Impact of health purchasing methods on the quality of health services in public hospitals: the case of Amana Hospital, Tanzania

Abstract

This paper analyses the impact of health purchasing methods on the quality of health services delivered by public hospitals in Tanzania. It examines the effect of fee for services methods used by the health insurance fund and user fees used by non members to purchase services, on the quality of services rendered by government hospitals. The resource use intensity in treating patients was used as a proxy for quality of health services delivered.

In analyzing the effect of health purchasing methods on the quality of health services, delivered by public hospitals, primary data from Amana district hospital were used. Econometric methods were adopted to estimate the hospital total recurrent cost function and coefficient of elasticities for fees for services and user fees for the outpatients and inpatients groups. In addition, the marginal costs for specific groups of patients were estimated to determine resource use intensity for treating patients in hospitals.

The results suggest that fee for services method led to low recurrent costs for outpatient group but resulted in higher total recurrent costs for inpatients. Furthermore, the results revealed that average cost for insured outpatient and inpatient were less than the marginal costs. This implies hospitals are either inefficient in delivering services to patients or are adjusting costs according to payment specific methods. Thus, it is recommended that a mixture of health insurance reimbursement methods be used to improve the quality of services. It is also recommended that non members be encouraged to enroll in health insurance schemes to minimize the adverse selection and to help in overcoming poverty in Tanzania.

Keywords: Health Insurance, health insurance reimbursement, fee for service user fees, Tanzania