2.4.1 Semi-structured in-depth interviews.

Semi-structured in-depth interviews with key informants were conducted to explore the contractual agreements between public purchasing agencies and private providers as well as their experiences and perceptions. Interview guides were separately developed for each of the two stakeholder groups:

First, for purchasing agencies, the major areas of enquiry included: a) profile and characteristics of contracted private facilities; b) contractual requirements, terms, conditions, and regulations; c) effectiveness and challenges in engaging private providers. Stakeholders were recruited through direct request for interviews to the insurance scheme offices. Senior management officers with knowledge on and involvement in implementing contracts with private sector facilities were interviewed.

Second, for key informants from private providers, the major areas of enquiry included: a) general profile and capacity of the health facility; b) requirements, conditions and standards to join public insurance; c) motivations and challenges in contracting with public insurance. Health facilities in the Bangkok Metropolitan Area that have ever undergone contractual agreements with NHSO and/or SSO were contacted from lists of registered private facilities in the UCS and SHI schemes for in-depth interviews [13, 14]. Senior management executives and owners of private health facilities with experience in undergoing contractual agreements with NHSO or SSO were interviewed.

Verbal and written consent was obtained from all participants. All interviews were conducted in Thai. Each interview was audio-recorded and detailed field notes were documented.

2.4.2 Document review.

Documents published between 2002–2021, including policies, reports, statistics, presentations and publications on private health facilities contracted within the UHC schemes were searched through relevant government agency websites, including the Royal Thai Government Gazette, NHSO, SSO and National Statistical Office (See Table 2). Documents were selected based on the title’s relevance to the research topic. Additionally, documents relevant to key informant discussions (such as unpublished reports, regulations, forms) were requested and obtained directly from key informants. Selected documents were reviewed in full and included if any data applicable to the data analysis themes were identified.

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Table 2. Documents relevant to contracting private health facilities in UHC.

https://doi.org/10.1371/journal.pgph.0000799.t002

2.4.3 Data analysis.

We adapted conceptual framework for evaluating contracting-out of health services by Liu et al. [11]. Engagement of private sector is analyzed by the characteristics of the purchaser organizations, the contractor providers, and the contractual relationship, which includes six components: 1) types of services; 2) contract formality; 3) contract duration; 4) provider selection; 5) payment mechanism and 6) performance and quality assurance (See Fig 1).

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Fig 1. Conceptual framework for analysis.

https://doi.org/10.1371/journal.pgph.0000799.g001

Audio recordings from each interview were transcribed. Data from the transcriptions and the field notes were summarized then manually coded and categorized based on relevance to each analysis component. Data obtained from documents were also categorized into each component. Information provided by key informants were verified and triangulated with review of relevant documents. We gave priority to documents over verbal information especially on factual evidence. When supporting documents were available, interview findings were used to support our understanding about policy intentions, underlying problems, procedures and steps, time sequences, or example cases. The interview was, however, the only source for the findings about perceptions of purchasers on challenges in contracting private providers, and providers’ motivations and challenges in contracting with NHSO and SSO. Narrative analysis was applied. Minor quantitative analysis was also conducted by reporting values, ratios and percentages of statistical data obtained from the document review.

3.3.1 Types of services.

UCS members are entitled to a comprehensive benefits package including disease prevention, diagnosis, medical treatment, health promotion, rehabilitation and dental services, as well as Thai traditional and alternative medicine. In addition to basic inpatient and outpatient services, the NHSO’s targeted and special services include thrombolytic therapy for ischemic stroke patients, cataract lens replacement surgery, transplantations (heart, liver, stem-cell), knee arthroplasty, thalassemia, HIV/AIDS including Anti-retroviral treatment, renal replacement therapy, diabetes and hypertension, chronic psychiatric care and long-term care for elderly [16, 32]. There are no copayments for UCS members as NHSO fully funds all services.

Similarly, the SSO covers all expenses for medical examination and diagnosis, medical treatment, admission to and treatment in medical establishments, medicine and medical supplies, and ambulatory services. Coverage includes organ transplants, HIV/AIDS, haemodialysis, dental treatment, transplantation (bone marrow, kidney and cornea), and renal failure treatment. SSO contracts with the main contractor hospitals to provide inclusive outpatient and inpatient services using an annual capitation fee plus some additional payments for outpatient and inpatients (see detail in sub-section 3.4). Therefore, contracted hospitals must meet all required capacities.

3.3.2 Contract formality and duration.

NHSO renews annual contractual agreements with private main contracting units, on a condition that they maintain NHSO standards and pass annual inspections. Call for new health facility applications are announced annually, with applications assessed at NHSO’s regional offices. NHSO can undergo contractual agreements with all three categories of service providers (as described in section 2), with direct payment mechanisms established for the contracted facilities. A health provider may apply to register as one or more facility type [15]. This has been the case for facilities in Bangkok where most private contractors located. However, NHSO may not make a direct contract with primary care units and leave primary care provision in responsibilities of the Main Contracting Units. NHSO applies this practice to most health centers belong to Ministry of Public Health (MOPH) in all 76 provinces outside Bangkok. It leaves MOPH’s district hospitals to manage service and financial agreements with their own subsidiary health centers. Contractual documents with private providers are legally binding with financial penalties for non-adherence, while agreements with public providers do not have provisions on penalties.

Contractual agreements between the SSO and private main contracting units are legally binding contracts which are renewed annually with new rates, terms and conditions if applicable. Unlike agreements with public main contracting units where contracts are automatically renewed, private providers must undergo annual re-application, review and re-registration process [26]. Calls for new applications and renewals of the incumbent contractors are announced between April and May through the SSO’s website and invitation letters to previously contracted providers. Interested providers submit their applications for review to SSO headquarter or its provincial branch offices. Private providers that are selected must sign contracts by October to provide services from January to December of the upcoming year [22]. For supra-contractors and/or sub-contractors, SSO is not involved in the agreement process; it is left to internal management of the main contracting units. However, main contractors are required to notify SSO upon application with details about their sub- and supra-contractors’ facility licenses, service scope, and their agreement and consent documents.

New interventions or medicines are introduced into the benefit package and inflation from labour and medical supplies cost can affect the cost of service provision and capitation rate. Both NHSO and SSO apply annual contracts with new rate of capitation and other renewal conditions [17].

3.3.3 Selecting providers for contracting.

A minimum eligibility criterion for a main contracting unit has been established by the NHSO. This includes a) being a health service provider that is already operational, b) must have received a unique health service provider identification number generated by the Bureau of Policy and Strategy, Ministry of Public Health, c) if the health service provider is a primary care unit, it must have an agreement with a host service provider that serves as its main contracting unit, d) if the health service provider is a main contracting unit that is not also registering as a referral unit, it must have a referral unit already registered within the National Health Security System. All NHSO regulations aim for a seamless referral of patients who require secondary or tertiary hospital services [15].

Additionally, main contracting units must have a doctor to population ratio of 1:10,000, referral units must have a minimum of 30 beds and have at least four main specialties, namely obstetric and gynaecology, general surgery, internal medicine and paediatric, while private sector providers must be licensed and re-licensed annually by the Bureau of Sanatorium and Art of Healing, Ministry of Public Health [15].

Prior to entry into contractual agreement, the NHSO’s service inspection unit assesses the applicants registering as main contracting units and/or referral units based on a nationally set standards and guidelines developed jointly by NHSO, Ministry of Public Health and relevant stakeholders. Criteria of pre-entry assessment differs by types of contracting units [15]. NHSO also re-assess the contractors annually to ensure these standards are maintained. The one-day assessments are conducted by trained public sector medical doctors and nurses for both new registrations and annual re-assessment inspections. In practice, the main contracting units are inspected and assessed by staff from their affiliated referral hospitals. Facilities that do not pass either the initial inspection or annual inspection are requested to make either general or specific urgent improvements within 7 days otherwise they are removed from the NHSS.

The private main contractors for Social Health Insurance must meet the following requirements: a) having at least 100-bed capacity; b) ability to arrange referrals to ensure patients are treated to the utmost medical care they need; and c) having at least 12 medical specialties [Internal medicines, General Surgery, Ob-Gyn, Paediatrics, Orthopaedics, Preventive Medicines, ophthalmology, anaesthesiology, Ear Nose and Throat, Radiology, Rehabilitation, Emergency medicine or neuro-surgery] [26]. The facilities that do not meet all criteria may be contracted on an exceptional circumstance as advised by the SSO’s medical committee; for example, if it is the only health facility in the underserved areas in particular public contractor. SSO also sets standards for specific areas such as general facility standards, emergency services, outpatient / inpatient / intensive care, surgery, pharmacy, and medical records [26]. For the registration of new applicants, main contractors must also be an accredited hospital either through the Joint Commission International (JCI) or Thailand Healthcare Accreditation Institute (HAI). These requirements and regulations are not enforced on sub-contractors and supra-contractors which are separately contracted by main contracting facilities.

3.3.4 Provider payment mechanisms.

Both NHSO and SSO make direct payments to facilities that have undergone direct contractual agreements and implements a blended payment model.

From the NHSO, Main contracting units providing outpatient services to UCS members are paid prospectively one month in advance as well as general health promotion and disease prevention services. The capitation payment is calculated for each facility by multiplying an age-adjusted differential capitation rate with the number of members registered to the main contracting unit; the more number of elderly and children under five years old receives slightly higher outpatient capitation rate. The total budget for outpatient is calculated for each contractor unit based on the population in the catchment area registered with each contractor. Age adjustment is applied to 80% of capitation rate while the remaining 20% is flat rate equally for any main contracting unit [17].

In-patient services for UCS members are paid through retrospective claim and reimbursement by applying Diagnosis Related Groups (DRGs) System under a global budget. Reimbursement payments are also used for special health promotion and disease prevention services in cash and in kind for specific services such as vaccines, anti-retroviral drugs and peritoneal dialysis solutions in the form of medicines and medical supplies [17]. For example, NHSO authorizes Government Pharmaceutical Organization to purchase peritoneal dialysis solution; contracts Thai Post Distribution to deliver these solutions to patients’ home nation-wide; pays Main Contracting Units where patients registered with for supervising and supporting patients at home.

Providers are responsible for filing their reimbursement claim forms within 30 days after the inpatient was discharge from hospital, through the NHSO e-Claim program managed by the NHSO Bureau of Information Technology. The claim is then verified by the Bureau of Fund Allocation. Upon satisfactory verification, providers are compensated by the Bureau of Fund Accounting through electronic bank transfer directly to the health facility [17].

In addition to capitation for outpatient and DRG reimbursement for inpatient, a fee schedule under a global budget is applied for high-cost services that may pose a financial risk to health facilities, such as knee prosthesis and high-cost medication such as recombinant tissue plasminogen activator for the treatment of acute ischemic stroke [17].

NHSO also applies a fixed fee per patient for some non-communicable diseases screening services, and a point system with global budget for acute diseases, emergency services, Thai traditional medicines and rehabilitation services. Activity-based contracts for area-based and community-based health promotion and disease prevention services to meet the needs of local health problems are managed by regional NHSO offices and paid as project-based “block-grants”. The grant is allocated to sub-district health centres [17]. All of these blended payment to providers aims to improve access to high cost but effective interventions and minimize the weakness of potential “under provision of services” of the main mode of capitation payment.

The SSO applies a mix of payment methods, which include capitation, point-system, DRG, and fee-schedule. The DRG relative weight is the relative resource intensity of each inpatient. It is the ratio between average resource for one DRG and total resource for all DRG [31]. Each disease group was assigned with a relative weight; the higher the DRG weight, the more resources are required to treat a patient, meaning the more payment to the providers. Thailand had applied DRG systems for more than two decades [33]. Outpatient and inpatient services are paid monthly based on an annual fixed capitation rate per SHI member registered to the facility. Additional per-capita payments are also added for chronic illness patients. For inpatient care with an adjusted relative weight over 2 under the DRG systems, services for these patients are paid by applying DRG with global budget. For inpatient with relative weight below 2, it is covered by the capitation rate. Supra- and sub-contractors are paid directly from main contractor units, not SSO, with rates and terms mutually agreed upon between the main contractor and the supra- and/or the sub-contractors.

To incentivize providers to provide adequate treatment for out-patients with chronic diseases, an additional 453 THB per registered SHI member for each main contractor hospital was offered. Half of this amount is paid on a monthly basis for 11 months calculated from the number of points per capita member earned by providing outpatient services for the 26 chronic diseases by each contractor. On the last payment in month 12th, the contractor hospitals receive the remaining half of 453 Baht based on its points per capita earned as a share of total national points per capita by all contractors in a year.

Further, certain equipment such as orthopedic prosthesis can be reimbursed using a fee-schedule. SSO also pays an additional 80% of the amount of expense over 1,000,000 THB for high-cost in-patient service of more than a million Bath. This complex mix of additional payment method applied by SSO aims to incentivize adequate treatment for more complex and high-cost outpatient and inpatients.

3.3.5 Performance requirements and quality of care.

The NHSO has introduced various mechanisms to monitor health facility performance and ensured service quality. The Health Service Standard and Quality Control Board (HSQCB), one of the two governing bodies of the NHSO, sets and monitors the standards and quality of health providers. The Quality Control subcommittee of the HSQCB sets both national and regional standards to ensure applicability to different regional contexts, including criteria for new entry and contract renewal [6]. Health service providers that do not meet the assessment criteria are unable to enter to contract, while facilities that fail annual inspections are subject to dismissal or contracts not renewed. Apart from the new entry and renewal requirements, NHSO also conducts unannounced ‘surprise visits’ to health facilities, usually for facilities suspected to be non-compliant to NHSO requirements based on document audits, complaints received from UCS members, and random checks with users [19].

In 2014, to increase quality of services, the Quality and Outcomes Framework (QOF) for primary care providers links payments with their performance. The Thai QOF, which aims to reflect the quality of health promotion and disease prevention, primary care, administrative services, and performance of services, consists of six national health service performance indicators set by the NHSO in collaboration with the Ministry of Public Health and Thai Health Promotion Foundation and not more than five regional specific indicators approved by regional committee based on health and quality challenges faced by the region [29]. See Box 1.

In 2004, The Healthcare Accreditation Institute (HAI) of Thailand initiated a new stepwise standardization process to recognize hospitals of varying quality standards [30]. Step one accreditation was granted for facilities which established preventative measures and risk identification systems in place; step two for facilities meeting key Hospital Accreditation standards of quality assurance and quality improvement; and step 3 was granted to hospitals meeting all Hospital Accreditation standards.

In fiscal year 2007, NHSO earmarked a budget of 0.76 Baht per capita member (35.7 million Baht in total) as additional incentives based on the achievement of different accreditation status. NHSO applied a scoring system with a maximum of score of 5 for hospitals with full accreditation, score of 2 for those achieving step 2 and score of 1 for those achieving step 1 from the HAI accreditation. Fully accredited primary health care facilities have been entitled to receive a grant of up to 30 Baht per capita multiplied by catchment population it served [34].

In contrast to the NHSO, the SSO does not proactively incentivise hospitals for continuous quality improvement. However, the Office relies on external evaluations and certifications from the Healthcare Accreditation Institute or Joint Commission International (JCI) as conditions for private hospitals to enter into agreements with SSO. Additionally, SSO conducts assessments and quality control audits, with main contracting units assessed annually.

3.3.6 Enforcement of contract through audit.

NHSO pioneered three categories of audit. First, coding audit is used to detect upcoding of DRG relative weight, DRG creep, which is a deliberative process to gain higher reimbursement [35]. DRG claims, randomly selected or targeted samples of outliers, were retrospectively reviewed by trained independent auditors. Overclaimed amounts were asked to return to NHSO otherwise legal actions would be taken in several cases. Second, billing audit identifies outstanding or abnormal claims by health facilities for services paid outside capitation or DRG such as Pap Smear for cervical cancer. By 2021, total 2272 auditors were trained and actively function. Though SSO does not develop auditing system, it applies NHSO coding audit though not systematic and regularly.

SSO has never terminated contracts though poor performing facilities voluntarily leave the Scheme. Prior to 2019, NHSO has terminated a few private contractors in Bangkok due to fraud and failed quality standard. In the past, NHSO only pressured the poor performance not to renew the contract.

3.4.1 Purchaser perspective.

Overall, the two purchasers felt that the current levels of private provider participation were still inadequate to fill service gap. Although several forms of financial and non-financial incentives were in place to attract private providers, these incentives were not seen attractive to all. First, financial payment rates were generally standardized i.e., applied to all facilities of the same type. Whether these incentives were attractive enough also depended on provider factors. Capitation payment, the major source of hospital revenue, offered predictable and steady flow of incomes. However, a significant drawback of capitation method was inadequate risk sharing among smaller hospitals or those recently operated which were unable to register the maximum or nearly maximum number of populations for their capacities. In such circumstance, small pools of UCS member took higher financial risk when they got some serious chronic illness cases and were unable to survive. Second, smaller hospitals operate with higher cost than larger hospitals or hospitals formed into chains who negotiate large-scale medicines and supplies purchase with lower cost. Third, new contractors usually experienced difficulties competing with long-standing reputable contractors for registered patients. Finally, some private hospitals joined public contracts to secure funding and gain reputation and, after some years, left for more profitable markets.

In addition to insufficient number of participating providers, purchasers also viewed that the current accountability mechanisms still provided some opportunities to exercise profit-making behaviors such as cherry picking especially among hospitals registered in the stock market. A measure to control quality beyond standard requirement was also lacking. For example, the NHSO regulations only allowed contract termination based on two conditions i.e., when the contractors requested to leave or when they failed the standard requirement. However, in the situation that the purchasers still wished for greater participation, more stringent criteria or lower autonomy would counteract the expected target.

3.4.2 Private sector provider perspective.

Providers raised several push and pull factors underlying decisions to join public contracts. Representatives from small hospitals and private clinics agreed that they could generate sufficient-to-survive revenues from public contract. These providers also satisfied with different revenue generating activities apart from capitation methods. These included fixed fee for services such as individual disease prevention activities, home visits, mobile services as well as financial rewards from achieving QOF and higher quality standard. A few also mentioned intrinsic values namely fulfilling their altruism and social responsibility to serve people in local communities, opportunities to work with intersectoral parties, and social recognitions. Market competition was also involved when neighboring providers participated in public contract pushes them to join the race. However, meeting NHSO standard requirements such as minimum number of required health professionals, computer systems, being subjected to audit was seen as a barrier especially for physician-owned private clinics.

On the contrary, a representative from a large hospital chain shared reasons for not joining UCS or SHI provider network. By and large is the feeling that private providers were treated unfairly by purchasers. For instance, they were not able to negotiate payment rates. The global budget system made DRG relative weight unpredictable and revenue predictability was vital to run private businesses. They also felt that public providers should share registered population to private providers proportionately to infrastructure size. It was also (mis) perceived that public providers received staff salary on top of the same payment rates. Lastly, regulations were unequally enforced between public and private facilities. Despite several disincentives, some private providers had to join public contract because their locations were among SHI users such as locating near factories.