Management of Key Purchaser Risks in Devolved Purchase Arrangements in Health Care

Abstract

This paper examines the key risks and risk management strategies associated with devolving the purchase of publicly funded health care to non-governmental organisations, where the aim is to maintain at least the current level of equity of access. The key risk is greater ‘cream-skimming’ or risk selection, particularly with competitive purchase models based on patient choice of purchaser. The paper also examines the risks of poor purchaser performance and cost shifting. Minimising these risks would require considerable government regulation. This paper was commissioned and carried out to inform Treasury’s thinking in helping develop health policy under the National Party Government that was in power from August 1998 to November 1999. It is a background paper and does not provide policy advice, nor does it propose any particular course of action. The Treasury has chosen to make it publicly available in order to encourage public discussion.