The PhilHealth Case—Health Care Contracts and Social Contract in Social Health Insurance

Two cases are discussed: the first is a simple health care contract, done in the context of selective contracting; and the second case explores the same contract as a social contract. It highlights the Contractual Management (CM) fields of planning, implementation, monitoring and evaluation for re-negotiation stages in the contract. The starting point is a selective purchasing model of care for complex medical cases in which a single payer no longer traditionally reimburses on fixed fee input-based items, but prospectively announces a package price, and providers express their interest in participating (designated as Z cases). When viewed in a principal-agent context, in which the funder is the principal and the contracted provider the agent, the issue of interest is finding the right incentives for the agent to pursue the principal’s goal. An analysis of the cases presented herein, a contractual non-payment or delayed payment, highlights risks that could have been anticipated and addressed with a smarter contract management. The CM framework permits exploration of contract risks and an examination how improvements in the planning and process stages, including management of information and knowledge from the contract, can improve contract outcomes. The model presupposes flexibility of action open to private or business firms operating under strong institutions. However, the entities or contractual parties in the given case are both government agencies. With its management-based lens, the CM contract assessment highlights not only the legal aspects but also the social contract of state institutions assuring basic health care to the people. Contracting in this context subsumes authority and compliance (the default modes of state institutions) with more ‘learning by doing’ or knowledge management, within the purview of Contract management. CM provides a pragmatic view of what it takes to bring out contracting’s potential to transform the way health care is financed and delivered in the country.