Quality-based purchasing in health care

Hugh R. Waters, Laura L. Morlock, Laurel Hatt

Research output: Contribution to journalArticlepeer-review

12 Scopus citations


Quality-based purchasing is a growing trend that seeks to improve healthcare quality through the purchaser-provider relationship. This article provides a unifying conceptual framework, presents examples of the purchaser-provider relationship in countries at different income levels, and identifies important supporting mechanisms for quality-based purchasing. As countries become wealthier, a higher proportion of healthcare spending is channeled through pooled arrangements, allowing for greater involvement of purchasers in promoting the quality of service provision. Global and line item budgets are the most common type of provider payment system in low and middle-income countries. In these countries, improving public hospital performance through contracting and incentives is a key issue. In middle and high-income countries, there are several documented examples of governments contracting to private or non-governmental health care providers, resulting in higher perceived quality of care and lower delivery costs. Encouraging quality through employer purchasing arrangements has been promoted in several countries, particularly the United States. Community-based financing schemes are an increasingly common form of health financing in parts of sub-Saharan Africa and Asia, but these schemes still cover less than 10% of national populations in countries in which they are active. To date, there is little evidence of their impact on healthcare quality. The availability of information - concerning healthcare service provision and outcomes - determines the options for establishing and monitoring contract provisions and promoting quality. Regardless of the context, quality-based purchasing depends critically on information - reporting, monitoring, and providing useful information to healthcare consumers. In many low and middle-income countries, the lack of availability of information is the principal constraint on measuring performance, a critical component of quality-based purchasing.

Original languageEnglish (US)
Pages (from-to)365-381
Number of pages17
JournalInternational Journal of Health Planning and Management
Issue number4
StatePublished - Oct 2004
Externally publishedYes


  • Health care purchasing
  • Performance
  • Provider payment
  • Quality

ASJC Scopus subject areas

  • Health Policy


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