Health procurement and rise of corruption. Causes and consequences | Experts’ Opinions

ByCatalina Russu

Health procurement and rise of corruption. Causes and consequences | Experts’ Opinions

Corruption in the health sector can be a matter of life and death, particularly for people living in developing countries. Substandard ventilators, grossly overpriced equipment – these are just two of the aspects we have seen during the COVID-19 pandemic. Normally, an estimated 10% to 25% of a public contract’s value is lost to corruption every year. Where does this situation lead? We asked the opinions of several global health specialists.

What are the biggest consequences of corruption in health procurement? 

Ilaria Mosca, partner at Tagliente and consultant at the World Health Organization

“The amount of public monies spent on health procurement represents the second largest item of the total general government expenditures on public procurement. About 20% of health spending could be channeled towards better use (Organization for Economic Co-operation and Development (OECD), 2020). Corruption in health procurement leads to inefficiencies and undermines financial protection. Medicines and medical products are not purchased at a fair, competitive price and people are confronted with inflated medicine prices that cause out-of-pocket payments (including informal payments) and lead to financial hardship. Corruption in health procurement skews resource distribution and sets barriers to equitable access to affordable and high-quality medicines. Shortages of medicines and the distribution of counterfeit and substandard medicines and medical products are often the consequences of corruption in health procurement. Poor people and people with chronic conditions are the most affected by corruption in health. (The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agencies.)”

 

 

Nahid Alaei, public sector / strategic commercial director

“Short term issues are the loss of work days due to illness.  Long term issues are health issues or disability for people that can result in suffering and pain on both a physical and mental health level. It also results in long term dependency and care needs, loss of workability and dependency on health and social care services which can also result in an inability to maintain or hold jobs. Human capital is the most critical asset held by individuals and, once lost, it is difficult to recover from it. A longer-term impact is poverty on an individual basis and added cost to the mainstream health and care industry and public finances as well as higher morbidity rates. Health inequality has a direct link with general poverty and the type of care or intervention people receive in hospitals or through medical systems and practitioners.”

 

 

Snezana Jovanovska Aceva, Procurement Specialist

“Not only in health procurement, but in public procurement in general, there are big consequences when it comes to corruption. Regardless of the shape, regardless of the size, regardless of the case, corruption has a devastating impact on the rule of law, hinders equal treatment of bidders, affects public trust and is a hurdle to economic and social development, especially in young democracies. These days, the global health crisis due to corona virus provides a wealth of opportunities for corruption. Many governments have invoked emergency legislation, choosing “direct award” contract instead competitive bidding. The process eliminates cost, quality, and capability comparisons, enables price manipulation, over payment and lucrative contracts awarded to entities with poor or no expertise.”

 

 

Sandra Velovska, Legal and Procurement Consultant at Ministry of Health/Central European Bank

“I believe that one of the biggest consequences of corruption in health procurement is the misuse of state budgets and funds (paying higher prices than the usual market prices) which results in less money being available for service provision. The corruption creates inefficiencies reducing competitiveness (such as supplier being awarded multiple bids) and public scandals.”

 

 

 

 

Why is the health sector particularly susceptible to corruption?  

Nahid Alaei, public sector / strategic commercial director

“The health and medical equipment supplies, medicine and drugs industries are an expensive industry and corruption can be due to the fact that criminals are looking for further profit throughout the chain. Corruption among medical systems and doctors could be due to the doctors or hospital systems wanting to cover up negligence, avoid insurance claims or payments or earn profit from private practice. People are forced to accept help from medical or alternative care professionals as they have no other choice but to do so. They have nowhere else to go – and they are prepared to pay for it or wait for it, no matter how costly or late in delivery it as they cannot do anything else. Regulations and policies may not be effective enough to support or monitor and track health industry crimes. Alternative therapies are not known to people, can be expensive… or not regulated which again does not help with a real recovery model.”

 

 

Sandra Velovska, Legal and Procurement Consultant at Ministry of Health/Central European Bank

“Health systems are particularly susceptible to corruption because of the large number of stakeholders that are involved. Corruption affects the health sector in many ways. It can take money away from healthcare, lead to poorer quality care and make access to healthcare unfair. As we all know, the pharmaceutical industry is one of the most powerful industries in the world, always trying to influence regulators’ decisions through bribes. Besides public procurements, the medical services and the R&D are not transparent and rarely put public interest first. Production of fake medicines and medical products has significantly increased especially in times of pandemics and the COVID crisis gives ample evidence of this.”

 

 

How can anti-corruption strategies be integrated into health policies/plans? 

Davor Katavić, international consultant on healthcare financing

“Based on my experience, besides the usual preventative approaches to anti-corruption, health systems should also try to systematically outsmart any corrupt behavior by implementing value-based payment models as an integral part. In this way, opportunities (and the “need”) for corruption could be reduced while better quality and efficiency in healthcare can be stimulated. Implementing such models in practice can take a lot of effort, but it can bring stable long-term results against corruption in healthcare while simultaneously improving the quality of the system itself.”

 

 

Ilaria Mosca, partner at Tagliente and consultant at the World Health Organization

“Better integration of accountability, transparency and anti-corruption mechanisms in the procurement process is needed to reduce the risk of corruption. Several solutions are presented in the literature: audits, community oversight and monitoring, social audits, web publication of all procurement processes, bidding and holding wrongdoers accountable, sanctions on those who break the law and coalition of civil society organizations (CSOs) are measures that can fight corruption. Kohler and Dimancesco (2020) present different sets of anti-corruption measures in health procurement: Policy measures to include the advancement of transparency, nondiscrimination, equality of access, open competition, accountability, value for money evaluation, related policy compliance and a well-vetted expert committee with sufficient resources and power to undertake internal and external audits. Use of e-procurement, capping the maximum price of pharmaceuticals, prequalifying suppliers to ensure they are reliable, establishing a product defect reporting system, providing constant technical assistance and training to procurement officers to ensure that procurement is carried out based on evidence and technical knowledge and using procurement performance indicators that are regularly updated and analyzed. Use of open contracting that is defined as “a way to identify and fix problems within government contracts by engaging those outside of government such as citizens and the private sector (The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agencies)”.

 

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