National Audit Office: The Estonian Health Insurance Fund (EHIF) awarded procurement contracts to medical service providers that lacked sufficient number of physicians or suitable premises

Priit Simson | 6/26/2020 | 10:00 AM

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TALLINN, June 26, 2020 - EHIF tendering conditions fail to ensure that procurement contracts are awarded to medical service providers with the capacity to provide the service in accordance with rules and regulations, the NAO found in its audit report “Activities of the Estonian Health Insurance Fund upon carrying out public procurement of healthcare services” published today. The National Audit Office reached this conclusion by auditing six public procurements carried out by EHIF for the provision of specialized medical care and nursing care services with a total cost of nearly 215 million euros.

In the opinion of the National Audit Office, it is crucial in the case of healthcare services to make sure that procurement contracts are awarded to compliant institutions, as patients’ health is at stake. Although EHIF had in most cases complied with the Public Procurement Act when conducting public procurements for healthcare services in 2018, there were substantive shortcomings in tendering conditions that failed to ensure compliance with rules and regulations.

The National Audit Office established that a medical service provider could have been chosen as the winner of a procurement while, at the time, actually lacking suitable premises, equipment or staff for the provision of procured medical services. There were institutions that after having been chosen as the winner of the procurement, applied for a new activity license from the Health Board and started providing healthcare services in the premises and with the physicians of the institution that had lost the contract. This means that EHIF is invoiced by a successful tenderer, but in fact the service is provided at the same premises and partly by the same physicians as in case of a tenderer who was not successful at the procurement.

One of the tendering qualification criteria set by EHIF was the existence of an activity license for the provision of health care services, which must ensure that the tenderer’s premises, equipment, etc. meet the requirements. However, EHIF did not carry out any additional checks on whether the institution in fact met the requirements.

Processing and supervision of activity licenses is the responsibility of the Health Board, however, the audit revealed that the Health Board is not informed about whether institutions with a valid activity license actually comply with the requirements. "As activity licenses are issued for an indefinite period, the Health Board has left many institutions providing healthcare services uninspected for a long time," said Mart Vain, Audit Manager of the National Audit Office. "Before 2018, the Health Board did not always carry out on-site inspections when processing a new activity license, which resulted in uncertainty about whether the data on premises and equipment were correct." The National Audit Office also identified cases where it was not clear what service procurement license was required to be able to provide the services procured. This was due to insufficient cooperation between EHIF and the Health Board in organizing procurements.

EHIF had included conditions in the procurement documents which failed to ensure equal treatment of tenderers and did not consider the institutions’ consistency in meeting the requirements. "For example, an institution that had been operating for three years and an institution that had provided services for only a few months could receive the same number of points from the EHIF's evaluators," Mart Vain pointed out. In the evaluation of tenders, an institution did not receive points, if precepts or complaints had been issued to the institution over the previous three calendar years. EHIF did not take into account whether the institution had provided services during all of that period or had only recently begun its activity. Thus, the conditions concerning precepts or complaints may have favored tenderers who had provided healthcare services for less than three years because they were less likely to have received any precepts or complaints.

For outpatient specialized care services, EHIF had set for tenderers a requirement of turnover of at least EUR 4 000, but that requirement, however, could not ensure that the tenderer had been providing services over a longer period of time. The turnover requirement was not limited to specific area of specialization or treatment type, but applied to the provision of all healthcare services. A company is able to achieve such turnover easily in a short time.

Another evaluation criterion that the National Audit Office considered problematic concerned the submission of health records to the health information system. A healthcare provider is required to submit to the health information system data on the healthcare services provided to a patient. Based on tendering conditions, the same number of points was awarded to an institution which had submitted health records for all or most patients during the previous year, and to an institution which had submitted two health records. Thus, an institution that had not previously submitted any health records but wanted to obtain points in that regard in the procurement process could submit the records just before the procurement started and receive the same number of points as an institution that had consistently performed its duties. The National Audit Office finds that the consistent submission of health records to the health information system is an important prerequisite for ensuring the best possible treatment quality for patients.

The tenderer did not have to prove that it had enough employees to provide the procured service in the extent promised. EHIF had not included in the procurement documents a condition that the number of healthcare professionals presented in the tender must correspond to the number of treatment cases. Therefore, tenders that did not indicate the necessary number of physicians for providing the desired volume of services were also declared successful. For example, two institutions submitted a tender for the provision of outpatient psychiatric services corresponding to a workload of 2.5 physicians. However, both institutions had indicated only one physician in their tender. With one tenderer, a contract was signed in the volume corresponding to 1.5 physicians and with the other tenderer in the volume corresponding to 2.5 physicians. In the opinion of the National Audit Office, if the institution lacks sufficient capacity to provide the required service, the provision of the service can be disrupted or there is a risk that the institution will recruit physicians whose competence has not been verified.

For the most part, EHIF complied with the Public Procurement Act. The National Audit Office assessed whether the procurements had been organized and contracts awarded in accordance with the procedure provided by the Public Procurement Act. In general, EHIF complied with the Public Procurement Act, however, there were also some shortcomings. For example, EHIF had not divided the procurement for specialized medical care into lots, so that, under the Public Procurement Act, contracts should not have been awarded before the end of ongoing disputes and required waiting periods. As EHIF signed some contracts before that deadline, there was a risk that the contracts could have been declared void.

Background

Majority of specialized medical care and nursing care services are provided by the hospitals in the Hospital Network Development Plan (HNDP), but EHIF also orders additional services from non-HNDP healthcare providers. In 2018, EHIF organized public procurement of healthcare services for the first time - in previous years, respective contests had been organized on other legal bases.

As a result of six public procurements carried out in 2018, EHIF signed contracts with 102 healthcare providers, the estimated cost of which in the period from October 2018 until September 2021 will total almost 215 million euros.

During the audit, the National Audit Office assessed whether

  • the public procurements of healthcare services organized by EHIF in 2018 were organized in accordance with the Public Procurement Act;
  • EHIF ensured that, as a result of the procurement, contracts were awarded to institutions that were able to provide the service in accordance with rules and regulations;
  • the Health Board supervision ensures that the activities of the healthcare provider comply with the requirements that have been the basis for the issue of the activity license.

 

Priit Simson
Head of Communications of the National Audit Office of Estonia
+372 640 0777
+372 5615 0280
priit.simson@riigikontroll.ee
www.riigikontroll.ee

 

  • Posted: 6/26/2020 10:00 AM
  • Last Update: 6/26/2020 11:38 AM
  • Last Review: 6/26/2020 11:38 AM

In the opinion of the National Audit Office, it is crucial in the case of healthcare services to make sure that procurement contracts are awarded to compliant institutions, as patients’ health is at stake.

National Audit Office

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