A dynamic model of quality assurance in primary healthcare in developing countries

ABSTRACT

Purpose: This study aims to examine the impact of investments in Quality Assurance (QA) within the primary healthcare industry in developing countries using a dynamic economic model.

Study design: The study deviates from a static framework to examine the case where healthcare quality is a dynamic stock, which increases over time due to investments in quality assurance by healthcare providers and deteriorates due to resources being overused or becoming obsolete. Dynamic optimization is used to examine the behaviour of a representative primary healthcare (PHC) provider and the implications for other healthcare providers in the field.

Findings: The study supports the argument for long term benefits of quality assurance investments. At least two stable steady state paths were revealed. In one case, healthcare providers experience a period of decreasing healthcare quality and the need for increased investment in quality assurance. This is typical of the healthcare industry in many developing countries where the focus has been on amassing production inputs. The second path is characterized by increasing healthcare quality over time without the need for additional investment in quality assurance as the healthcare providers enjoy sustained returns on their initial investment in quality assurance.

Implications: Policymakers are advised to monitor their current level of healthcare quality provided to their clients. They should be proactive in their approach to elevating the quality of healthcare. Once the focus changes from that of stockpiling healthcare inputs to one of investment in quality assurance, not only will the quality of healthcare improve, but it will be sustainable as the healthcare industry will reap the lasting returns on their investment in quality assurance.

KEYWORDS:

• Quality assurance
• healthcare
• Hotelling
• spillover effects
• dynamic investment
• dynamic optimization

Disclosure statement

No potential conflict of interest was reported by the author(s).

Ethical approval: This article does not contain any studies with human participants or animals performed by any of the authors.

Notes

1 The seminal 1978 Alma Ata Declaration was pivotal in revisiting PHC assessment. Although it initiated general references to the importance of increasing service delivery efficiency, the main issues addressed were access and affordability.

2 Brown et al. [33] provides a detailed analysis of the evolution of the QA definition, p. 12–13.

3 PHC providers invest in quality assurance mechanisms which increases the healthcare quality stock. Likewise, healthcare quality can experience depreciation due to resources becoming obsolete and being overused.

4 Time subscripts are omitted for notational simplicity. However, we note the dynamic variables in our model are q_A(t), q_B(t), I_A(t), and I_B(t).

5 This is a widely used equation of motion form which stems from the Solow growth model. This general functional form is used to describe capacity accumulation over time. See Dockner et al. [39] and Cellini and Lambertini [38].

6 The insurer is representative of either a public or private health insurance system.

7 This is aligned with the seminal Hotelling [40] model. Total mass of clients has been normalized to 1.

8 Several studies such as Kessler and McClellan [42], Brekke et al. [41], and Tay and Emmanuel [43] reveal that proximity to PHC providers and quality of health care are the main predictors of the client’s choice of provider.

9 y could also be interpreted as the gross valuation of medical treatment.

10 This is done without loss of generality.

11 For simplicity, we set $\underset{-}{q}=0$.

12 These are typical private facilities, whose goal is usually to make a profit, or alternatively retrieve some measure of producer surplus, which can then be reinvested into the operations in subsequent periods. Sloan [44] shows there is little difference in the economic behavior of for-profit private hospitals, and public ones who may be more focused on promoting social welfare.

13 This functional form has been adopted widely in the literature including Calem and Rizzo [45], Lyon [46].

14 First order conditions shown in Equation (8) are the standard result of the first derivative of the current value Hamiltonian with respect to provider A’s investment in healthcare quality assurance set to zero given by $\frac{\mathrm{\partial }{H}_A}{\mathrm{\partial }{I}_A}=0$.

15 The Jacobian matrix is such that tr(J)>0, and det(J),0 which implies a saddle point equilibrium. This methodology is consistent with Chiang [47].

Additional information

Notes on contributors

Tesa E. Leonce

Tesa E. Leonce, Ph.D. is an Associate Professor of Economics at Columbus State University. Major fields of specialization are Industrial Organization and Financial Economics with diverse applied research interests in the areas of quality assurance, public health, natural resource conservation, and the economics of higher education.