BACKGROUND:
Strategic health purchasing is a core function of health financing and a critical lever for achieving universal health coverage (UHC). Many low- and middle-income countries (LMICs), including Nepal, continue to face challenges related to fragmented financing, passive purchasing practices, and limited alignment between purchasing arrangements and population health needs. This study examines health purchasing reforms in Nepal and draws policy-relevant insights for other LMICs pursuing UHC.

METHODS:
We conducted a qualitative health systems analysis using a mixed-methods approach, including a review of national policy documents, program guidelines, and financing reports, complemented by key informant interviews with policymakers, purchasers, and providers involved in Nepal’s health financing reforms. The analysis was guided by a strategic purchasing framework, focusing on governance arrangements, provider payment mechanisms, benefit package design, and accountability structures.

RESULTS:
Nepal has made notable progress in reconfiguring health purchasing through the expansion of the National Health Insurance Program and increased government financing for essential health services. However, purchasing remains largely passive, with limited use of provider payment mechanisms to incentivize efficiency, quality, and equity. Fragmentation across federal, provincial, and local levels has led to duplication of services and inconsistent purchasing decisions. Weak information systems and limited provider autonomy further constrain the effective use of purchasing levers. Despite these challenges, recent reforms—such as efforts to standardize benefit packages and introduce performance-linked payments—demonstrate emerging opportunities for more strategic purchasing.

CONCLUSIONS:
Nepal’s experience highlights both the potential and the constraints of reconfiguring health purchasing in resource-constrained settings. Strengthening governance, improving coordination across levels of government, and aligning provider payment mechanisms with health system objectives are essential for advancing strategic purchasing. These lessons are highly relevant for other LMICs seeking to accelerate progress toward UHC through more effective health financing reforms.