Issues in Health Sector Reform in low income

countries/aid dependant countries

Broad Overview

• Lack of evidence base

• Systems historically based

• Influence of Development agencies -huge

• Language –acronyms

• Frequent change in international policies

• Politicians timeframe dictates pace of new initiatives

Key Tools

• Understanding health seeking behaviour

• Health Accounts

• Household Surveys

DHS –Demographic and Household survey

• Rapid Participatory assessments

• Anthropological surveys

Main causes of death in low-income countries

In South-East Asia and Africa Estimates for 1998

45%

35%

1%

6%11%

2%

NutritionalInfectious diseasesMaternalPerinatalInjuriesNoncommunicable conditions

Burden of disease DALYs (Disability Adjusted Life Years) lost

in 1998 due to infectious diseases, millions, all ages

0

10

20

30

40

50

60

70

80

90

Acuterespiritoryinfections

Diarrhoealdiseases

HIV/AIDS Malaria Measles TB

DA

LYs

(m

illi

on

s)

National Health Accounts

• Key questions:– what is the total spending on health?– who is spending it (poor, rich, rural, urban)– what is it being spent on (primary health care,

hospitals, MoH headquarters etc.)– what are the sources of this expenditure

(Government, donors, NGOs, private)

National Health Accounts

• Key questions:– how does expenditure compare to others– are funds efficiently allocated and spent– what can be done to improve the financing of

health services increasing the level of resources available using and allocating resources more effectively

Level of public expenditure (at purchasing power parity) 

$10 or less per head: Cambodia, Nigeria

$10 - $30 per head: China, Ghana, India, Pakistan, Uganda, Tanzania

$30 - $100 per head: Egypt, Kazakhstan

$100 - $300 per head: Brazil, Colombia, South Africa Source: WHO World Health Report 2000 (1997 figures)

Wealth Inequalities inUnder-5 Mortality: Select Countries

Health financing mixes

0%

25%

50%

75%

100%

Net

herlan

ds (

1992

)

UK

(199

2)

Ger

man

y (1

989)

Swed

en (

1990

)

Den

mar

k (1

987)

Finl

and

(199

0)

Irel

and

(198

7)

Spai

n (1

990)

Fran

ce (

1989

)

Ital

y (1

991)

USA

(19

87)

Switz

erla

nd (

1992

)

Port

ugal

(19

90)

Zam

bia

(199

6)

Rom

ania

(19

94)

Bulg

aria

(19

95)

Ecua

dor

(199

5)

Chi

na (

1993

)

Jam

aica

(19

93)

Mex

ico

(199

6)

Egyp

t (1

997)

Bang

lade

sh (

1997

)

reve

nue

shar

es

Out-of-pocket payments Private insurance Social insurance General taxes

11

Sources: Wagstaff, van Doorslaer, et al. (1998), Parker and Pier (1999), Sources: Wagstaff, van Doorslaer, et al. (1998), Parker and Pier (1999), Lasprilla et al. (1999), Theodore et al. (1999), Lasprilla et al. (1999), Theodore et al. (1999), Wagstaff, van Doorslaer, Watanabe and Xu (1999)Wagstaff, van Doorslaer, Watanabe and Xu (1999)

Private expenditure on health as % total health expenditure (2000)

0

10

20

30

40

50

60

70

80

90

Health Expenditure

Per capita Public Private

Bangladesh $16 34% 66%

Bolivia $53 20% 80%

Cameroon $ 26 20% 80%

Health expenditure in low and middle income countries

• Most expenditure is private

• Most private expenditure is out of pocket

• Most goes on pharmaceuticals

• Poor may spend greater % of household income than the rich

• They fund it by borrowing at high interest rates

Broad overview

• Increasing role of the private sector

• Failure of the public sector

• Plurality of providers

• Out of pocket expenditure dominates

• OECD health economic models don’t apply

Category 1991/92

1993/94

1995/96

1996/97

1997/98

Primary Care:       Service Delivery

 34.8

 34.0

 34.0

 26.6

 24.9

      Support Services

6.3 6.1 7.7 7.9 7.6

      National Health Programmes.

35.7 32.7 21.7 29.4 24.7

Sub Total 76.8 72.8 63.4 63.9 57.2

Health Policy and Management

5.7 4.4 3.2 2.5 2.5

Hospitals[1] 14.6 20.0 30.0 30.6 37.5

Traditional Medicine 2.9 2.8 3.4 3.0 2.8

TOTAL 100.0 100.0 100. 100. 100.

Trends in Budget Allocation Shares by Major Components-Nepal

Orissa: Public and Private Sector Shares of Hospitalization by Income Quintile

0 500 1000 1500 2000 2500 3000 3500

Poorest 20%

20%-40%

Middle 20%

60%-80%

Richest 20%

Hospitalization per 100,000 population

Public Private

Orissa India: who benefits from publicly funded hospitals

Public Health SectorParticular problems include:

• A shift of resources from the primary care sector to the hospital sector

• A shift in resources from rural areas to urban ones

• Limited geographical coverage especially in remote areas where trained personnel are unwilling to work

• Reluctance of consumers to use public facilities because they cannot provide much-there are frequent or permanent drug shortages and staff capacities and attitudes leave much to be desired

Public Health Sector

Causes:

• Staff often earn very low wages

• Lack of management authority at provider level because of employment legislation

• Lack of staff incentives

• Limited prospects for earning a living in a poor rural area and the limited living conditions

• The political influence of the middle classes

Health Worker Clinical Knowledge

% of correct answers MeanMedical officers (DG Heath) 61.2%Nurse 25.4%Medical assistant 42.3%Health assistant 46.0%FP medical officer (MCH) 59.6%Family welfare visitor 47.4%SACMO 40.8%Family welfare assistant 16.5%

CS OfficeUpazila - DG HealthUpazila DG FP

59%29%

73%67%61%

to receive allotment letters to have expenditure bills passed37%

% of respondents reporting need for speed payments

Quote from one sub-Saharan country

‘ The hospital is my farm, the patients are my sheep, how else would my family eat’

Proportion of service users by provider-Bdesh

» 2000 2003

• Unqualified 52% 60%

• Private qualified31% 27%

• Govt 17% 13%

Exercise

• In Nigeria what proportion of drugs sold in rural pharmacies are useless?

Do they get good value for money?

• They buy fake or dangerous drugs

• They buy the wrong dosage

• They buy from unskilled health workers

But….

Doctors not necessarily any better

Proportion of users with full explanation -Bdesh 2000 2003

• Govt 50% 44%

• Private qualified 71% 80%

• Unqualified 68% 73%

Cost ratio-Bdesh

• Unqualified 1

• Govt 2

• Private qualified 4

Biggest issue-Capacity

• Most Health ministries in low income countries have less capacity than a primary health care trust

• Dhaka (population 15million) has a public health dept of six doctors plus EHOs and admin staff

Exercise

• You are the World Bank task manager for the health sector in a low income Asian country. What do you see as the five most important issues that need to ( and can ) be addressed in the next five year health strategy?

Aid Instruments: Doing Good????

• G8 governments have a major commitment to improve health in poor and middle income countries:• emerging/growing diseases (TB, SARS, HIV/AIDS)• reducing poverty• 5 of the 8 MDGs are health related• world security

• Goal: 0.7% of GNI of OECD countries on aid (now average of 0.4%)

Aid• Aid transfers for health growing at 3% pa,now at

over US$5 billion pa

• Of this, US$1 billion is technical assistance

OECD, five yearmoving averages1978-98

International Development Targets/Millennium Development Goals

By 2015:

by 2/3 rate of inflation & child mortality

by ¾ the rate of maternal mortality

• attain universal access to reproductive health services

by 25% in HIV infection in 15-24 yr olds

Role of EDPs

• Focus on Poverty Reduction

• Focus on MDGs

• Sector Wide Approaches –SWAPs

• New Initiatives

Current focus of DPs

• Focus on poverty reduction through Poverty Reduction Strategies-PRSPs

• Move to Debt Relief

• Move to budget support monitored through PRSPs –moving upstream

• Harmonisation

?????? Aid lite

Sector Wide Approaches - SWAPs

EDPs shift from donors to investors

Elements include:– an agreed health strategy

– a medium term expenditure framework for the health sector which can deliver the strategy

– a sector investment plan which will deliver the strategy

– a financing mechanism which clearly shows government and EDP inputs

SWAp - definition

• All significant public funding for the sector supports a single sector policy and expenditure programme

• Under Government leadership• Common approaches adopted across the

sector by all funding parties• Progression towards relying on Government

procedures to disburse and account for all public expenditure, however funded

Criteria for a SWAP (1)

All of the following:• Comprehensive sector policy and strategy • Annual sector expenditure programme and

Medium Term Sectoral Expenditure Framework

• Donor coordination is government-led • Major donors provide support within the

agreed framework

Criteria for a SWAP (2)

At least one of the following:

• Significant number of donors committed to moving towards greater reliance on government financial and accountability systems

• Common approach by donors to implementation and management

How wide is sector wide?

Ideally includes • All activity, financing and participation in the sector• Civil society actions, e.g. in health

– insurance schemes

– employee health services

– cooperatives

– expenditures by private individuals

In reality• Most concerned primarily with the public sector

A new way of doing business

• Partnership between government and donors in all stages of strategic development, management and assessment

• Donor-led to country-led development • Donors and government accept joint accountability and

relinquish attribution • Bilateral arrangements managed collectively according

to an agreed programme • Environment of increasing mutual trust leading to higher

levels of financial and institutional risk

Threats / challenges to the process (1)

• Vision may rest with only few individuals

• Stakeholders in existing system v reformers

• Institutional set up at sector level not conducive to new ways of working

• Productive sectors very complex

• Meaningful participation of the poor

Threats / challenges to the process (2)

• Multiple stakeholders; ministries; sections of ministries

• Donor competitiveness/need for attribution

• Pressures of donors “spending horizons”

• Dependency of sector reforms on wider public sector reforms overall

• Complexity of decentralisation process

Problems of drawing in NGOs and Private Sector

• No single voice • Inadequate information access • Not influential at policy level • Governments unreceptive • SWAP as threat • Views on modalities mixed • Not all CSOs are interested • Independent players • Private sector seen as body to be regulated

SWAps, PRSs, and Direct Budget Support

• SWAp as a process in which….– Gradual increase in the share of funds

transferred to government management– Moving toward sector budget support

• In the context of national poverty reduction programmes: – move towards general budget support – with or without notional earmarking to sectors

Focus on DPs

• On public sector

• However key issue is how to get better value for the out of pocket expenditure by the poor

• Fashion- centre need to come up with new initiatives

• Failure of health systems to deliver

• Small pox programme success

• EPI people came out of the cupboard

• Very attractive to politicians

• Very attractive to other funders

Global Initiatives for health

Global Health Partnerships

• GFATM

• GAVI

• RBM

• GPEP

• Stop TB partnership

• MCT plus

• Healthy newborn partnership

Global Initiatives for health

• GAIN

• Access to medicines

• Grand challenges in global health programme

• DNDi

• MVI

• MMV

Global Initiatives for health

• TB alliance

• IAVI

Financing Proposals

• International Finance Facility for immunisation – IFFIm

• International Finance Facility –IFF

• Advance Market Commitment for Vaccines-AMCs-also called APCs

Harmonisation

• Global • Paris meeting• High Level Forum• UN Millennium review summit• G8• G7• APF• Etc etc etc

Fiscal Space

• IMF v Aid Agencies

• MoF vMoH

• Move to off budget finance

• ? Back to projects

Capacity/Human Resources

• HR Commision

• TA pot at country level –WB v WHO

Aid flows to the private sectorBILATERAL DONORS

MultilateralAgencies

GlobalHealth Initiatives

InternationalNGOs National

Government

THE POOR

Private Health Providers (For Profit and NFP)

Non-Govintermediaries

Insurance,Poverty andSocial Funds

LocalGovernment

HealthMinistry

Service contractor reimbursement

Contracts andsubsidies

Contracts,subsidies,regulation training

Sector budgetsupport andprogrammes

Programmes

Generalbudgetsupport

Programme loans andbudget support

Projects directlywith private sector

Key issues

• We will not hit the MDGs in poor countries or for the poor in middle income ones

• We are not getting the public sector working either at the policy or delivery levels

• We are ignoring the private sector

• International aid strategies are in a mess

So what do we recommend

• Recognise public sector capacity very limited

• Augment with TA until it is sufficient

• Advocate for large pay supplement for senior MoH staff

• Swaps not budget support

• Global initiatives to work through Swaps

So what do we recommend -2

• Recognition of role and size of private finance and delivery

• Recognise plurality of providers i.e OECD health market mechanisms wont apply

• Scale up proven pp initiatives• Reorientate MOHs for role of enabler and

contractor AS WELL as running public sector

So what do we recommend -3

Understand health seeking behaviour by the poor

Understand motivation of health providers

Useful Websites

• www.who.int

• www.worldbank.org

• www.hlspinstitute.org

• www.dfidhealthrc.org

Some tools for getting better value for out of pocket expenditure

Exercise

• You are a consultant employed by the UK DFID to work with a health ministry in a low income countries. Name five interventions you should advise which will help the poor get better value for their out of pocket expenditure

Supply side approaches

Provider

Service users

Managing Agency

Funder

Provider

Supply AND demand

• Most promising results achieved through combination of S & D initiatives

• Supply side failures: capture of subsidies by rich, weak incentives and low demand

• Demand side requires quality assured provision

• All approaches require capacity for management and QA, willing providers, mechanisms for governance and accountability, an informed and empowered demand side

Contracting

• Use of public finance to procure specified health services from private providers for consumers at agreed standards, amounts and prices

• Evidence for increasing access, quality and reducing costs for poor, although data limited

• Contract can specify and monitor service delivery to the poor (but requires workable identifying mechanism or geographical targeting)

Approach to targeting the poor Examples Providing general subsidy for services in areas where public services are not available (or to replace public provision), assuming the poor will benefit alongside others.

Cambodia, Guatemala and Uganda - contracts with NGO providers.

Geographic targeting – where there are high concentrations of poor residents eg. urban slums

Bangladesh - urban slums project.

Subsidising services for those identified as poor – which requires a mechanism to identify those eligible eg. social security system; individual or household characteristics.

Georgia – cardiac surgery; Surinam - health cards for the poor (but contracts not used).

Subsidising specific services related to illnesses that affect the poor or vulnerable target groups.

Nicaragua – vouchers for sex workers.

Contracting for pro-poor services

Contracting: issues

• Sustainability/scope – additional funds where governments unable to out source

• Public sector and professional resistance

• Institutional capacity to contract and be contracted

• Supportive public reform environment

• Technical capacity for QA e.g monitoring and accreditation scheme

Continuum for marketing products and services

Social marketing

Social franchising

Essential commodities requiring very limited technical expertise for distribution and use

Essential and monitorable services(with commodities) requiring technical expertise for provision

Limited need for QA, monitoring, training and regulatory controls

Substantial need for QA, monitoring, training and regulatory controls

Social franchising

• Limited evidence for impact on poor – main market in low income urban areas

• Where a branded (subsidised) model for service delivery is scaled up by the franchiser contracting with multiple providers in the private formal sector to offer quality assured and affordable services to consumers

• Reproductive health care and increasingly TB and other treatment services (with defined and monitorable protocols)

• Can be combined with voucher or other incentive method to increase take-up and compliance by poor

greenstar, Pakistan 1995

Fractional model – SF only part of basic RH services and branded products offered

Urban and peri-urban consumers

CFW drug shops, Kenya 2000

Full model – only CFW approved services and products

Supply essential drugs at controlled prices and counselling protocol

100,000 patients pa

Well-Family, Philippines 1997

FP and MCH services in urban areas

Franchisees - 12, 000 trained qualified private providers – focus on general practice, chemists and FHVs

No joining fee

Franchisees – 56 shops run by community health workers, plus 4 nurse run clinics

Low level of system subsidy, apart from HQ start-up costs

Franchisees – 205 clinics, with registered and practising midwives

Subsidised RH commodities, new medical techniques, training in IUDs, hormonals. Management support, advertising, peer interaction

Loans provided for start-up capital and training, provision of low priced commodities, ongoing management support, peer interaction

Lease of equipment, reduced price supplies. Training in FP, communication skills, counselling, business planning, and reporting.

Advertising

Formal twice yearly monitoring, mystery clients

Monitoring and product delivery combined monthly

Regular reporting and surprise inspections

Monitoring by regional franchisor

Greenstar is considering exclusive territories, membership fee and removing franchisees failing to meet standards

CFW grants exclusive territories, charge a management fee, and licences are revoked for poor performers

Well Family charges fees for management and additional training, and poor performers are removed from network

Factors for SF success

• Need basic market economy - well positioned private providers, and consumers able to pay

• Incentives for franchisees to join (products, market etc), plus willingness to invest e.g loan payments or capital

• Sufficient monitoring capacity, referral system, subsidy for poor, well defined protocol, and quality assured supply of drugs etc

• Need contracting and regulatory legislation in place, marketing of sensitive products

• Design to fill gaps in market – location, quality or affordability

Social franchising: issues

• Potential for public sector financing of quality health care by for-profit providers, without high infrastructure costs of direct provision

• Subsidy usually for non-profit franchisor’s costs, but can include subsidy/incentive to serve poor

• Positive impact on wider market – decrease prices/improve quality

Social marketing

• Where the commercial private sector is engaged in supply and distribution of branded (subsidised) commodities, and in increasing informed consumer demand and behaviour change

• Reproductive and sexual health, drugs, ITNs

• Significant results for vulnerable low income groups at reasonable cost, but weak comparative and impact data

• Two models – ‘own brand’ and manufacturer’s: feasibility, subsidy required and other inputs depend on context and time of market intervention.

• Public sector versus NGO/community versus commercial distribution?

Social marketing: issues

• Policy options: subsidy to support overall market development plus strategies to support the poor OR subsidise specific products and distribution for those with lower purchasing power

• Growing evidence for role of market segmentation and cross-subsidy to finance lower prices to the poor.

• Role of total or whole market approach – market segment analysis to allocate provider role and product subsidy/price/brand according to reach and competency

• Supports government stewardship role alongside earmarked or project funding for private sector

2000

2002

2007

2005

SMITN 2 (ITN Promotion, distribution

and advocacy)

SmartNets (Supportive commercial

alliances to expand markets)

KINET & other ITN projects

MOH Unit funded Design & financing

MOH ITNs Unit operational

Unit accompanies phasing out of projects.

New issues, evaluation & monitoring. Continued demand creation

Market maturing

Market mature

SmartNets 2 (Exit phase)

Advocacy, technical support, interactions

private sector, contracting of activities

Market Forming

Growing Commercial Market Shrinking Social Market

Coordination by MOH National ITNs Cell National Malaria Control Programme

Total Market Approach to ITNs in Tanzania

Regulation

• Mechanisms to influence provider and insurer behaviour in the market e.g minimum entry standards, self regulation and consumer protection

• Approach needs to be suited to highly fragmented and pluralistic system, dual service provision etc

• Most countries have basic system but very weak capacity and high corruption levels – role for consumer monitoring and advocacy, and incentives for self regulation across P&P sectors

• Regulation can prevent private sector engagement e.g semi-qualified providers

• Low levels of donor investment but TA can be effective at design stage

Unlicensed providers

• Health care systems in poor countries are pluralistic

• Unlicensed providers/drugs account for the majority of household health expenditure

• No quality control –significant proportion of drugs sold are fake

• Evidence from small scale studies that consumer education, training of providers and pre-packaged drugs work

Demand side approaches - vouchers

Funding Agency

Implementing Agency

Health Care Provider

Health Care Provider target users

vouchers

►

vouchers

voucherscash payment

Demand side approaches – pooling purchasing power

Funding Agency

Health Care Provider

Health Care Provider

Insurance Payments

Exemption mechanisms for target groupsContract / norms and standards

Purchasing Agency

Demand side financing: vouchers

• Demand side financing (DSF) is ‘a means of transferring purchasing power to specified consumers for the purchase of socially beneficial goods and services from a range of accredited public and private providers’

• Vouchers are non cash transfers for purchase of specified goods or services – limited experience in the health sector

• Most effective where an easily defined population has a predictable need for specified, non complex and low cost services

• Pregnant women, at high risk of STIs, TB and malaria patients, chronic illness and disabilities, e.g KfW project for rehab. services for disabled war veterans, Rwanda

Vouchers cont.

• Impact on poor, plus wider public health benefits, can be significant, but at high costs (e.g Nicaragua STI unit cost of $5).

• Role in reaching the poor in social marketing and franchising projects e.g Tanzania national ITN plan includes a voucher scheme for pregnant women and children (public sector distribution, private sector distribution)

• Similar system requirements to supply side interventions – e.g voucher management agency, provider contracts/reimbursement, referral mechanism and quality assurance mechanisms

Project, country Health impact Impact on poor Comments

ITNs for low income women, Tanzania

Voucher subsidy

Some impact , hard to attribute

Co-payment deterred the very poor

Some leakage to male household members

Poverty targeting or increased subsidy required

STI treatment for sex workers, Nicaragua

Voucher

Positive affect on behaviour and STI rates

Assumed most were poor.

Leakage to other users not considered a problem given nature of service

MCH vouchers for low income pregnant women, Yunnan, China

Positive affect on behaviour

Effect concentrated among poor

World Bank, ongoing evaluation

Limited cash transfer for priority health services to poor households

Positive affect on service utilisation and health indicators

Well developed household registration system

Successful scale up, to 20% of population, 21 million beneficiaries

Some mis-targeting but less than alternative methods

Cash subsidies to pregnant women for institutional delivery, AP, India

No data, poorly reported

Targeting poor women only

Informal payments and other costs reduce impact

Any public or private hospital

Reproductive and child health care, Kolkata, India

Voucher subsidy

Increased demand for services

Assumed most poor. (Slum based providers)

Insurance and micro-credit

• Mechanisms to reduce financial risk of illness for households by pooling costs, third party purchasing and risk-sharing

• Pre-payment schemes: social, community and commercial health insurance

• Post-payment schemes: loan to cover illness costs, to be re-paid over time

• Require selected provider contracts for reimbursement and can leverage quality improvement and consumer demand

Insurance cont.

• SHI schemes focus on the formal, tax paying sector and therefore excludes the poor

• Evidence that SHI is inequitable for the non-covered - increases costs for the public sector, and can attract resources to facilities serving the insured (e.g Medicare, Philippines)

• Commercial HI – likely to have zero or negative impact on coverage of the poor

Community health insurance

• CHI provides protection for people in the informal sector – small scale, voluntary, local control, income related or flat premiums

• Flexible payment terms mean low and variable incomes can be members (e.g harvest time) but poorest require additional subsidy for exemption

• Well managed schemes tend to be sustainable, but demanding on capacity

Micro credit

• Unsecured personal loans

• In theory can reach poor but not very poor

• Can be scaled up relatively easily

• May increase household expenditure on health

• Not usually ‘improved purchasing’ capacity

Way forward

• Mixture of schemes

• Social insurance for the formal sector including government employees

• Community insurance/micro credit schemes for the informal sector

But……

• Need to have capacity to be informed purchasers

• Need financial management capacity

• May need government/Aid agency subsidies for very poor

• Need reinsurance links

www.hlsp.org

www.hlspinstitute.org

www.healthsystemsrc.org

www.dfidhealthrc.org