Strengthening the Geographical Resource Allocations for the Health Sector in Tanzania

Jamie Boex and Selemani Omari

Inception Mission Debriefing

January 18, 2013

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Presentation Overview

1. Background of the assignment

2. Issues for strengthening the equity and efficiency of resource allocations for the health sector

3. Options for strengthening the equity and efficiency of resource allocations

4. Next steps

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Study objective (1)

“The objective of the consultancy is to undertake a thorough review both of the design and use of different resource allocation formulae within the health sector, in the context of broader government policy, and to recommend changes where necessary….”

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Study objective (2)

Main funding flows to be looked at:

1.Health Basket Fund Grant

2.Block Grant – Personal Emoluments

3.Block Grant – Other Charges

4.Allocation of resources for drugs and medical supplies

5.Health sector development expenditures (MMAM / HSDG)

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The big picture: local public health expenditures

Source: http://www.localpublicsector.org/profiles/tza0910.htmLG = local government, LPS = local public sector

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A short history of health sector allocations in Tanzania

• Prior to 2004, HBF allocated $0.50 per person to LGAs; Government OC was discretionary allocation

• Introduction of current formula in 2004/05:– 70% in proportion to population– 10% in proportion to poverty– 10% in proportion to Under Five Mortality– 10% in proportion to medical vehicle route

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Legal basis: Local Government Finances Act

“There shall be paid annually to [each local] authority by way of block grants from the public revenue of the United Republic the following amounts, for which payment there shall be no further authorization other than this section, such sum as the Minister [responsible for local government] may after consultation with the Minister responsible for finance, determine as being the cost to be incurred by the [local] authority for development and maintenance of services particulary education, health, water, roads and agriculture.”“Payment of block grants … may vary from one local authority to another depending on the grades and standards as may be prescribed by the Minister [responsible for local government].”

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The political economy of health sector allocations in Tanzania

• Original formula agreed after extensive dialogue between MOHSW, MOFEA and PMO-RALG

• HBF allocations annually prepared according to formula in consultation by MOHSW and PMO-RALG

• Prior to 2008/09, PMO-RALG prepared LGA Budget Guidelines, including formula-based OC allocations and formula-based LGDG

• From 2009/10, MOFEA prepares LGA allocations. PMO-RALG continues to prepare LGDG allocations

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Context for strengthening the geographic resource allocations

• Health sector formula has been objective, transparent and stable

• Data increasingly outdated• Adherence is variable (in part because

formula does not capture all needs or constraints)

• Tanzania’s economy and the focus of health policy are evolving over time

ISSUES

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Issues for strengthening the geographic resource allocations (1)

• Census population, service population and utilization

• Poverty and burden of disease (utilization)

• Cost variations in health service delivery

• Improving the provision of basic health services in under-staffed councils (“equity”)

ISSUES

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Issues for strengthening the geographic resource allocations (2)

• Stimulating performance of the facility-level in delivering services

• Council performance (management performance; budget execution)

• Health infrastructure needs

• Resources for local health administration

• Councils with extra-ordinary needs

ISSUES

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Options for improving resource allocations – PE

• In 2004, expectation was that block grant formula would be applied to PE and OC together

• Use formula-based measure of staffing needs as guide to inform the allocation of staff and PE (prioritizing additional PE where the needs are the greatest)

• Problem is not finance: Need incentives, improved motivation and other administrative mechanisms for reducing staff disparities

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Options for improving resource allocations – OC & HBF (1)

Options to explore:•Updating data for existing windows, no change in formula•Shift more weight within formula on poverty, BoD, remoteness – pros and cons•Replace census population with estimated service population, taking into account differential reliance on private health care options in urban and rural

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Options for improving resource allocations – OC & HBF (2)

• Small fixed amount to account for fixed costs• Consider addition of window that aims to improve

health services in under-staffed councils (“equity” or “service improvement”) – pros and cons

• Consider additional window for selected councils with extra-ordinary needs – pros and cons

• Consider implications of performance (both at council and facility level) on allocation of resources

• Should OC & HBF continue to follow the same formula?

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Options for improving resource allocations – Medicines

• Allocation of medicines and medical supplies for basic health services is now done using an allocation formula that is similar to main formula (70/15/15)

• Allocation of drugs to health facilities within district is done on based estimated service population of each facility

• Major improvement versus previous allocation pattern• Should this formula potentially be revised to mirror

changes in OC/HBF formula?

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Options for improving resource allocations – HSDG

• HSDG adopted the main health sector formula as interim measure

• Should HSDG focus on:– “Infrastructure gap” for those who have below-

average infrastructure?– “Infrastructure gap” based on “a dispensary in

every village”?– Health staff housing in under-staffed places?

OPTIO

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In what directions are we thinking about the main health sector formula (1)

• Many of the same issues that led to the current formula are still relevant today

• Updating the data for the existing formula would go along way to updating the allocation patterns

• Small fixed amount or replacing population with estimated service population might make the formula somewhat more pro-poor/pro-rural (without tipping the scales or relying excessively on weak data)

NEXT STEPS

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In what directions are we thinking about the main health sector formula (2)

• It would be good to maintain the same formula for OC and HBF

• Extra-ordinary costs faced by some councils are reasonable to include in the allocation formula (but needs to be through an objective and transparent top-up)

• Equity or improving service delivery: What interventions are in place to ensure that increasing OC for under-served councils (in terms of health staff) will result in improved service delivery? Are top-up allowances for remoteness –as separate from performance- acceptable to government?

NEXT STEPS

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In what directions are we thinking about the main health sector formula (3)

• Performance-based funding (together with results-monitoring and in-line clinical mentoring) has the potential to unlock the potential of existing health staff

• Performance allocations to health facilities do not necessarily need to be incorporated into the formula- instead, councils may be directed to set aside a share for such performance incentives as part of the CCHPG

• Performance incentives for councils might be best provided through the development side of the budget– should be closely tied to (i) on-spending resources to the

facility-level; (ii) supporting/mentoring and strengthening front-line service delivery; (iii) reporting

NEXT STEPS

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Next steps

• How does the resultant formula fit with the desire of MOHSW to shift to a more performance-based funding system?

• Preparation of simulations for various options and finalization of report

• Need for MOHSW, PMO-RALG and MOFEA –informed and supported by selected other stakeholders- to convene a joint working session; analyze allocation options and reach policy consensus on revised health sector allocation formulas in accordance with the law

NEXT STEPS

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A final note

• Improving the geographic distrubution of health resources is only one piece of the puzzle

• Many of the obstacles to effective health service delivery have to do with administrative impedements:– Adjustment of salaries/allowances to conform to

market conditions– Problems with provision of medical supplies through

MSD; inability to flexibly procure supplies from market as needed

– Weak motivation, monitoring and mentoring– Inefficient paper reporting systems at facility level– Council-level capture of facility resources?

NEXT STEPS