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

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 n increasing the level of resources available n 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 in Under-5 Mortality: Select Countries

Health financing mixes 11 Sources: Wagstaff, van Doorslaer, et al. (1998), Parker and Pier (1999), Lasprilla et al. (1999), Theodore et al. (1999), Wagstaff, van Doorslaer, Watanabe and Xu (1999)

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

Category1991/ / / / /98 Primary Care:  Service Delivery  Support Services  National Health Programmes Sub Total Health Policy and Management Hospitals[1][1] Traditional Medicine TOTAL Trends in Budget Allocation Shares by Major Components-Nepal

Orissa India: who benefits from publicly funded hospitals

Public Health Sector Particular 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

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 » Unqualified52% 60% Private qualified31% 27% Govt17% 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 Govt50% 44% Private qualified 71% 80% Unqualified68% 73%

Cost ratio-Bdesh Unqualified1 Govt2 Private qualified4

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 year moving averages

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 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 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

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)

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

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 target users vouchers ► cash payment

Demand side approaches – pooling purchasing power Funding Agency 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, countryHealth impactImpact on poorComments 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