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Introduction: Major challenges for health financing
The Elements of Health System
Management
Resource Inputs(trained staff,drugs, knowledge,
facilities,etc.)
Organization(ministry, hospitals, etc.)
Financial support
Service Provision
Health Sector Reform:
• Civil service and public sector reform
• Development in financing the social sector
• Managed-market health care reforms
• Development in epidemiology and health economics
Health Sector Reform -2-
• HSR occurs as part of changes in public sector reforms.
• Changes in health financing: the need to assess the advantages and disadvantages of user fees, community financing, voucher systems and different forms of insurance
• Traditional bureaucratic structures do not necessarily sufficient incentives to guarantee cost-effective or user-friendly services, neither are unregulated private markets capable of achieving the mix of objectives that health systems seek to satisfy.
Need versus Demand
0
10
20
30
40
50
60
70
80
90
diarrhea
pneumonia
accident
heart disease
cancer
AIDSestimated
AIDSreported
Aging and Economic Growth
1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
1940 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040
1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050
Year:Japan
Korea
Thailand / Sri Lanka
0
0.05
0.1
0.15
0.2
0.25
0.3
0
5000
10000
15000
20000
25000
30000
35000
40000
45000
population 65+ (%) Japanpopulation 65+ (%) Koreapopulation 65+ (%) Thailandpopulation 65+ (%) Sri LankaGNP per capita, JapanGNP per capita, KoreaGNP per capita, ThailandGNP per capita, Sri Lanka
Low-income Countries HaveWeak Capacity to Raise Revenues
• Governments often raise less than 20% of GDP in public revenues;
• The tax structure in many low-income countries is often regressiveTota
l G
overn
men
t R
even
ues a
s %
GD
P
0
20
40
60
80
100
Per capita GDP $ (Log scale)
10,000 100,0001,000100
Source: IMF data 2000
Epidemiological Changes
Nature of health care (quantity + quality)
Not necessarily all public goods
Higher service costs
Less and less passive acceptance of service
( Customers’ satisfaction, better quality of service)
Accountability to be sought after
Major challenges for health financing
Epidemiological transition
Financial constraints
Allocative inefficiency of health sector resources
Lack of management capacity
Recurrent Costs Problems in Developing Countries
(1) Private foreign investment• foreign direct investment
• foreign portfolio investment (stocks, bonds and notes)
(2) Public and private development assistance• bilateral and multilateral donor agencies
(grants and loans)• nongovernmental organizations (NGOs)
The International Flow of Development Resources
Government Budget 1. Development (Capital) Budget (資本予算)– Domestic Financing
– External Financing (development assistance, etc.)
2. Recurrent Budget (経常予算)– Domestic resources (tax, user fees)
Absorptive capacity ( 援助 の吸収能
力 )
Foreign currency portion
Local currency portion
Local currency portion
0
1
2
3
4
5
6
7
8
2000 2001 2002 2003 2004
Development(Capital ) Budget
Actual Recurrent Budget
Shortage in recurrent budget
User Fees
Recurrent Resource Gap
(by Y.Uchida)
Recurrent cost constraints threaten the productivity of past
investment
A mismatch between capital investment* and recurrent financial capacity
(*one-off investment)
“R”co-efficient: the ratio of recurrent expenditure to total investment outlay
District hospitals 0.33 every $1000 spent on the initial capital development of a district hospital results in $333 of expenditure per year
external assistance
・ Development (capital) budget + recurrent budget
・ Foreign currency portion + local currency portion
A mismatch between capital investment*and recurrent financial capacity (*one-off investment)
Symptoms of the recurrent cost problems
New facilities unable to function because of recurrent resources
Faculties supplied with equipment but no qualified staff to operate
Poorly maintained buildings, equipment, facilities, etc.
Transportation difficulties and immobile vehicle fleets caused by lack of spares, fuel, etc.
A large number of unfilled posts
The consequences of these
problems Reduced efficiency Reduced service quality/quantity Reduced confidence in public sector facilities A shortened lifespan for capital investments Low morale among staff with high turnover
Causes for the recurrent cost problems
Poor project design Weak planning, budgeting and resource mechanisms
( dual budgeting, PIP) Resource availability factors
(low per capita income, low growth rates, low savings rations, weak business sectors)
Weak management capacity
Balance Sheet: B/S
AssetsCurrent assets
(Short-term assets)
Fixed assets
(Long-term assets )
LiabilitiesCurrent Liabilities
Long-term Liabilities
Stockholders’ Equity
Aid Coordination
and
Resource Management
Coordination of external resources is central to the development agenda in many countries.
The following growing recognitions:The following growing recognitions:
Unmanageable proliferation of Unmanageable proliferation of projects, policies and demands projects, policies and demands on sector ministrieson sector ministries
Unmanageable proliferation of projects, Unmanageable proliferation of projects, policies and demands on sector policies and demands on sector
ministriesministries
Fragmented (overlapped) sector activities Fragmented (overlapped) sector activities = = projectisationprojectisation
Little resource fungiblilityLittle resource fungiblility
Several technical specificationsSeveral technical specifications
Some disbursement rules and financial years among donorsSome disbursement rules and financial years among donors
Enormous works with donors’ missions – heavy administrative Enormous works with donors’ missions – heavy administrative burdenburden
Parallel management system Parallel management system
Parallel Management System Parallel Management System
Excessive separate systemsExcessive separate systems created great confusion. The disbursement and created great confusion. The disbursement and
accounting arrangements made financial control very difficult and accounting arrangements made financial control very difficult and
rendered it impossible to gain an overview of the resources employed or rendered it impossible to gain an overview of the resources employed or
to analyse expenditures.to analyse expenditures.
The fragmentation of control over civil works initiativesThe fragmentation of control over civil works initiatives hindered the hindered the
development of rational capital planning policies and paid inadequate development of rational capital planning policies and paid inadequate
attention to the aggregate recurrent cost consequences.attention to the aggregate recurrent cost consequences.
Unmanageable proliferation of projects, Unmanageable proliferation of projects, policies and demands on sector ministriespolicies and demands on sector ministries
Fragmented sector activitiesFragmented sector activities
Little resource fungiblilityLittle resource fungiblility
Several technical Several technical specificationsspecifications
A few different disbursement A few different disbursement rules and financial yearsrules and financial years
Enormous works with donors’ Enormous works with donors’ missionmission
Asymmetric power relationships
Informal networking between key policymakers /managers in both donor and recipient organizations
Ugandan national health plans since 1986
• National Relief Plan 1986• Rehabilitation and Development Plan
1987• Ten Year National Health Plan 1990• Three Year National Health Plan
1992• National Plan of Action for Children
1992
SWAps (sector-wide approaches):
The concept of coordination, best compressed in the SWAps.
SWAps represents a next generation approach to aid, and set out to provide a broad framework within which all resources are coordinated in a coherent and well-managed way .
Definition of SWAps (sector-wide approaches):
All significant public funding for the sector
supports a single sector policy and
expenditure program, under Government
leadership, adopting common approaches
across the sector, so as to disburse and
account for all public expenditure.
SWAP Arrangements
Coordination mechanism:A steering committee: 1) A Code of Conduct which establishes principles and
mechanisms on which SWAp is to be based
2) Formulating and sharing a sector policy(a set of medium and long term performance indicators)
3) Allocation of development resources and technical assistance Basket Fund (pooling arrangement)