Introduction: Major challenges for health financing

1. Introduction: Major challenges for health financing

2. The Elements of Health System Management Service Provision Resource Inputs (trained staff,drugs, knowledge, facilities,etc.) Organization (ministry, hospitals, etc.) Financial support

3. 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:

4. 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. Health Sector Reform -2-

5. Need versus Demand

8. 0.3 45000 population 65+ (%) Japan population 65+ (%) Korea 40000 population 65+ (%) Thailand 0.25 population 65+ (%) Sri Lanka 35000 GNP per capita, Japan GNP per capita, Korea GNP per capita, Thailand 0.2 30000 GNP per capita, Sri Lanka 25000 0.15 20000 0.1 15000 10000 0.05 5000 0 0 Year:Japan Korea 1950 1910 1940 1950 1960 1920 1960 1970 1930 1980 1970 1940 1990 1980 1950 1990 2000 1960 2010 1970 2000 2020 2010 1980 2030 2020 1990 2040 2030 2000 2050 2040 2010 Thailand / Sri Lanka Aging and Economic Growth

9. 100 80 60 Total Government Revenues as % GDP 40 20 0 100,000 100 1,000 10,000 Per capita GDP $ (Log scale) Source: IMF data 2000 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 regressive

10. 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

11. Major challenges for health financing • Epidemiological transition • Financial constraints • Allocative inefficiency of health sector resources • Lack of management capacity

12. Recurrent Costs Problems in Developing Countries

13. The International Flow of Development Resources (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)

14. 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 Localcurrency portion

15. 8 Recurrent Resource Gap (by Y.Uchida) 7 Shortage in recurrent budget 6 5 User Fees 4 Actual Recurrent Budget 3 2 Development (Capital ) Budget 1 0 2000 2001 2002 2003 2004

16. 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

17. external assistance ・Development (capital) budget + recurrent budget ・Foreign currency portion + local currency portion A mismatchbetween capital investment* and recurrent financial capacity (*one-off investment)

18. 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  

19.  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

20. 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

21. Balance Sheet: B/S

22. Aid Coordination and Resource Management

23. Coordination of external resources is central to the development agenda in many countries. The following growing recognitions: Unmanageable proliferation of projects, policies and demands on sector ministries

24. Unmanageable proliferation of projects, policies and demands on sector ministries Fragmented (overlapped) sector activities = projectisation Little resource fungiblility Several technical specifications Some disbursement rules and financial years among donors Enormous works with donors’ missions – heavy administrative burden Parallel management system

25. Parallel Management System  Excessive separate systems created great confusion. The disbursement and accounting arrangements made financial control very difficult and rendered it impossible to gain an overview of the resources employed or to analyse expenditures. The fragmentation of control over civil works initiatives hindered the development of rational capital planning policies and paid inadequate attention to the aggregate recurrent cost consequences.

26. Fragmented sector activities Little resource fungiblility Several technical specifications A few different disbursement rules and financial years Enormous works with donors’ mission Asymmetric power relationships Informal networking between key policymakers /managers in both donor and recipient organizations Unmanageable proliferation of projects, policies and demands on sector ministries

27. 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

28. 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 .

29. Definition of SWAps (sector-wide approaches): All significant public funding for the sector supportsa 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.

30. 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)