Assessment of Health System Performance in Nepal

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AssessmentofHealthSystem PerformanceinNepal May2010 HSRSP Report No Assessment of Health System Performance in Nepal Ministry of Health and Population Government of Nepal May 2010 I N T E R
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AssessmentofHealthSystem PerformanceinNepal May2010 HSRSP Report No Assessment of Health System Performance in Nepal Ministry of Health and Population Government of Nepal May 2010 I N T E R N A T I O N A L HSRSP Publications 2010 Management of Lamjung District Community Hospital April 2010 Pro-Poor Health Care Policy Monitoring: Household Survey from 13 Districts April Assessing Implementation of Nepal s Free Health Care Policy: Third Trimester Health Facility Survey - December 2009 Overview of Public-Private Health Care Service Delivery in Nepal November 2009 Health System Performance November 2009 Examining the Impact of Nepal s Free Health Care Policy: Second Facility Survey Report June 2009 Examining the Impact of Nepal s Free Health Care Policy: First Facility Survey Report April 2009 Cost and Equity Implications of Public Financing for Health Services at District Hospitals April 2009 Human Resource Strategy Options for Safe Delivery January Ministry of Health and Population Budget Analysis December 2008 National Competitive Bidding Process for the Procurement of Goods November 2008 International Competitive Bidding Process for the Procurement of Goods November 2008 Health Sector Strategy (translated into Nepali) October 2008 Costing Study on Incentives Packages for Nepal s Health Care Professionals August 2008 Equity Analysis of Health Care Utilization and Outcomes August 2008 Financing Pro-poor Health Care in Nepal August 2008 State-Nonstate Partnerships in the Health Sector June 2008 Monitoring Strategy and Toolkit for Pro-poor Essential Health Care Services February 2008 Rapid Costing of the Government of Nepal s Free Health Care Policy January 2008 Bottleneck Study for Timely Disbursement of Funds January Rapid Costing of Delivery and Emergency Obstetric Care November 2007 Operationalising Social Inclusion in the Health Sector September 2007 Ministry of Health and Population Budget Analysis August 2007 Nepal s Experience of Advocacy and Lobbying to Increase the Health Sector Budget July 2007 Implications of the Government of Nepal s Free Health Care Policy June 2007 Equity Analysis in Resource Allocation to Districts June 2007 Please note that all of our publications may be downloaded from our website: This paper examines health system performance in Nepal based on efficiency and equity. Funding was provided by the U.K. Department for International Development (DFID) through the Health Sector Reform Support Programme. The paper was produced by Mr. Shiva Raj Adhikari, RTI International provided technical assistance. The opinions expressed herein are those of the author and do not necessarily reflect the views of DFID. The Health Sector Reform Support Programme (HSRSP) aims to provide policy and strategy support to the Ministry of Health and Population (MoHP) in implementing its sector reform agenda. Additional information on HSRSP is available by contacting: Dr. Rob Timmons, Team Leader, at: HSRSP, Ministry of Health and Population, P.O. Box 8975, EPC 535, Kathmandu, Nepal (telephone: ; fax: ; Suggested citation: RTI International, Health System Performance. Research Triangle Park, NC, USA. Table of Contents Key Points... iii Acronyms... iv I. Introduction Background Conceptual framework and data... 1 II. Efficiency analysis Technical Efficiency Regression analysis Cost Effectiveness Allocative efficiency... 9 III. Factors contributing to Health production function Health production function Determining factors for health production function Public health institutions Private health institutions Human resources Possible synergic effects in health production Changes to the health production function IV. Equity analysis Child health outcomes Child health outcomes by location Child health outcomes by socioeconomic status Child health outcomes by caste/ethnicity Maternal health outcomes Deliveries assisted by a skilled birth attendant Nutritional status Nutritional status by geographic region Nutritional status by socioeconomic group V. Utilization of Health Care Services i 5.1 Disparities in health care utilization Antenatal care utilization VI. Access to health care services Access to immunization VII. Conclusions References Appendix: ii Key Points Health is both a direct component of human well-being and a form of human capital that increases an individual s capabilities. Better health significantly contributes to economic development and to the reduction of poverty and income inequality Nepal has made significant progress in the health sector over the past decade. Health indicators such as life expectancy, infant/child mortality, and maternal mortality show gradual but steady improvement Despite these achievements, there are still large inequalities in health outputs and health outcomes across geographic regions and socioeconomic groups Increasing the real per capita income by 10 percent, will cause the IMR to fall by 7 percent, child mortality rate (CMR) by 11 percent, and life expectancy rate (LER) will increase by almost 2 percent. Increasing the ratio of health budget to total budget by 10 percent, CMR will decrease by 4.5 percent, and LER will increase by 0.6 percent. If we provide more services by increasing health services, for example increasing number of beds by 10 percent, IMR will fall by 4 percent and LER increase by 1 percent. The results show that in recent years, public health institutions have less capacity to improve intermediate health outputs because of a shortage of human resources, number of health institutions, and institution-related inputs Equity and efficiency are not in conflict. Improvement of institutional capacity in the delivery of health services (at least increasing the numbers of institutions and manpower in the institutions) can shift the health production function ensuring equity in health care services across regions. Allocation of resources according to needs can improve equity and efficiency of health outputs; however, a blanket policy will not have such a capacity Private providers play a complementary role in providing health services and contributing to improvement of health outcomes. Thus, this report includes not only public providers, but also how to make better use of private capacity to improve health outcomes Money matters to the health care system, but it does not guarantee efficient, equitable, and effective health care services. Health care financing has the power to reform health care delivery and provide incentives to providers to deliver efficient and effective health care iii Acronyms ANC BCG BP CBR CBS CMR DfID DPT EDP EPI GDP HBGDP HBTG HID HP IMR LER MMR MoF MoHP NDHS NFHS NNDP PHCC RPI SBA SHP SMP SP UNDP Ante-Natal Care Bacille Callmet-Guerin Population per Hospital Bed Crude Birth Rate Central Bureau of Statistics Child Mortality Rate Department for International Development (UK) Diphtheria, Pertussis, and Tetanus (vaccine) External Development Partner Extended Programme of Immunization Gross Domestic Product Public Expenditure on Health as percentage of GDP Public Expenditure on Health as percentage of Total Budget Health Care Institution Density Index Health Post Infant Mortality Rate Life Expectancy Rate Maternal Mortality Rate Ministry of Finance Ministry of Health and Population National Demographic Health Survey Nepal Family Health Survey Nepal National Demographic Survey Primary Health Care Centre Per Capita Public Expenditure on Health by GDP Skilled Birth Attendant Sub-Health Post Skilled Manpower Population per Service United Nations Development Programme iv I. Introduction 1.1 Background The central issue in health policy is how the health sector can contribute to a country s economic development and poverty reduction. There is a growing consensus that health is not merely a medical issue, but a matter of development in general. Thus, it is essential to understand the contribution the health sector makes to economic development and poverty reduction in order to more clearly justify the financial resources needed by the health sector. Expenditure on health is an investment because it provides financial returns in the future and helps to accumulate human capital. Health not only increases wellbeing and productivity, but raises per capita income as well. As overall health improves, one can expect to see a corresponding increase in the productive potential of individuals and higher levels of national income in the long run. Countries with high levels of health but low levels of income tend to experience relatively faster economic growth as their income adjusts (Jamison, 2006). Thus, health system investment brings real benefits to the society. Appropriate investment in the health system is an effective way of improving health and economic development. A health system assessment, therefore, is necessary to capture what is happening and what can be done better. This paper s objective is to assess health system performance within the framework of health production functions from the perspective of equity and efficiency. The health system can be defined as all organisations, institutions, and resources that are devoted to producing healthrelated goods and services and whose primary purpose is to improve health and well-being. This paper gathered information from various sources, including journal articles, published and unpublished research reports, various government documents, documents from external development partners (EDPs), reports from the Nepal National Demographic survey, and Department of Health Services annual reports from various years. The time series data for almost two decades were used to measure the efficiency of the health system. Econometric and statistical tools were used to better understand the efficiency of the health system, and cross-sectional data from different surveys was utilized to measure equity in the health system, which are then presented in various graphs and tables. 1.2 Conceptual framework and data This assessment of health system performance examines what is happening and what can be done better. Performance measures must reflect the various levels at which health systems act and interact to impact health outcomes. This requires defining a brief list of outcome indicators to measure the performance of the health system based on a conceptual framework. The conceptual framework offers a useful structure since it examines the health system by function and links these inputs to the outputs of the health system. 1 The performance of delivery function, illustrated below, has been assessed through intermediate objectives such as access to health services, coverage, institutional capacity (health care providers), and resources (health care expenditures). Ultimately, these delivery functions serve as inputs to the health system that produce health outcomes. The arrows indicate causal pathways from a particular element to intermediate outputs or final outputs/outcomes. Equity and efficiency are two criteria used in evaluating health care system that are directly related to inputs and outputs of health care production functions. The health production function examines the technical relationship between inputs and outputs, and takes into consideration a number of elements that influence the process of health production functions, including regulations, social values, policies, and programmes, among others, that jointly constitute the points at which the health system can be changed. Ultimately, all elements and relationships shown in the conceptual framework are instrumental to the performance assessment methodology. Figure 1.1: Health System Performance conceptual framework Equity Access Provider Coverage Resource Geographical Inputs Allocative Socioeconomic status Process Caste/ Ethnicity Outcomes Outputs Technical Cost effectiveness Child health (outcome) Maternal health (outcome) Nutrition (outcome) Utilization (output) Measuring Performance Efficiency 2 To develop an effective mechanism for resource allocation and utilization in the health sector, an analysis of the equity, efficiency, and effectiveness of resource allocation and utilization in the health sector is crucial. Simply stated, equity is the notion that greater resources and more services should be made available to the most vulnerable and needy groups; efficiency looks at the cost of inputs for each unit of output produced, and effectiveness is the extent to which actual performance compares with expected performance. A better health system advances both efficiency and equity. This analysis of the health system seeks to improves performance by providing a better understanding of the health system to aid in the design of an evidencebased policy. II. Efficiency analysis Efficiency is concerned with maximising health outcomes/outputs. As such, there are three types of efficiency: technical efficiency, cost effectiveness efficiency, and allocative efficiency, as stated in the conceptual framework. 2.1 Technical Efficiency The following is an analysis of the causal relationship between inputs and outputs in the health sector. In the health sector, inputs are both public and private expenditures, although public expenditure is the primary factor in determining health outcomes and shaping the health system in developing countries. Based on the available data, the input-output matrix, on the following page, shows the relationship between inputs - particularly expenditure in the health sector - and health outcomes for the last two decades (fiscal years 1989/90 to 2007/08). 3 Table 2.1 Input outcome matrix Input Fiscal Year Public Expenditure on Health GDP per As % of As % of capita total GDP 1995/96 Budget (HBGDP price (RPI) (HBTG) ) Infant mortality Rate (IMR) Child Mortality Rate (CMR) Outcome Crude Birth Rate (CBR) Life Expectancy Rate (LER) 1989/ / / / / / / / / / / / / / / / / / / Sources: Adhikari and Maskay (2004), MOHP et al, (2009), RTI, (2009) This matrix shows that health outcomes are increased as health inputs are increased. All inputs are shown in monetary terms. These physical inputs are measured by the ratio between the population and physical inputs. Extension of services (health service providers) in terms of population per service (hospitals, health centres, health posts, ayurvedic service centres, sub-health posts, and primary health centres [SP]), the population per hospital bed (BP) and population per supply of skilled manpower (SMP) are also used in this analysis. All inputs are independent variables that determine the level of health outcomes (dependent variables). The correlation coefficients between the dependent and independent variables show the relationships in the input-output model. 4 Table 2.2: Correlation coefficients of the given variables IMR 1 IMR CMR CBR LER RPI HBTG HBGDP SP BP SMP CMR 0.98** 1 CBR LER -0.93** -0.93** RPI -0.90** -0.91** ** 1 HBTG -0.70** -0.74** -0.48* 0.64** 0.58* 1 HBGDP SP 0.73** 0.75** * -0.55* -0.71** BP * SMP 0.90** 0.88** ** -0.73** -0.61** ** ** Significant at 1% level * Significant at 5 % level IMR has positive correlations with CMR, SP and SMP and negative correlations with LER, RPI, and HBTG at a 1 percent level of significance. Similarly, CMR has positive correlations with SP and SMP, and negative correlation with LER, RPI, and HBTG at a 1 percent level of significance. CBR is negatively correlated with only HBTG at a 5 percent level of significance. LER has a positive correlation with RPI, HBTG, SP and SMP. The coefficients that are significant at 1 percent or 5 percent have theoretically expected signs. The results suggest that there are expected relationships between the given variables. 2.2 Regression analysis The most popular method for estimating the causal relationships between health inputs and health outcomes was suggested by Filmer and Pritchett (1999), and Adhikari and Maskay (2004), and is used in this analysis. The following conceptual equation for the health production function is: This equation relates the dependent variable, M, which is taken to be either that of child morality rate, infant mortality rate, crude birth rate and life expectancy rate, to the log of mean per capita income, the log of the share of public health as a fraction of total government budget and the log of the share of public health as a fraction of GDP. X is the independent variable which control for a variety of other socio-economic factors. Regression analysis helps illustrate the causal relationships between input and outcome variables. 5 Table 2.3: Regression analysis and interpretations Dependent variable Real GDP per capita Ratio of health budget to total government budget Ratio of health budget to GDP Number of people served by the health care providers Number of people served by a bed Number of people served by skilled manpower IMR Interpretations (overall model significant at 1% level with high Squared (0.9684) Significant at 1% with expected sign Expected sign but not significant Expected sign but not significant Expected sign but not significant Expected sign and Significant at 10% Expected sign and Significant at 5% CBR Interpretations (overall model not significant) not significant not significant not significant not significant not significant not significant CMR Interpretations (overall model significant at 1% level with high Squared (0.9591) Significant at 1% with expected sign Expected sign and Significant at 10% Expected sign but not significant Expected sign but not significant Expected sign but not significant Expected sign but not significant LER Interpretations (overall model significant at 1% level with high Squared (0.9666) Significant at 1% with expected sign Expected sign and Significant at 10% not significant not significant Expected sign and Significant at 5% not significant The regression analysis demonstrates that government health expenditure has the power to change health outcomes, particularly CMR and life expectancy. However, it has a little power compared to per capita income. The elasticities of the given variables determine how sensitive the output variables are to changes to the input variables. Table 2.4: Elasticity of health outcomes with respect to health inputs Variable IMR CMR LER Real per capita income Ratio of health budget to government total budget Number of people served by a bed Note: This employs a double log model The coefficients of elasticity provide encouraging results for researchers and policymakers. If the real per capita GDP increases by 10 percent, it will decrease the IMR by almost 7 percent, CMR by 11 percent, and increase LER by almost 2 percent. Similarly, if we increase the ratio 6 of health budget to the total budget by 10 percent, CMR will decrease by 4.5 percent and LER will increase by 0.6 percent. If we increase the number of beds in hospitals, the number of people served by a bed will be reduced. If we reduce the ratio of people to total beds by 10 percent (in other words, increase the number of beds), it will reduce IMR by 4 percent and increase LER by 1 percent. The literature provides indicative results based on empirical evidence of how extra spending leads to changes in health outcomes. The World Bank has written about health expenditure effectiveness, In countries with good policies and institutions (strong property rights, absence of corruption, a good bureaucracy), an extra 10 percent of GDP in aid has been estimated to lead to a decline in infant mortality of 9 percent. By contrast, in countries in which policies are only average, the impact is just 4 percent. Where policies are bad, aid has no statistically significant effect on infant mortality, (Wagstaff and Claeson, 2004, page 56). Thus, the Nepalese health system can be expected to have average results; there is a lot of room for improvement. 2.3 Cost Effectiveness There are various methods to measures the cost effectiveness efficiency of health systems. It is determin
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