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Headlinne in 211 pt Graavur Conndensedd Bold Subheadline in 13pt Gravuur Condensed Regular Assessment of the Government Health Financing System in Nepal: Suggestions for Reform Imprint Published by: Deutsche
Headlinne in 211 pt Graavur Conndensedd Bold Subheadline in 13pt Gravuur Condensed Regular Assessment of the Government Health Financing System in Nepal: Suggestions for Reform Imprint Published by: Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH Health Sector Support Programme Department of Health Services Teku, Kathmandu Nepal T F E I Commissioned by: Authors: Lluis Vinyals i Torres Ghan Shyam Gautam Franziska Fuerst Chandra Mani Adhikari Edited by: Susan Sellars-Shrestha Photographs: GIZ Archives Designed and Printed by: Sigma General Offset Press Sanepa, lalitpur-2, Nepal T : Contents Acknowledgements Acronyms Executive Summary III V VII Chapter 1. Introduction 1-3 Background and rationale 1 Methodology 2 Terminology 2 Limitations 3 Structure of report 3 Chapter 2. Health Financing System in Nepal 4-12 Conceptual framework 4 Fund ows in the Nepali health nancing system 5 Collection: Where is the money for health coming from? 6 Pooling: Who manages the resources? 9 Purchasing: How are health services paid for? 9 Chapter 3. Analysis of the System Introduction 13 Limited scal space 14 Limited progressiveness of taxation system 17 Fragmented resource allocation 17 Passive purchasing 18 Challenges in reaching the poor 23 Output-based budgeting mechanisms yield results 27 Chapter 4. Reforming the System Key challenges 29 Creating a Social Health Protection Centre 31 Phase-wise implementation of the Social Health Protection Centre 38 Parallel processes in uencing reform 39 Policy decisions affecting reform 42 Preconditions for reform 44 Chapter 5. Conclusion and Recommendations Conclusion 46 Recommendations: Key reforms 47 Immediate steps 49 References Annexes I III Acronyms ANC CBHI DDC DfID D(P)HO DoHS FY GDP GIZ HDI HP MDG MoF MoHP NHEICC NHTC NHSP-IP NGO NPC NPR OPD ORC PHC PHCC PNC RTI SHP SHPC TB VDC WHO antenatal care community based health insurance district development committee Department for International Development district (public) health of ce Department of Health Services scal year gross domestic product Deutsche Gesellschaft für Internationale Zusammenarbeit Human Development Index health post Millennium Development Goal Ministry of Finance Ministry of Health and Population National Health Education, Information and Communication Centre National Health Training Centre Nepal Health Sector Programme Implementation Plan non-governmental organisation National Planning Commission Nepali rupees outpatient department Outreach Clinic primary health care primary health care centre postnatal care Research Triangle Institute social health protection Social Health Protection Centre tuberculosis village development committee World Health Organization V Executive Summary The Government of Nepal has shown a strong commitment to health, declaring the right to basic health services free of cost to every citizen in the Interim Constitution of The Ministry of Health and Population (MoHP) has introduced several social health protection interventions to increase citizens access to health care services and enhance their nancial protection from the risks associated with accessing such services. Past experience has shown that the expansion of social health protection needs to go hand-in-hand with improvements in the health nancing system in order to enhance equity, access and ef ciency in the health sector. In order to improve maternal health substantial funding was earmarked for service delivery and cash transfers given to mothers under the Safe Motherhood Programme (Aama Karyakram) 1. As part of this programme, the MoHP introduced a provider payment mechanism that links budget allocations to the actual delivery of services. These efforts have contributed to a substantial improvement in the production and utilisation of services and may have played an important role in bringing down maternal mortality rates. Building on these steps taken by the MoHP, this report aims to contribute to the reform process of the health nancing system to ensure social health protection for Nepalese citizens. It has a particular focus on purchasing mechanisms and makes recommendations on how to move towards better utilisation of resources and strategic purchasing. The report focuses on the government health nancing system in Nepal and explores ways to support the system to be more ef cient and equitable. The analysis follows the World Health Organization s three health nancing functions revenue collection, risk pooling and purchasing leading to the following assessment of the key challenges: The Government of Nepal has limited capacity to generate more resources on a substantial scale. The health nancing system has limited ability to address inequities and identify and protect the poor. There are inef ciencies in the system due to fragmented resource allocation. The Government of Nepal has limited power to negotiate the price and quality of services due to the practice of passive purchasing. The key reforms recommended in the report are as follows. 1. Improve access of the poor to speci ed services Access of the poor to speci ed health services, which are in theory being provided by the government for free, should be facilitated by allocating suf cient nancial resources and simplifying procedures for utilisation. The use of proxy indicators to identify bene ciaries, such as place of residence, type of disease or demographic pro le, while minimising bureaucratic steps, is needed to enhance access to services for the poor. Access can also be enhanced by increasing publicity about what people can expect from health facilities and how they can avail themselves of bene ts. VII 2. Merge funding arrangements for social health protection The merging of scattered funds under the proposed Social Health Protection Centre would help to allocate resources more ef ciently and simplify administrative and reporting procedures, thereby reducing the administrative costs of managing funds. The merging of vertical programme funding would end the current earmarking of funds at the district level, allowing district authorities to be more responsiveness to local needs. This merger should be incremental, with the rst phase focusing on clustering similar programmes and later gradually transferring them to the Social Health Protection Centre. Centralising funding arrangements would pave the way for strategic purchasing and facilitate the implementation of procedures to improve the access of the poor to health services. 3. Introduce strategic purchasing Government resources should be allocated where they have the most impact using budgets and reimbursements that mitigate the differences between rich and poor areas and that reward facilities that are performing well. The introduction of formulas to allocate budget resources could help to build a stronger link between the resources distributed and the performance of health facilities, taking into account local needs. Separate formulas could be used to pay for hospital services and primary health care services, which may help in allocating resources while promoting health system objectives at the same time. Value for money can be increased through the introduction of provider payment mechanisms that incentivise providers to scale up the production of services in an ef cient manner and improve quality. Nepal can build on its success stories, such as the output-based budgeting method that is being used to pay providers under the Safe Motherhood Programme. Other provider payment methods need to be explored to establish an explicit and transparent relationship between the resources allocated and the output produced. 1 Under the Safe Delivery Programme, operated since 2005, nancial incentives were given to mothers and health workers and user fees were waived in target districts. In 2009, the programme was expanded to the Safe Motherhood Programme and user fees were removed for all types of delivery. VIII Chapter 1 Introduction This chapter sets out the background and rational for this assessments of Nepal s health nancing system, as well as the methodology used and its limitations. Background and rationale Nepal is in a time of dynamic change including drafting a new constitution and, with it, restructuring the state. Discussions on reforming the health nancing system and expanding social health protection have gained momentum. The Ministry of Health and Population (MoHP) is developing a comprehensive health care nancing strategy (NHSP-II), which will set out the government s vision and strategy for expanding social health protection in Nepal. Over the past few years, the MoHP has embarked on a process to improve the health nancing system and expand social health protection to citizens through interventions such as the Free Health Services Programme (FHSP). Under this programme, a package of basic health services is being provided free of charge in all districts. The MoHP has also introduced other programmes and interventions, such as the Safe Motherhood Programme (Aama Karyakram) and the Screening and Treatment of Uterine Prolepses, to provide speci c health care services to the population. In 2005, the MoHP introduced the output-based allocation of resources for the rst time with the introduction of the Safe Delivery Incentive Programme (now the Safe Motherhood Programme). Through this mechanism, the MoHP is linking budget funds to desired outputs, rather than just nancing inputs. This payment mechanism has now been extended to other programmes and is proving successful. Alongside the introduction of these programmes, the central government budget for the health sector has increased as a percentage of the total budget. Funds for essential health care services (EHCS) as a share of the total MoHP budget have also increased. Consequently, the use of health services has gone up and health outcomes have improved. Nepal was recently honoured at the Millennium Development Goals (MDGs) review for its signi cant progress in decreasing maternal mortality rates. The country is on track to achieve most of the MDGs targets, particularly those related to health 1. The success of the Safe Motherhood Programme demonstrates how the provision of social health protection (in the form of free treatment and cash transfers) together with improvements in the health nancing system (the use of output-based budgeting to pay providers) can increase the utilisation of health services and improve health outcomes. The MoHP has started exploring ways to improve equity, access and ef ciency by redesigning the health nancing system with the support of external development partners such as the Department for International Development (DfID), Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), the World Health Organization (WHO) and the World Bank. In August 2010, the MoHP Assessment of the Government Health Financing System in Nepal: Suggestions for Reform 1 and GIZ developed several policy options ranging from improving the current system through ef ciency gains to establishing a national insurance scheme. These options are further elaborated on in a draft report currently being prepared for the MoHP and funded by WHO. Based on these ndings and ideas, the MoHP organised a workshop on health nancing and social health protection on 22 March The workshop was attended by MoHP of cials, representatives from other ministries and development partners. At this workshop participants agreed to improve the current system by creating a Social Health Protection Centre (SHPC) to bring existing social health protection interventions under one management system. The consolidation of existing scattered initiatives for social health protection (SHP) is considered to be a key to improving the current health nancing system. It will also enable the government to promote social health protection through ef ciency gains and engage in the active purchasing of health services, thereby ensuring better value for money. Building on this, and to support the MoHP in the reform process, this report provides an assessment of the government health nancing system in Nepal. It has a particular focus on purchasing mechanisms and makes recommendations as to how to move towards better utilisation of resources and strategic purchasing. The report touches brie y upon budgeting and planning processes, particularly on their strengths and weaknesses, as their general features are described in other documents in more detail 2. Methodology This review of the government health nancing system builds on existing studies 3 and ongoing discussions on the direction of reforms. It provides a rapid assessment of the different provider payment systems in use and identi es ways of improving social health protection in Nepal. The assessment relies on secondary information from various agencies and primary information gathered from interviews with key informants and consultations with stakeholders. Consultations were held with of cials from the MoHP, Department of Health Services (DoHS), Ministry of Finance (MoF), National Planning Commission (NPC), Financial Comptroller General Of ce (FCGO), and various district (public) health of ces (D[P]HOs), district development committees (DDCs), district treasury controller of ces (DTCOs), and village development committees (VDCs). The study team (consisting of an international consultant and GIZ staff) visited Banke, Surkhet and Dang districts from 23 to 28 March 2011 to gather data and interview key informants; they also met with of cials from Sindhupalchowk. Interviews were conducted at two government hospitals (regional and zonal), two primary health care centres (PHCCs), three district (public) health of ces and a community based health insurance (CBHI) scheme. The list of people met and consulted is provided in Annex H. Terminology For the purpose of this report, social health protection is de ned according to the common understanding of the Providing for Health (P4H) partners (Germany, France, the International Labour Organization, WHO and the World Bank) 4 as: a system based on pre-payment and nancial risk pooling that ensures equitable access to needed quality health services at affordable prices in which contributions to the system are based on capacity to pay and bene ts are based on need; and 2 Introduction a set of measures against ill health related cost of treatment, social distress, loss of productivity and loss of earnings due to inability to work 5. Accordingly, social health protection interventions are de ned as programmes and activities that offer nancial protection and are funded by prepaid pooled government resources. These can be either universal interventions, which are in principle accessible to everybody, or interventions targeted at certain population groups, which provide either in-kind bene ts (in the form of services and goods) or cash transfers or both. Funds to providers (such as hospital grants) that are used to provide unspeci ed services to patients are also included in this de nition. For a detailed list of social health protection interventions see Annexes B and C. Limitations This review is based on observations and interactions with a number of government of cials at the central level and in four districts (Banke, Surkhet, Dang, and Sindhupalchowk), providing a limited snapshot of the whole system. Secondary data was compiled from the Financial Management Information System and Annual Work Plan and Budget of the MoHP. Activity-wise expenditure data for health sector programmes are not available under the existing Financial Management Information System of the health sector; hence, the assessment is based on budgetary allocations. The total public health sector budget refers to the total budget of the MoHP in this report. Structure of report The report is structured as ve chapters. Chapter 1 deals with the background, rationale and methodology of the assessment. Chapter 2 outlines the conceptual framework of health nancing systems in general and describes the existing health nancing system in Nepal. Chapter 3 analyses the performance of the existing system in terms of what it is trying to achieve. Chapter 4 presents the key challenges that need to be overcome and discusses the direction of the suggested reforms including parallel processes and key health policy decisions that will affect any reforms. It also looks at some preconditions that need to be in place for the reforms to be successful. Chapter 5 makes some conclusions and proposes some recommendations and immediate next steps. 1 National Planning Commission; United Nations Country Team of Nepal (2010) Nepal Millennium Development Goals progress report Kathmandu: NPC, Government of Nepal. 2 National Council for Economic and Development Research (2010) Public expenditure review on health sector. Unpublished report of MoHP, Government of Nepal, Kathmandu; Ministry of Health and Population (2010c) Nepal Health Sector Programme. Audited nancial statement/ scal year 2008/09 (2065/066). Kathmandu: MoHP, Government of Nepal; RTI International (2008) Bottleneck study for the timely disbursement of funds. Research Triangle Park, NC, USA: RTI International. 3 GIZ; Ministry of Health and Population (2010) Nepal at the crossroads. Setting the stage for improved social health protection, Final report of a joint assessment of MoHP-GIZ. Kathmandu: Health Sector Support Programme, GIZ; World Bank (2010) Nepal: Public expenditure review. Washington, DC: World Bank; National Council for Economic and Development Research (2010) Op. cit. 4 Providing for Health (P4H) is an initiative established to implement decisions taken by the G8 summits in Gleneagles (2005), St Petersburg (2006), Heiligendamm (2007) and Toyako (2008) in support of strengthening health systems through social health protection for the whole population and particularly for the poor. 5 Adopted from WHO web site: Assessment of the Government Health Financing System in Nepal: Suggestions for Reform 3 Chapter 2 Health Financing System in Nepal This chapter outlines the conceptual framework of health nancing systems, including the three main health nancing functions and their characteristics. It also looks at fund ows in the Nepali health nancing system. Conceptual framework It is important to understand the main functions of a health nancing system and their interrelationships before looking at the systems working mechanisms. The three main functions of a health nancing system are the collection of funds, the pooling of these funds and the purchasing of services. These functions and their linkages with the population and stewardship role are illustrated in Figure 1. Figure 1: Conceptual framework of health nancing systems Stewardship of financing (governance, regulation and provision of information) Provision of services Purchasing of services Pooling of funds Collection of funds Health services Cost sharing/user fees Coverage Choice? Coverage Choice? Entitlement? Contributions The population Source: Adapted from Kutzin, J (2000) A descriptive framework for country-level analysis of health care nancing. Health Policy 56, Collection of funds According to WHO, the function of collection of funds deals with how nancial contributions to the health system are collected from different sources 1. For example, they may be collected by the government as taxes or by an insurance scheme from member contributions. The method used to collect the funds determines the fairness of the health nancing system. Some methods, such as direct taxes, through which the rich pay more than the poor, are considered fairer than other methods, such as fees for services (out-of-pocket expenditure), through which the rich and the poor pay the same for services based on use. 4 Health Financing System in Nepal Pooling of funds The function of pooling deals with how funds (revenue and contributions) are put together (in a pool)
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