What countries need to consider in health financing transition

By Jenny Lei Ravelo 25 October 2016

Nurses in a maternity ward in Fiji. Photo by: Maggie Boyle / DFAT / CC BY

The Western Pacific region faces a multitude of public health issues that need attention: Noncommunicable diseases such as diabetes are rising, while communicable diseases such as HIV and tuberculosis remain persistent.

Against this backdrop of need is an aid landscape that’s shrinking, particularly for middle-income countries, and prompting a search for other funding sources. The South Pacific island nation of Fiji, for example, is currently looking at alternative sources of financing such as social impact bonds and public-private partnerships as it prepares to transition out of Global Fund support in 2017.

But how countries address the funding gap is just one part of the equation when it comes to trying to meet their health needs, argued experts at the World Health Organization during a recent session on how countries can strengthen their domestic financing for health at the U.N. aid agency’s regional office in Manila, Philippines.

“Strengthening domestic financing mechanisms is not just about getting more money, it is also about how to improve the way you’re doing things,” said Shin Young-soo, WHO regional director for Western Pacific.

In practice, this means countries need more integration and cost efficiencies within their health systems given the reality of tightening budgets. If they have separate drug procurement systems for tuberculosis and HIV, for example, a system could be developed to merge the two to cut down costs.

Like any transition, the task is not easy, but WHO has developed a framework it hopes will help guide countries in the region as they go about developing their strategies and plans.

The framework

The first key step for countries is to examine their whole health system architecture, looking at who is currently doing what, what health programs are being delivered and how are these programs currently funded and how effective they are. After that, countries can decide on their priorities.

“Sometimes you have to compromise, and take into consideration all local contexts, but you need to have a clear direction where you want to go,” said Xu Ke, WHO coordinator for health policy and financing in Western Pacific.

Once the direction is clear, countries can better see what activities they are able to integrate to achieve efficiency gains.

But implementation is often hard, so WHO has suggested a phased plan that will allow countries to assess and consider their fiscal situation, policies, institutional arrangements, and technical and managerial capacity. There’s no question that governments need to fill in the funding gap left by the phased out donor support, Xu said, but being aware of the government’s fiscal situation can help those in charge of the transition to better plan and manage expectations.

“Countries graduating from low income have steady economic growth, so that created a fiscal space. But we also need to see the public funding on all social sectors, not just health, [as we] consider the government’s fiscal situation. If you have very high debts, then that means you cannot use all the growth for the social sector funding,” Xu said.

Stakeholders also need to consider current policies and institutional arrangements.

“That’s really to change the way of doing things. Instead of you vertically running your program, you now have to better coordinate and integrate it. For example, you may not necessarily need a whole laboratory for each of the diseases,” Xu said.

She cautioned this can be one of the most difficult parts of the transition.

“You can see that’s a very sensitive issue … as there will be a lot of questions such as: ‘Does that mean I’m disappearing? Does that mean my program is disappearing?’” she said.

Lastly, they should ensure current expertise and capacities are not lost in the transition.

If governments are currently relying on international partners to finance the salaries of disease experts and community health workers for example, they have to find a way to ensure these expertise and capacities will not be lost when donor support ends.

A space for NGOs

There is also a debate on where nongovernmental organizations, which are often heavily reliant on external donor funding, fit in the transition discussion.

Xu said it’s not a question of whether they still fit in the picture, but rather what functions they perform and how those functions can be better organized.

A number of NGOs work through substitution whereby they provide direct health interventions in parallel with government services or in the absence of government intervention. This is the traditional way international partners have worked, said Nobuyuki Nishikiori, WHO coordinator for stop TB and leprosy elimination in Western Pacific.

“But we’d like to see it replaced more by technical assistance or system building support,” he told Devex.

Ideally, he said, all partners will work toward system building in the long-term, consistent with what the SDGs aim for: developing sustainable systems in each country, government or society so development can continue even without external assistance.

Making Markets Work is an online conversation to explore what’s being done to make global health care markets accessible to people at the base of the pyramid. Over 10 weeks, we will amplify the discussion around effective health financing, analyze key challenges blocking universal market access in the health care supply chain, and explore the key strategies to make markets more effective. Join us as we look at this important issue, and share your thoughts by tagging #MakingMarketsWork and @Devex.

About the author

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Jenny Lei Ravelo@JennyLeiRavelo

Jenny Lei Ravelo is a Devex senior reporter based in Manila. Since 2011, she has covered a wide range of development and humanitarian aid issues, from leadership and policy changes at DfID to the logistical and security impediments faced by international and local aid responders in disaster-prone and conflict-affected countries in Africa and Asia. Her interests include global health and the analysis of aid challenges and trends in sub-Saharan Africa.


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