Leaking money away from health programs

November 22, 2010 § Leave a comment

Every time I read an article on global health financing or listen to a podcast or read a journal the case for additional funding for health programs is made. The famous Commission on Macroeconomics and Health stated in a report that for Developing Nations to fulfill their commitments to the Millennium Development goals there is a need for more funding than is currently available. They call for more external funding and for governments to increase their health expenditures. This seems like a valid point. However, while it is obvious that more capital would be needed for scaling up health services, it is also important to make the case for more efficient and effective use of already available funds.

Health systems are financed differently in each context. However, there are general financing sources that can be found in each system albeit to different degrees. Financing sources such as governments, private citizens, corporations and finally external funders all come together to pool resources for the system. Each source has distinctive characteristics and trends.

It is important that the resources gathered for health reach the right people at the right time. When this fails to happen, this means the system suffers from allocative inefficiences.

Health system leakages results when the allocated resources do not translate into actual health services for the population.  The causes of health system leakages are thus:

  • Embezzlement and theft from budgets or user-fee revenues
  • Corruption in Procurement
  • Corruption in payment systems
  • Corruption in pharmaceutical supply chain
  • Corruption at the point of health service delivery
  • Unclear resource allocation guidance
  • Poor accountability mechanisms

The leakage in health sector spending is massive and serves as the main source of inefficiency in expenditure. It is inefficient for monies budgeted for health to not reach the population. The report further claimed “a problem closely related to low-budget execution rates is that of long delays in releasing funds for activities at the operational levels such as districts and health institutions”. The insidious diversion of funds or delay of revenue is extremely dangerous and will likely lead to terrible health outcomes for the people.

Building the capacity of health systems must include increasing the strategies necessary to remove inefficiencies and encourage institutional transparency are important. This can be achieved through the use of tools such public expenditure management tools and National health accounts to track both the revenue and expenditure within the sector. It is absolutely necessary to ensure that resources are allowed to reach the operational levels of service delivery by enforcing institutional transparency by removing all the various inefficiencies in developing Countries. If we fail in this, people will die and that will be our responsibility.

The African Union report released at the 4th session of the Conference of Ministers of health claimed that an estimate of only “50% of funds earmarked for the health sector is actually received and transformed into direct services for the people who need it the most”.

This should be one of the priorities of all health systems. The government must create mechanisms that will make it impossible to divert health funds to other purposes. Mechanisms such as FOI lawsPublic Expenditure Management tools and regular audit of departments of health can help.

I hope to see more of these strategies implemented all over sub-Saharan Africa in the future. This is truly the way forward.

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