103552 FINANCING THE FRONTLINE: AN ANALYTICAL REVIEW OF PROVINCIAL ADMINISTRATIONS' RURAL HEALTH EXPENDITURE 2006-2012 DISCUSSION PAPER SEPTEMBER 2015 Alan Cairns Xiaohui Hou FINANCING THE FRONTLINE IN PAPUA NEW GUINEA: An Analytical Review of Provincial Administrations’ Rural Health Expenditure 2006-2012 Alan Cairns & Xiaohui Hou September 2015 1 Health, Nutrition and Population (HNP) Discussion Paper This series is produced by the Health, Nutrition, and Population Global Practice. The papers in this series aim to provide a vehicle for publishing preliminary results on HNP topics to encourage discussion and debate. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations or to members of its Board of Executive Directors or the countries they represent. Citation and the use of material presented in this series should take into account this provisional character. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries For information regarding the HNP Discussion Paper Series, please contact the Editor, Martin Lutalo at mlutalo@worldbank.org or Erika Yanick at Eyanick@worldbank.org. RIGHTS AND PERMISSIONS The material in this work is subject to copyright. Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202- 522-2422; e-mail: pubrights@worldbank.org. © 2015 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433 All rights reserved. 2 Health, Nutrition and Population (HNP) Discussion Paper FINANCING THE FRONTLINE: An Analytical Review of Provincial Administrations’ Rural Health Expenditure 2006-2012 Alan Cairnsa Xiaohui Houb a Consultant, Health, Nutrition and Population Global Practice, World Bank. b Health, Nutrition and Population Global Practice, World Bank. Financial support for this work was received from the Australian Department of Foreign Affairs and Trade. Abstract: Financing the Frontline updates the expenditure analysis carried out in Below the Glass Floor (2013) and tests whether the spending patterns emerging in 2009 and 2010 in Papua New Guinea have been sustained or improved in 2011 and 2012. The review also supports a better understanding of the issues that confront frontline service delivery — such as the ambiguity of roles and responsibilities in some rural health functions — and proposes next steps. Concurrently, the National Department of Health performance information on facilities (from the National Health Information System) has been reviewed. The integration of the expenditure analysis, the NHIS performance information and the findings from the Promoting Effective Public Expenditure facility surveys will provide a rich source of information to help sharpen understanding and shape solutions. Keywords: Provincial spending, cash disbursements, frontline services, rural health, cash releases Disclaimer: The findings, interpretations and conclusions expressed in the paper are entirely those of the authors, and do not represent the views of the World Bank, its Executive Directors, or the countries they represent. Correspondence Details: Xiaohui Hou, World Bank, Sydney, Australia, xhou@worldbank.org. 3 4 Table of Contents ACKNOWLEDGMENTS .................................................................................................................................... 6 ABBREVIATIONS ............................................................................................................................................... 7 PREFACE ............................................................................................................................................................. 8 EXECUTIVE SUMMARY .................................................................................................................................. 9 Findings: National Level Support for Frontline Services in 2011 to 2012 ............................................ 9 Findings: Overviewing Provincial Support for Frontline Services ........................................................ 9 Findings: Provincial Spending Levels on the Frontline Activities in 2011 to 2012 .......................... 10 Recommendations and Next Steps ........................................................................................................ 11 INTRODUCTION .............................................................................................................................................. 12 Background ................................................................................................................................................ 12 Scope and Limitations of the Analysis .................................................................................................... 13 1: FINDINGS: THE ROLE OF THE NATIONAL LEVEL .......................................................................... 14 Assigning Responsibility ........................................................................................................................... 14 Delivering Timely Funding ........................................................................................................................ 17 3. FINDINGS: PROVINCIAL SPENDING ON FRONTLINE RURAL SERVICES .................................. 21 Rural Health Facility Operations and Integrated Health Patrols ......................................................... 21 The Distribution of Drugs and Medical Supplies ................................................................................... 26 The Transfer of Patients ........................................................................................................................... 28 The Provision of Clean Water .................................................................................................................. 30 Supervision................................................................................................................................................. 32 4. POLICY RECOMMENDATIONS AND NEXT STEPS ............................................................................ 34 Clarifying Responsibility: Identifying Who Does What ......................................................................... 34 Facility Maintenance: Finding a Sustainable Approach ....................................................................... 34 Aligning Funding: Are We Hitting the Target? ....................................................................................... 35 Issues Surrounding Provincial Prioritisation and National Transfers ................................................. 38 Developing System Capacity in Monitoring and Reporting ................................................................. 38 Linking Spending With Performance: Gaining New Insight ................................................................. 38 APPENDICES ..................................................................................................................................................... 39 Appendix 1: Frontline Spending Versus Cost Estimate Table and Explanatory Notes ................... 39 Appendix 2: The Analytical Methodology ............................................................................................... 42 Appendix 3: Explanatory Note on the NEFC’s PER Methodology...................................................... 43 Appendix 4: Health Funding Flows ......................................................................................................... 45 Appendix 5: Notes on Intergovernmental Financing Arrangements................................................... 46 Appendix 6: Relevant Questions ............................................................................................................. 47 GLOSSARY ........................................................................................................................................................ 50 5 ACKNOWLEDGMENTS This study was undertaken jointly by the World Bank, the Australian Department of Foreign Affairs and Trade (DFAT), and the National Economic and Fiscal Commission (NEFC). The World Bank coordinated and led the study under the Papua New Guinea Health Programmatic Analytical and Advisory Activities. Alan Cairns led the design of the conceptual framework, undertook the analytics and wrote the report under the task leadership of Xiaohui Hou (senior economist of World Bank and the Task Team Leader of Papua New Guinea Programmatic Health Analytical and Advisory Activities). Toomas Palu (Practice Manger, Health, Nutrition and Population Global Practice), Venki Sundararaman (Program Leader), Steffi Stallmeister (Country Manager, PNG), and Franz Drees Gross (Country Director of Timor-Leste, PNG and the Pacific Islands) provided the overall management guidance for this report. Sincere appreciation is extended to Mr. Hohora Suve, the Chairman and Chief Executive of the National Economic and Fiscal Commission, and staff in NEFC for their generous ongoing support that has involved the sharing of information, thoughtful feedback and cooperation at all stages; and to Secretary Pascoe Kase and Deputy Secretary Elva Lionel, of the National Department of Health and their staff for their ongoing support and insight. We would also like to extend our appreciation to Son Nam Nguyen (Lead Health Specialist, GHNDR) for providing invaluable comments to the earlier draft and to Sarah Harrison, Tasha Sinai and Kate Barker for their assistance. DFAT provided close oversight and valued contributions during all stages of the study. Sincere thanks to Lara Andrews and Alex Stephens. Financial support for this work was received from the Australian Department of Foreign Affairs and Trade. The author is grateful to the World Bank for publishing this report as an HNP Discussion Paper. 6 ABBREVIATIONS ARB Autonomous Region of Bougainville AusAID Australian Agency for International Development CoA Chart of Accounts CoS Cost of Services Study CPI Consumer Price Index DFF Direct Facility Funding DHQ District Headquarters (the district administrative offices) DPLGA Department of Provincial and Local Government Affairs DSG District Support Grant DSIP District Service Improvement Program FAD Function Assignment Determination GoPNG Government of Papua New Guinea GST Goods and Services Tax HFG Health Function Grant HSIP Health Sector Improvement Program IASRG Independent Annual Sector Review Group LLG Local Level Government MPA Minimum Priority Activity NCD National Capital District NDoH National Department of Health NDPM National Department of Planning and Monitoring NEFC National Economic and Fiscal Commission OIC Officer-in-charge PBM Provincial Budget Model PGAS PNG Government Accounting System PHA Provincial Health Authority PHQ Provincial Headquarters (the provincial administrative offices) PIP Public Investment Program PNG Papua New Guinea PSIP Provincial Support Improvement Program RIGFA Reform of Intergovernmental Financing Arrangements SSG Special Support Grant SWAP Sector wide Approach 7 PREFACE The review Below the Glass Floor (2013) delved below the surface to develop an understanding of what was happening with health service delivery at the frontline in Papua New Guinea. The review sought to establish whether the country’s intergovernmental financing arrangements, introduced in 2009, were beginning to support an improvement in the delivery of basic services to the rural majority through analysis of spending during the period 2006 to 2010. The findings from the 2009 and 2010 analysis were mixed. Issues at both the national and subnational levels were apparent. The transfer of operational funds, in the form of function grants, from the national level to the provincial level was unreliable. In broad terms, significant improvements in spending could be seen on facility operations, and perhaps on outreach patrols. However, the spending on other key activities such as: the distribution of drugs and medical supplies; the transfer of patients from rural facilities to provincial hospitals; the provision of clean water; as well as the supervision of rural facilities appeared alarmingly low. Below the Glass Floor was the beginning, as it helped establish the importance in adequately financing the frontline activities in rural heath. In 2014, a process of dissemination, engagement and consultation helped to test the initial analytical findings and develop a strategy that is dynamic and connects with other complimentary activities. While the tone of the recent PEPE publication of facility surveys is sobering,1 the strategy is to maintain momentum – to analyse, inform and engage. This review is the next step. Financing the Frontline updates the expenditure analysis and tests whether the spending patterns emerging in 2009 and 2010 have been sustained or improved in 2011 and 2012. The review also supports a better understanding of the issues that confront frontline service delivery, and proposes next steps. Concurrently, NDoH performance information on facilities (from the NHIS) has been reviewed. The integration of the expenditure analysis, the NHIS performance information and the findings from the PEPE facility surveys will provide a rich source of information to help sharpen understanding and shape solutions. 1 The Promoting Effective Public Expenditure (PEPE) project is a joint research initiative between the National Research Institute (NRI) of Papua New Guinea and the Australian National University (ANU). The project included a study of 142 rural health facilities. 8 EXECUTIVE SUMMARY Findings: National Level Support for Frontline Services in 2011 to 2012 The national level plays a vital role in supporting the delivery of frontline health services in rural areas. In particular, by providing an efficient transfer of funds to the right level that is both timely and predictable; and, promoting a clear understanding of functional responsibility between the levels of government and across non-government actors – such as churches. • The picture of variability in cash disbursement from Port Moresby to the provinces continued in 2011 and 2012. In 2011, 17 of the 18 provinces received 50 percent of their appropriations by February. In contrast, in 2012, no operational funds were transferred to support the frontline in January or February. • Certainty in cash disbursement is a prerequisite for improved service delivery. A standard cash release schedule has been proposed, discussed and agreed as sensible in many forums. Implementation has not occurred. • It is timely to have a working group review the assignment of rural health functions. Grey areas exist between the role of government and the role of non-government actors [such as churches]. The impact of the new Provincial Health Authority modality needs to be considered. Where necessary, adaptions, in the way functions are aligned, need to be integrated. Other questions exist around facility maintenance, outreach patrols, drug distribution, water supply and patient transfer. Findings: Overviewing Provincial Support for Frontline Services Table 1 creates a profile of aggregate spending to support frontline rural health activities by province. The table is ordered by frontline spending relative to cost. Those who spent the most relative to the cost estimate to delivery frontline services are at the top of the table. It also details the province’s funding base, and the estimated cost per head to deliver rural health services at the frontline. Seven provinces, representing 35 percent of the population, spend less than a third of what is estimated to be necessary. 2 Despite having high per capita costs, the Gulf and Manus provinces spend relatively higher amounts to support frontline rural health activities. Additional information is required to fully assess Milne Bay Province’s performance in 2012. 3 2This proportion excludes the National Capital District (NCD) and the Autonomous Region of Bougainville (ARB). 3Milne Bay Province transferred a large amount [K5.5 million] of lump-sum funds to its Provincial Health Authority in 2012. 9 Table 1: Provincial Profiles in Rural Health (2012) Province Region Population Fiscal Funding Cost Per Head Frontline Spending Capacity Profile To Deliver Compared To What Is Ranking Health Services Required Manus Islands 50,321 10 High Grant Very High Higher 70% Gulf Southern 121,128 8 High Grant High Higher 70% East New Britain Islands 271,252 7 Mixed Low Higher 68% Eastern Highlands Highlands 582,159 13 Mixed Low Higher 63% West New Britain Islands 242,676 4 Mixed Medium Higher 62% Simbu Highlands 403,772 16 High Grant Low Medium 52% East Sepik Momase 434,724 15 High Grant Low Medium 52% Western Highlands Highlands 694,513 12 Mixed Low Medium 48% Southern Highlands Highlands 868,209 6 High OSR Low Medium 40% Central Southern 237,016 14 Mixed Medium Medium 37% New Ireland Islands 161,165 2 High OSR Medium Low 30% Sandaun Momase 227,657 17 High Grant High Low 27% Oro Southern 176,228 9 High Grant Medium Low 27% Enga Highlands 452,596 5 High OSR Low Lower 25% Morobe Momase 646,876 3 High OSR Medium Lower 20% Madang Momase 487,460 18 High Grant Medium Lower 19% Western Southern 181,037 1 High OSR Very High Lower 17% Milne Bay Southern 269,954 11 High Grant Medium ? 12% Source: NEFC cost and expenditure information and author's calculations. Findings: Provincial Spending Levels on the Frontline Activities in 2011 to 2012 Facility Facility Outreach Distribution Patient Supervision Water Supply Most frontline rural health services happen locally – at health Operations Operations Patrols Transfer & Patrols MPA 1 MPA 2 MPA 3 Fiscal Capacity Funding Cost Per head Frontline Frontline Frontline MPA 1 MPA & 2 District v 1&2 Transfers Transfer Specific Specific Spending Spending Spending Spending District v Province Region full name Ranking Profile To Deliver Spending Spending CoS Spending PHQ % Of Exp. Level Spending Spending v CoS v CoS v CoS v CoS PHQ Services Level Per Capita Per Capita v CoS centres, aid posts and through outreach patrols at schools Western Southern 1 High OSR Very High Low 6.5 39.6 62% 89% - 27% 77% - 6% - 18% 100% New Ireland Islands 2 High OSR High Medium 5.5 21.2 81% 63% 24% AP's 76% 90% 41% - 4% 7% 30% Morobe Momase 3 High OSR Medium Low 2.6 14.8 44% 59% - 40% 40% - 17% - - - West New Britain Islands 4 Mixed Medium Higher 8.4 16.9 128% 77% 11% 111% 139% 377% 17% 10% 79% 17% and in villages. Therefore, provinces need to demonstrate that Enga Highlands 5 High OSR Low Low 2.1 11.2 65% - - 35% 145% - 10% - 11% - Southern Highlands Highlands 6 High OSR Low Medium 3.4 11.9 90% 100% - 68% 196% 453% 2% 72% 4% - East New Britain Islands 7 Mixed Medium Higher 7.9 14.8 147% 96% 92% LLG's 222% - 124% 11% 15% 85% 100% their spending aligns with the service delivery reality. The table in Gulf Southern 8 High Grant Very High Higher 15.3 27.7 247% 91% - 3% 454% 418% - - - - Oro Southern 9 High Grant Medium Medium 4.4 18.1 68% 92% - 126% 4% - 3% - 15% 100% Manus Islands 10 High Grant Very High Higher 17.5 32.0 96% - - 85% 109% 269% 26% 61% 52% - appendix 1 provides a detailed summary of the spending to Milne Bay Southern 11 High Grant High Low 2.2 22.3 42% 97% - 55% 1% - - 1% 13% 74% Western Highlands Highlands 12 Mixed Low Medium 2.8 9.4 144% - 53% HC's/Dist. 120% 105% 439% - - 11% - Eastern Highlands Highlands 13 Mixed Low Higher 4.4 10.0 219% 100% - 150% 398% 198% 8% 19% 16% 100% Central Southern 14 Mixed High Medium 6.7 22.9 70% 89% - 41% 123% 200% 11% 20% 40% 95% support frontline services in 2012. East Sepik Momase 15 High Grant Medium Medium 5.7 17.1 116% 54% 11% 107% 85% 436% 23% - 37% 69% Simbu Highlands 16 High Grant Low Medium 4.0 11.3 127% - 6% 160% 9% - - - 38% - Sandaun Momase 17 High Grant Very High Medium 5.8 27.3 103% 76% - 95% 90% 144% - 11% 19% 76% Madang Momase 18 High Grant Medium Low 2.4 15.3 27% 45% - - 75% 188% 9% - 34% 54% max exp (kina) 2,036,900 559,327 684,084 672,863 306,000 min exp (kina) 401,107 24,179 27,981 9,600 22,266 ave exp (kina) 1,099,876 194,969 216,100 134,283 168,413 ave % 71% 66% 65% 64% 56% # of zero's 4 12 1 1 6 6 9 2 7 (NB: max, min and ave do not include provinces with zero exp) • The analysis shows more money is recorded as being budgeted and spent on facilities and outreach patrols. Triangulation of the datasets – expenditure, PEPE facility surveys and NDoH facility performance information – allows corroboration of this improvement and clarifies understanding. • Interestingly, there is a notable improvement in spending on the distribution of drugs and medical supplies. However, the ongoing confusion of responsibility in this area will need to be resolved. 10 • There are small signs of increased spending on the transfer of patients from rural areas to hospitals, most notably in Morobe Province. However, the overall picture is not encouraging and suggests that the responsibility for getting a patient to the necessary level of care is most often a matter of “problem bilong yu”. • Small amounts are budgeted and spent on the provision of clean water. The small size of the spending suggests that this area is still not an accepted responsibility/ priority. • The overall picture continues to show little visible spending on supervisory activities. Recommendations and Next Steps In a highly decentralized and complex operating environment, establishing clarity over ‘who does what’ is a priority process. It is timely to convene a working group and review the assignment of responsibilities in rural health. In Papua New Guinea, finding a sustainable approach to maintain the vast network of rural health facilities will yield immediate benefits for patients and for facility staff. International experience may offer interesting models to consider. Once a maintenance strategy is established, funding can be more appropriately aligned. Getting the ‘right amount’ to the ‘right place’ and ‘on time’ needs to be a guiding priority. Budgets and funding streams need to be appropriately aligned to ensure the right amount gets to the right level. The National Department of Health has conducted exploratory initiatives in using facility-based budgeting and funding. These findings can be used to inform and develop national policy. The impact of ‘low funding for rural health’ in provinces with higher levels of own-sourced revenue [GST and royalties] needs to be considered. If rural health is not suitably prioritized and funded, rural health services in these provinces will continue to suffer. There is a need to continue the dialogue with the national level around the timing of grant releases. Achieving a predictable timely release of funds – from the national level to the subnational level [and ultimate spenders] – is a prerequisite for improved service delivery. Developing effective and timely monitoring and reporting systems is critical in a highly decentralized context. This involves the collection and analysis of expenditure and performance information. As mentioned, there is a process underway to gain new insight by linking spending with performance information. The triangulation of the NDoH facility information and the PEPE facility surveys with the expenditure analysis will provide a rich supply of information to help sharpen understanding and shape solutions. 11 INTRODUCTION Background In 2013 the World Bank published the findings of its analytical work – Below the Glass Floor. This review sought to identify whether the increased funding, under the intergovernmental financing arrangements implemented in 2009 (see appendix 5) was beginning to support an improvement in the delivery of basic services to the rural majority by reviewing spending over the period 2006 to 2010. The findings were mixed. Issues could be seen at both the national level and the subnational levels. The transfer of operational funds from the national level to the provincial level was unreliable. In broad terms, significant improvements in spending could be seen on facility operations, and perhaps on outreach patrols. However, the spending on other key activities such as: the distribution of drugs and medical supplies; the transfer of patients from rural facilities to provincial hospitals; the provision of clean water; and on supervisory activities of rural facilities appeared alarmingly low. It is important to appreciate the operating context in Papua New Guinea. The rural health system operates as part of a complex and highly decentralized governmental system that now contains: twenty provinces; two very different management modalities – being the traditional and the PHA; and a major non-government actor – churches – that has quite separate financial arrangements [and is largely outside the scope of this review]. As such, it is not surprising to find that the broader findings are an aggregation of eighteen, quite different, provincial stories. So, what might be fair and true as a broad-statement may not portray the reality in a particular province. What can be said with absolute confidence, is the delivery of rural health services ‘in every province’ across Papua New Guinea, relies heavily on its network of rural health facilities and the outreach services provided by rural-based staff. Rural facilities and outreach patrols are, in a very real sense, the face of service delivery for 85 percent of the country’s population who live outside the urban centers. And so Financing the Frontline continues the exploration of how well the government is funding these frontline services. The performance of both the national and provincial levels was reviewed. We also examine whether the right amount of funding is getting to the right staff to ensure that facilities remain open and operational and that this funding helps to ensure that outreach activities happen on a regular planned basis. The methodology examined: the way spending happens; whether enough is spent; and whether the funding appears to be reaching the right level, to be effectively spent on the right things. Financing the Frontline examines the world of service delivery through a fiscal lens. In doing so, we acknowledge that financial matters are only one of a number of inputs that collectively determine whether things work or not. Finance is however, a key determinant, and getting money to where it needs to go in an efficient manner and then monitoring the results continues to be a major stumbling block in attaining a substantial improvement in the delivery of rural health services. This update of Below the Glass Floor, which expands the analysis to cover the years of 2011 and 2012, is part of a broader suite of analytical work and engagement strategies that the World Bank is supporting. The update integrates the findings from the series of consultations, with both national and provincial audiences, that took place during 2014. This process, along with updated analysis, will help inform and improve the financing of frontline rural health activities in Papua New Guinea. 12 Scope and Limitations of the Analysis The Financing the Frontline review methodology is carried out according to the following scope and limitations: • In this report frontline service delivery is examined through a fiscal lens. In doing so, we acknowledge that financial matters are only one of a number of inputs that collectively determine whether things work or not. Finance is however, a key determinant, and getting money to where it needs to go in an efficient manner, and then monitoring the results, continues to be a major stumbling block in attaining a substantial improvement in the delivery of rural health services. Appendices 2 and 3 contain notes on the analytical methodology. • The report has a sub-national focus on recurrent operational expenditure. • The expenditure analyzed includes all health spending as recorded at the provincial treasuries. This means spending that circumvents provincial treasuries is not included in the analysis. The expenditure data originates from the provincial treasuries that are administered by the Department of Finance. The data is unaudited. 4 Milne Bay Province transferred a large amount [K5.5 million] of funds to its Provincial Health Authority in 2012. Accordingly, in the absence of separate reporting on this amount, the manner in which it was used was unable to be assessed. • It is important to note that operational grants from government for church-run health facilities are not included in this analysis. 5 • The Autonomous Region of Bougainville (ARB) is not included. 6 • Hela and Jiwaka Provinces were created in 2012 and, as such, are not analyzed separately. Neither is their future impact on the intergovernmental funding system discreetly analyzed. 7 • Estimates of the cost of services have been obtained from information provided by the National Economic and Fiscal Commission (NEFC). 8 The original Below the Glass Floor (2013) analysis used the indexed 2005 cost study, whilst the analysis underpinning this report uses the indexed 2011 updated cost study (see appendix 5). • All information (including expenditure amounts, cost estimates and fiscal gaps) is derived from data provided by the NEFC. Expenditure information originates from the provincial accounting records (PGAS). • Population statistics are as per the most recent census. 4 PGAS is the accounting system used by provincial government across the country. The financial data extracted from PGAS, is the data used by the Auditor-General in performing their statutory mandated audits. 5 Operational grants to churches for church-run facilities are a critical part of the sub-national rural health picture. There is a need to draw a more comprehensive picture that includes these operational grants. For this picture to be meaningful, however, it requires a detailed understanding of the division of functional responsibilities that church-run facilities are required to deliver versus the responsibilities that provincial administrations (government) deliver on behalf of church-run facilities. Once this functional split is understood then funding, spending and costs can be meaningfully compared. 6 The ARB has a special arrangement within Papua New Guinea that is different from other provinces. 7 The future fiscal impact of the newly created provinces–Hela and Jiwaka–and the reduction in size of the Southern Highlands and Western Highlands provinces on the intergovernmental system is being clarified by central agencies. 8 The updated Cost of Services Study 2011, adjusted for inflation and population growth. 13 1: FINDINGS: THE ROLE OF THE NATIONAL LEVEL Whilst the delivery of a rural health service happens in the rural areas, the national level plays a lead enabling role of real importance. Analysis and discussions helped identify two areas where prompt improvement can be made. The first is in clarifying functional responsibility. International literature and practice affirms that establishing clear functional responsibility is a prerequisite for advancement. The second area is improving the timeliness of funding to service delivery centres. The timing of funds transfer, from the national level to the provincial level [or lower levels], is ‘the first step’, and arguably the most fiscally deterministic, in successfully supporting rural health services. Assigning Responsibility Papua New Guinea’s rural health system has many participants. About half of all health centres are managed by churches, the other half are managed directly by the State. In addition, the various levels of government administration each have responsibility for key activities that directly impact the frontline of rural health. The situation, at least over the medium term, is becoming more complex with the advent of a second model of delivery—the Provincial Health Authority (PHA). Papua New Guinea now has two structural modalities for delivering rural health services, the traditional model via provincial administrations, and the new PHA model. Developing a clearer agreement of service delivery responsibilities is a key step for achieving progress. When ambiguity is present, it can act like a sinkhole, and foster a gap or deficit in service delivery. This is particularly likely when the system itself suffers from low funding and broader capacity constraints. The clear definition of roles and responsibilities will help prevent gaps in service delivery and promote accountability. However in seeking to clarify service delivery responsibilities, it is important to maintain reasonable expectations of the level of service that can be provided. This is particularly relevant given the challenge—in cost and capacity—of providing services to a largely rural population. In this context a considered and realistic approach is required. For example, an activity such as the transfer of patients from rural facilities to provincial hospitals can be extremely expensive. Given the expense of transferring patients, and the limitations in funding, policy in this area of service delivery responsibility needs to reflect a realistic view of what service can be provided. In other activities, such as the provision of clean water in health facilities and in villages, a variety of parties may be involved in the provision of aspects of this service. Again, policy in this area of service delivery responsibility needs to reflect a realistic view of how this service can best be provided. The analysis and consultation has highlighted a number of key areas of service delivery responsibility where discussion and agreement would be beneficial (see table 2 below). One such area is the transfer of patients from rural health facilities to facilities with higher levels of care. Which level of government [and which entity] should budget and fund this, and how much should they budget? Another key area is the distribution of medical supplies. Below the Glass Floor discussed the confusion in responsibility that had emerged when [part of] this activity was recentralized. A third area is activities that lie in the ‘grey area’ between church health and government administration responsibilities. A fourth area is activities supporting the provision of clean water to facilities and to communities. 14 Table 2: Questions Regarding Functional Responsibilities Function Responsibilities under the Traditional Responsibilities under the PHA Model Model Facility In the area of church-run facilities In the area of church-run facilities Operations • Is the provincial government responsible • Is the PHA responsible for any activities for any activities relating to the operations relating to the operations of church of church facilities? facilities? If so, which activities? If so, which activities? Facility For church-run and government-run facilities: For church-run and government-run facilities: Maintenance • Who is responsible for funding basic • Who is responsible for funding basic maintenance? maintenance? • Who is responsible for funding non-basic • Who is responsible for funding non-basic maintenance? maintenance? Outreach In areas serviced by church-run facilities In areas serviced by church-run facilities Patrols • Who is responsible for funding outreach • Who is responsible for funding outreach patrols [incl. integrated patrols and school patrols [incl. integrated patrols and school visits]? visits]? Drug and For church-run and government-run facilities: For church-run and government-run facilities: Medical Supply • Who is responsible for distribution, and • Who is responsible for distribution, and Distribution what are the underlying assumptions? what are the underlying assumptions? Water For church-run and government-run facilities: For church-run and government-run facilities: Supply9 • Who is responsible for the maintenance • Who is responsible for the maintenance of the water supply—(a) at a facility, (b) in of the water supply—(a) at a facility, (b) in the village? the village? • Who is responsible for the installation of • Who is responsible for the installation of simple village based clean water simple village based clean water systems—(a) at a facility, (b) in the systems—(a) at a facility, (b) in the village? village? Patient For church-run and government-run facilities: For church-run and government-run facilities: Transfer 10 • Who is responsible for the transfer of • Who is responsible for the transfer of patients? patients? 9 A variety of parties may be involved in the provision of clean water in health facilities and in villages. Therefore, policy in this area of service delivery responsibility needs to reflect a realistic view of how this service can best be provided. 10 The transfer of patients from rural facilities to provincial hospitals can be extremely expensive. Given the expense, and the limitations in funding, policy on this area of service delivery responsibility needs to reflect a realistic view of what service can be provided. 15 The formation of a working group that will consider and make recommendations to clarify functional responsibility in these critical areas is recommended. The original Determination Assigning Service Delivery Functions and Responsibilities to Provincial and Local-level Governments, (December 2009) was prepared and passed five years ago. In the interim, the operating environment has evolved and matured. The advent of the PHA model, and the importance of churches as partners in delivering rural services, requires recognition. As such, it would appear to be timely to review the determination and make modifications as necessary. 16 Delivering Timely Funding 11 Government operates under the shadow of a fiscal calendar, which acts as a major constraint in practice and a distorting influence on spending behaviour. Funding is allocated each year pursuant to the approved budget. The funds are then released for spending during the year through the government’s various disbursement mechanisms. At the year-end the government accounts are closed and the process starts over. The effect of this process on health services delivery is significant, particularly at the subnational level. Those at the frontline are the worst impacted as they wait for the funding to arrive. The irony is that health workers at the frontline are the real face of service delivery to the 85 percent of people who live in rural Papua New Guinea. Unfortunately, the timely delivery of funds to the frontline is not afforded the priority it deserves. An unwelcome pattern of fluctuating cash disbursements continues. Figure 1 tracks the percentage of cash released by February each year, from 2008 to 2012. • 2011 marks a dramatic improvement. The Department of Treasury released 50 percent of funds to seventeen provinces early in the year to enable rural health services. The Southern Highlands was an outlier, they received nothing. • In 2012, the improvement was completely reversed. The Department of Treasury released no funding to any of the provinces for rural health in the months of January and February. 11Waigani is a suburb of Port Moresby the nation’s capital. Most government agencies are located within the Waigani area. In the context of this chapter, ‘Waigani’ refers to the agencies that fund health at the sub-national level; namely the Departments of Treasury, Finance, Planning and Monitoring, Implementation and Rural Development, and the Department of Health. 17 It was also observed that the provinces who are most dependent on health function grants appear to receive their grants the slowest (Figure 2). This seems counter intuitive, as one would imagine the provinces with no alternate revenue sources need their grant funding the most. This pattern was also observed in 2010. • Provinces like Milne Bay are penalized. The Milne Bay health function grant of K5.5 million is one of the larger grants. However, by the end of July 2012, Milne Bay had only received 44 percent of its appropriation. • Strangely, provinces with own-sourced revenue received their grants faster. In contrast to Milne Bay, all of the ten provinces with access to [larger] amounts of own-sourced revenue received a significantly higher percentage of their health function grants during the same period. Figure 2: Warrant/Cash Released via Health Function Grant by July 2012 0m MBP WNB ENB EHP WHP NIP Mixed Manus Western Morobe Oro Gulf Sanda.. Simbu ESP Central SHP Madang Enga High Grant High OSR 7m 4m 5m 1m 2m 8m 6m 3m 0% Original A Momase Momase Southern Momase Highlands Highlands Highlands Islands Highlands Southern Southern Highlands Islands Southern Islands Momase Islands Southern 100% 80% 60% 40% 20% % of fundi Those that need the most funding tend to get it the slowest Momase Islands Islands Islands Islands Highlands Highlands Highlands Highlands Highlands Southern Southern Southern Momase Momase Southern Momase Southern Source: NEFC warrant release information and author’s calculations. Achieving a fast and efficient funding mechanism to the frontline should be an overwhelming priority of central agencies. Anything less will be a major hindrance to service delivery activities. In recent times this topic has attracted a greater profile and discussions continue between those involved in, and concerned about, service delivery at both the sub-national and the national levels. A growing consensus acknowledges that sub-national transfers for service delivery need: (i) the release of a first tranche early in the year to allow activities to commence; (ii) the earlier release of larger tranches which will enable provinces to disburse funds earlier to lower levels of government and facilities to fund services during the year; (iii) a more predictable schedule throughout the year to support good planning and implementation; and (iv) to avoid withholding service delivery funding as a disciplinary measure as this ultimately most severely impacts the public. Concerns 18 • The analysis shows that funding from the national level lacks the required consistency. Provinces often do not receive funding early enough, or on a timely basis throughout the year. • Operational funding for basic services needs to be a priority cash disbursement. The nature of service delivery is that it happens throughout the year and funding needs to be available in advance to match service delivery activities and implementation plans. Funding often gets spent at lower levels of government administration. This means the process of getting funding to the level where it is actually spent takes even longer. Consistent standards for the timely delivery of funds for rural health services delivery should be implemented across all provinces. Funding needs to be timely, predictable and consistent. The analysis of the funding to provinces paints a grim picture. Funding is released in an unpredictable manner that makes it extremely difficult (sometimes impossible) for provincial administrations to use operational funds (health function grants) in a timely and effective manner. Early funding is necessary—most funding needs to be disbursed by the end of July. It takes provincial administrations about two to three months to spend or transfer the money received to districts, LLGs or facilities. Therefore, it is proposed that the Treasury should release 90 percent of the funding by the end of July to ensure that it is well spent on service delivery activities before the end of the year (table 3). This target was achieved in 2008 when the Treasury released 100 percent of funding by the end of April. In 2010, a much more sobering scenario had evolved. In 2011, there was improvement again as most provinces received 75 percent of their allocation. Unfortunately, the trend did not continue into 2012. In 2012, most of the Momase Region (three provinces received 44 percent) and Southern Region provinces (average receipt of 49 percent) fared badly. A clear up and down pattern has emerged, year- by-year. Table 3: A Proposed Warrant Release Schedule Source: NEFC, The 2012 Provincial Expenditure Review, Government, Money Arteries & Services, 2013. 19 3. FINDINGS: PROVINCIAL SPENDING ON FRONTLINE RURAL SERVICES This chapter presents the findings of the expenditure analysis, which focuses specifically on a series of frontline activities. The analysis compares spending in 2006, the baseline year, against spending over the period 2009-12. 12 The frontline activities analysed include: • rural health facility operations and integrated health patrols; • the distribution of drugs and medical supplies; • the transfer of patients; • the provision of clean water; • supervisory activities. Rural Health Facility Operations and Integrated Health Patrols It is relevant to highlight the association between MPA 1 ‘facility operations’ and MPA 2 ‘outreach work’. In reality, both activity areas fall under the direct management of facility-based staff. So, while it is appropriate to analyze and consider each activity separately, it is necessary to be mindful that the resourcing and oversight/implementation of the work is conducted by the same people. Further, the experience in conducting the original analysis for Below the Glass Floor, for the period 2006 to 2010, highlighted that in many cases it was difficult to disaggregate the expenditure with the desired specificity. A significant amount of spending, in the facility space, may have been on either facilities operations or on outreach activities. For these reasons, it is helpful for the reader to see the two MPA’s studied both singularly and collectively in the same section. The country’s network of rural health facilities is at the heart of the rural health service delivery mechanism. As such, it is not surprising to find that much of the recurrent cost associated with maintaining rural health services is associated with the facility level. Common facility operational costs include: • rural health center transportation costs for motor vehicles and boats (including fuel and maintenance); • non-medical supplies; • fridge maintenance and gas supplies; and • facility maintenance. The ‘backbone’ of Papua New Guinea’s rural health service is its outreach patrols. Outreach work is the essential modality to achieving health coverage for the country’s 85 percent that live in rural areas. Facility-based health workers undertake day and overnight patrols, moving across the district to ensure that vital health services are available and accessible to the majority. Common facility-level costs that have been grouped as outreach include mobile clinics and school visits. 13 There are other costs that may be relevant to rural facilities and outreach activities, such as the maintenance of radios and medical equipment and the training for village birth attendants. 12 The fiscal year 2009 has particular relevance. In 2009, the national government began the process of increasing health function grant transfers under the new intergovernmental financing system. 13 Activity information was compiled from The Methodology and Results of the 2011 Cost of Subnational Services Study (O&M) that was completed in consultation with NDoH and provincial administrations. 20 Observations Provincial Spending on the Operation of Rural Health Facilities 14 • The overall picture shows that the increased spending in 2009-10, has been maintained, and in some cases enhanced in 2011-12 (Figure 3). This can largely be attributed to the increase in health function grant transfers under the new intergovernmental financing system [RIGFA, 2009] as the government commits increasing amounts for rural health. The advent of RIGFA continues to stimulate increased spending on facilities. • The overall picture is not uniformly positive. In Enga there remains limited evidence of spending on rural facilities, and Morobe’s spending is low compared to what is required. Madang’s spending on facilities disappeared in 2011-12, which raises many questions. Central’s spending on facilities decreased alarmingly in 2011-12. Again, the variations raise questions and concern. • There are regional patterns. In the Highlands and Islands regions, apart from Enga, the provinces performed well. In the Momase and Southern regions the results were mixed. • Only three of the eighteen provinces appear to transfer significant amounts directly to facilities, or to lower levels of government administration, for facilities to spend. Transfers continued in the Western Highlands and East New Britain in 2011-12. New Ireland transferred funds to select aid posts in 2012. This suggests that most provinces still retain the money that appears to be for facility activities at the provincial level. 14Spending in this figure is from health function grants and from provincial internal revenue—it does not include spending under the church operating grants. The coloured spending is spending that can be specifically identified as spending on the operation of rural health facilities, the grey faded out spending is less certain. Milne Bay Province transferred a large amount [K5.5 million] of funds to its Provincial Health Authority in 2012. 21 22 Observations 15 Provincial Spending on Rural Health Outreach Patrols (Figure 4) • The improving picture in 2009-10 continued into 2011-12 (Figure 4). There is much more spending in areas that may be related to outreach patrols than was apparent in 2006. • More spending is classified as ‘outreach’ however, there is still a significant amount in the ‘grey areas’ with nonspecific budget descriptions. 16 More precise budget descriptions will make it significantly easier for provinces to demonstrate that they are supporting priority areas such as outreach patrols. • There are no discernable regional patterns. • Three provinces transferred significant amounts of funding to ‘other levels’ that may relate to patrols. Such transfers can be seen in Western Highlands, East New Britain, and Milne Bay. 17 Again, this suggests most provinces retain [at the provincial level] the money that appears to be for outreach activities, and outreach staff then have to access this money for outreach activities. Provincial Spending on Both Facility Operations and Outreach Patrols (Figure 5) • The overall picture of spending on ‘combined facilities and outreach’ is encouraging (Figure 5). There is a substantial improvement from the baseline year, 2006, and incremental increases over the ‘RIGFA period’ 2009-12. • However, the story is not consistently positive. Some of the provinces with higher levels of internal revenue – such as Enga, Morobe and Western – need to spend more on ‘facilities and outreach’. Madang’s spending dropped alarmingly in 2011-12, whilst Central’s dipped over the same period. 15 Spending in these figures are from health function grants and from provincial internal revenue—they do not include spending under the church operating grants. The coloured spending is spending that can be specifically identified as spending on the operation of rural health facilities, the grey faded out spending is less certain. 16 The broader the selection correlated to a diminished level of assurance, that it was, in fact, spent specifically or exclusively on the target activity. Refer to the appendices for an explanation of the methodology applied. 17 Milne Bay Province transferred a large amount [K5.5 million] of funds to the Milne Bay Provincial Health Authority in 2012. 23 24 s 25 The Distribution of Drugs and Medical Supplies An essential aspect of rural health service delivery is the need to maintain the stock of basic drugs and medical supplies to health facilities through efficient procurement and delivery systems. Neither process is quite as straightforward in practice as it sounds. Procuring drugs and medical supplies in Papua New Guinea has long been a centralized function administered by the NDoH and paid for under a central budget. Distribution can be divided broadly into two parts, the first part is the delivery of the supplies to the area medical stores, and the second is getting the supplies from the area store to the many rural facilities. The arrangement has historically been that NDoH is responsible for the transfer to the area stores and provincial administrations are then responsible for distributing the supplies to rural facilities in their province. The distribution of supplies across the rural facility network is, understandably, a demanding logistical task and there have been ongoing concerns over the effectiveness and reliability of the historical approach to distributions. As such, NDoH with development partner support has, for a number of years, been conducting a nationally administered distribution of kits direct to rural facilities. 18 In 2012-13 this kit distribution was increased from 40 percent kits to 100 percent kits being procured and distributed under central administration. This is effectively a recentralization of a significant proportion of the distribution function. Under this arrangement, a large proportion of both procurement and distribution is being treated as a national function. It is important to note that, even with the distribution of 100 percent kits, this does not provide all the medical supplies that a province requires. There will, therefore, be a need to maintain a significant ‘pull’ or ‘demand’ side whereby provinces procure medical supplies over and above the kits. 19 Interestingly, the government during consultations selected the distribution of drugs and medical supplies to be one of the three rural health MPAs. So, this activity has been widely promoted in concert with the other MPAs as a critical activity for provincial administrations to fund, support and implement. The focus has been on reinstituting the MPAs as part of using the increased function grant funding more effectively. As an MPA, this activity is reported and actively monitored by provinces and national/central agencies. There is a risk, that the change in the distribution arrangements (40 percent kits then 100 percent kits supplied and distributed centrally) may deepen a sense of confusion as to which level of government is responsible for the distribution of medical supplies. The new arrangement, its nature (that is, temporary or indefinite) and the responsibility specifications need to be clear to all parties (health providers and practitioners, provincial administrations, national and central agencies and development partners). This will avert confusion and ensure all parties understand and can support the new initiative. 18 The 100 percent kits were initially procured with the assistance of a development partner, which included funding. They are now procured using GoPNG funding under the NDoH annual budget. 19 Aside from the 100 percent kits there is still a significant distribution activity necessary across the pull system as well as all vertical supply programs (tuberculosis, malaria, HIV test kits, and family planning commodities). Further analysis may be valuable to better understand (and cost) the residual responsibility that remains for provinces under the new approach. 26 27 The Transfer of Patients Transporting patients with an urgent need to a provincial hospital equipped to meet their condition is a constant challenge in Papua New Guinea. Most people are based in rural areas, widely dispersed and the closest hospital could be many hours or even days travel away. The burden of transportation to a hospital is often left to the family of the patient. In this sense, accessing the necessary health care is a matter of ‘problem bilong yu’. In a medical emergency it is right and proper for the patient to have access to the right level of medical care. However, the current reality is that the cost of meeting the emergency transfer costs of patients to provincial hospitals is prohibitively expensive and unsustainable. Government is currently unable to provide a standard emergency transfer service. This presents a difficult question, or set of questions. How much funding, if any, should government set aside for emergency patient transfer and then, in what circumstances, should that funding be used? The latter question is a matter for health professionals to deliberate and beyond the scope of this paper, but the initial question is pertinent. Observations on Provincial Spending on the Transfer of Patients20 • There may be evidence of ‘green shoots of change’, with a notable increase in spending on the transfer of patients (Figure 7). Spending has moved from K587,000 in 2010, to K2,593,000 in 2012. This marks an almost fivefold increase over two years. • That said, spending on the transfer of patients by all provinces, is only 7 percent of what the NEFC conservatively estimates is necessary. This suggests that the process of establishing patient transfer as a priority activity has only just begun. As this process develops, the hope is to see provincial health managers across Papua New Guinea, commit increasing amounts of discreet budget allocations to support emergency transfers. • Twelve of the eighteen provinces had some spending in 2012; up from seven in 2010. The amounts remain small, relative to the need. • Morobe Province is leading the way in this area, with notable allocations for patient transfer in 2011 and 2012. In 2012 Morobe spent K684,000, 17 percent of the NEFC estimate of K4 million. • It is possible that some funding for transferring patients, could on occasion, be accessed from discretionary spending sources. These include budget votes such as ‘provincial administrators’ funds’ or ‘district support grants’.21 The issue here is one of transparency and sustainability. Relying on unspecified funding is an unsustainable approach and lacks the benefits that transparency provides. 20 Spending in this figure is from health function grants and from provincial internal revenue—it does not include spending under the church operating grants. The coloured spending is spending that can be specifically identified as spending on the operation of rural health facilities, the grey faded out spending is less certain. Milne Bay Province transferred a large amount [K5.5 million] of funds to its Provincial Health Authority in 2012. We do not know how that money was used or whether any was spent on frontline health activities. 21 Sandaun Province is an example of a province with an individual approach to a service delivery challenge that partly funds patient transfer. The provincial administration currently covers some 60 percent of funding for air charter costs that assists with a variety of activities, including patient transfer. 28 29 The Provision of Clean Water Immediate access to clean water is essential to run a rural health facility. More broadly, community access to clean water is a key requisite for maintaining a healthy rural community. The Cost of Services Study, which was updated in 2011, identified the provision of clean water supply, in the form of tuffa tanks, as a key activity in rural health for provincial governments. These costs are significant. On average, the provision of clean water comprises 11 percent of the total estimated rural health costs for a province.22 A Water and Sanitation Service Delivery Assessment (World Bank and Government of Papua New Guinea 2013) has also been completed recently and provides an insight into rural water and sanitation service delivery and financing. This activity is not specifically noted in the Determination Assigning Service Delivery Functions and Responsibilities to Provincial and Local Level Governments (DPLGA 2010). This may, or may not, be an oversight however, if the rural health provincial government is not responsible; who is?23 The Determination does assign the monitoring of water quality to the health sector but does not address the provision, repair and installation work involved. Observations on Provincial Spending on the Provision of Clean Water24 • Spending on water supply (and/or related activities) via the provincial rural health budget has increased in recent years from 2009 post-RIGFA (Figure 8). However, while spending has increased, the level of spending is still relatively low for many provinces. • The spending by three provinces exceeded 50 percent of the NEFC cost estimate – East New Britain, West New Britain and Manus. Spending in four other provinces was between 30-40 percent of what the NEFC cost estimate – Central, Simbu, East Sepik, and Madang. • The higher spending in West New Britain and Milne Bay in 2009-10 is no longer visible. • This suggests, that some provincial health managers in Papua New Guinea still do not see the provision of water supply as a priority activity, or perhaps, not being their responsibility. If they did, one would expect to see some evidence of discreet budget allocations of reasonable sums. • Some rural water supply costs might be paid from another source for either repairing or installing water supply. Development funding allocations, such as the District Service Improvement Program (DSIP), is a likely potential source. In addition, donor projects and NGOs may specifically address this need at the local level but their coverage is likely to be ad hoc and very limited. 22 The percentage for each province will vary according to the differences in the cost structure for each province. 23 Responsibility for rural water and sanitation services is discussed in the service delivery assessment, concluding that there is ambiguity in responsibilities for development, operation and maintenance. This is inhibiting investment and development of necessary basic rural water and sanitation services. 24 Spending in this figure is from health function grants and from provincial internal revenue—it does not include spending under the church operating grants. The coloured spending is spending that can be specifically identified as spending on the operation of rural health facilities, the grey faded out spending is less certain. Milne Bay Province transferred a large amount [K5.5 million] of funds to its Provincial Health Authority in 2012. We do not know how that money was used or whether any was spent on frontline health activities. 30 31 Supervision Papua New Guinea’s network of rural health facilities is widely dispersed across its challenging terrain. In this context, supervisory activities are an integral element in maintaining the linkages, between staff providing services in far-flung facilities, and supervisory centres. Effective supervision achieves many things, it promotes: accountability and consistency of practice; the two-way exchange of critical information; the prompt on-the-spot resolution of difficulties; and acts as a necessary source of contact and encouragement for isolated health professionals. Supervisory activities in rural health originate from both the provincial and district levels. Funding therefore, is necessary at both the provincial and district levels to support and enable these visits. Observations Provincial Spending on Supervisory Activities 25 • In 2012, nine of the eighteen provinces, up from five in 2010, had discreetly budgeted and spent money on supervision (Figure 9). It is possible, and highly likely, that supervision activities had been funded in other provinces under generic (nonspecific) budget votes. It is impossible to confirm through the budget that this did indeed occur, and to identify what amounts might have been allocated and spent on this critical activity. • Southern Highlands and Manus were the exceptions with allocations, which were well below estimates. The estimated cost for supervision activities in Manus was K193,000. The estimated supervisory cost for Southern Highlands was K941,000. • Spending on supervision by Sandaun Province appears to have fallen away in 2012, after a positive trend between 2009 and 2011. • The Southern Highlands is an interesting case. The Southern Highlands had no visible discreet spending on supervision between 2006 and 2011, and then showed a relatively high spending level in 2012. 25 Spending in this figure is from health function grants and from provincial internal revenue—it does not include spending under the church operating grants. The coloured spending is spending that can be specifically identified as spending on the operation of rural health facilities, the grey faded out spending is less certain. Milne Bay Province transferred a large amount [K5.5 million] of funds to its Provincial Health Authority in 2012. We do not know how that money was used or whether any was spent on frontline health activities. 32 33 4. POLICY RECOMMENDATIONS AND NEXT STEPS Clarifying Responsibility: Identifying Who Does What It is proposed that a working group be formed to consider and make recommendations to promote greater clarity over functional responsibility. It would appear to be timely to review the Determination Assigning Service Delivery Functions and Responsibilities to Provincial and Local-level Governments, (December 2009), as it relates to health, and make modifications as necessary. The working group could consider and advance the thinking around the assignment of functions. The group could then make recommendations to NDoH who in turn could seek endorsement by determination via the Provincial and Local-level Services Monitoring Authority (PLLSMA). Chapter One highlighted the importance of clarifying responsibility, i.e. ‘who does what’. Table 2 tabulated areas that would benefit from clarification and responsibility assignment. These areas can be grouped as follows: • Effective maintenance. Establish, with suitable pragmatism, responsibility of maintaining rural facilities. • Outreach. Clarify responsibility, church v state. • Distribution of drugs and medical supplies. Clarify responsibility: church v state; national v subnational. • The transfer of patients. Clarify responsibility: church v state; national v subnational. 26 • The provision of clean water. Clarify responsibility and scope at both facility and community/ village levels. 27 • Grey areas. In all relevant areas, provide greater clarity around the responsibilities that reside with government, and those that rest with church health providers. • The PHA dimension. Review responsibilities as it applies under the PHA model and ensure there is an accepted level of clarity. • The DDA dimension. Consider the evolving role of District Development Authorities. Facility Maintenance: Finding a Sustainable Approach Developing a sustainable approach to maintain the vast network of rural health facilities in Papua New Guinea will yield immediate benefits for patients and for facility staff. The matter of facility maintenance was raised and discussed during the World Bank dissemination workshop held in April 2014. There was a general consensus that facility maintenance can be viewed as being one of two types; minor or more substantial. Responsibility for, and funding of maintenance is dependent on the type of maintenance. The arrangement that may be appropriate in the case of minor maintenance may well be ill-suited for more substantial maintenance. Depending on the size of a facility, it may be appropriate to allocate a small amount of funding for minor maintenance. This would give facility staff the flexibility to attend to basic maintenance tasks in a timely manner. This maintenance allocation for minor/basic maintenance could be part of the broader annual facility operations funding allocation and be available for use at the discretion of facility staff. Currently, some facilities are in such poor condition that substantial work is needed to bring them up to an acceptable standard for staff and patients. 28 There is a need to determine a more 26 The transfer of patients from rural facilities to provincial hospitals can be extremely expensive. Given the expense, and the limitations in funding, policy on this area of service delivery responsibility needs to reflect a realistic view of what service can be provided. 27 A variety of parties may be involved in the provision of clean water in health facilities and in villages. Therefore, policy in this area of service delivery responsibility needs to reflect a realistic view of how this service can best be provided. 34 effective method of facility management across all provinces. In addition, responsibility for management needs to be carefully considered and clearly designated either to facility staff or through central coordination at the district or provincial level. Most importantly, the appropriate funding should follow the designation of responsibility to allow for repairs and improvements in a timely manner. There may be insightful lessons to be learned from other countries. There are other countries with large networks of widely dispersed rural health facilities. The objective is to find a modality that can work well in Papua New Guinea, and to design a system that helps ensure that the country’s stock of rural health facilities are properly maintained on a regular basis. Aligning Funding: Are We Hitting the Target? This report recommends exploring new modalities that ensure frontline funding is available to those who need to access and spend it, particularly those at the facility level. Facility based budgeting/direct funding trials have, or are, already taking place at the subnational level in Bougainville and Milne Bay. The findings from these initiatives can be used to inform and provide direction to NDoH and subnational health stakeholders. The World Bank Health Efficiency Costing Study and the NEFC Cost of Services Study [both studies are currently underway] will provide valuable cost analysis to inform how much funding primary health care facilities require to meet their responsibilities. ‘Getting the money right’ is not only a matter of providing the right amount, it’s also a matter of getting the money to the right place and to the people who ultimately need to spend it. For example, to access funds held at the provincial level, a community health worker would be required to travel from their facility to the provincial capital to access funding to support their various activities. This is often impractical, time consuming and incredibly costly. Assuming it even happens, the transaction cost of the activity becomes very high and therefore the service delivery aspect becomes less efficient. The District Case Study (DPLGA 2009) also suggests that, in the absence of ready funding, many facilities revert to user fees to continue operating. Poor proximity to funding source means high transaction costs making it impractical to readily access funding. Even in cases where the community health worker and facility are in close proximity to the provincial capital it might not be easy for health staff to access the funding. Figure 11 in appendix 4 depicts the context between the national level and the sub-provincial level and the complicated relationships between the provincial treasuries that report to the Department of Finance and their client–the provincial administration. When health sector staff members complain of provincial administration inefficiency they may well be referring to either the treasury or the administration or the interplay between both. This separation of roles and accountabilities ensures that accessing funds will be a perennial challenge, which plays out in different ways in different provinces depending on the personalities involved. Even when funds reach the sub-provincial level (typically the provincial treasury) the funding flow may continue to the district treasury level, the LLG level, or to actual facilities. Each point that funds pass through in reaching their destination is an opportunity for delay and, potentially, for diversion or blockage. This, among other reasons, is why the District Case Study proposed fast tracking funds to their ultimate destination. The sub-national funding system that has evolved with its various actors, parts and pathways presents challenges that impede efficiency. These challenges include: (i) the absence of a designated budget for an activity or facility; (ii) a failure to inform the sector/facility of their budget; (iii) a failure to inform the sector/facility of the receipt of funds which may be due to poor communication between national and provincial levels of government, between provincial treasury and provincial 28 Facility infrastructure audits have been conducted in five provinces; Madang, Milne Bay, Sandaun, Simbu and Western Highlands. In Sandaun Province, only four of the thirty-five facilities were described as being in ‘good’ condition. Most facilities required substantial repair or rehabilitation (GoPNG, 2010). 35 administration or provincial administration and sector, or between sector and facility; (iv) the possibility that funds may be diverted for another purpose; and (v) the slow and/or untimely release of funds which may be due to the inefficiency of the national agency or provincial administration. The operating context is becoming more, not less, complex. The relatively recent introduction of Provincial Health Authorities, in several provinces, represents an entirely different administrative modality to the traditional approach. Further, the emergence of District Development Authorities, with an unknown remit in the area of rural health services, adds another dimension to the labyrinth that is evolving. For all these reasons, the effort to improve service delivery is unlikely to settle on a single standard approach in every province. Not only are provinces different in topography, culture, language, and economic base; they also differ in fiscal capacity (that is, how much they have relative to what they need) and in where their funding comes from. Existing financial arrangements rely heavily on getting funding through the provincial HQ hub, which is an interaction between the provincial administration, the provincial treasury and the provincial health manager. The provincial hub is intended to play a key role by distributing funding to the district and facility levels. If the interaction at the provincial hub is inefficient, it creates a bottleneck to service delivery for frontline health staff members. It seems timely to reconsider the efficiency of this arrangement and whether it is likely, in the medium-term, to enable the efficient distribution of all activity funding. Is it possible to design a better system, one that identifies the levels of service delivery responsibility and then seeks to fund each level by the most direct method possible? In doing so can a system be designed that recognizes the dual funding arrangements that are the reality of provincial governments (national grants and internal revenue)? Figure 10 outlines a slightly different approach to funding sub-national health that looks at how GoPNG can ensure that the funding of key service delivery activities (highlighted in blue) reaches the right level and the service providers. Essentially, the service delivery activities, and corresponding funding needs, are identified and packaged as activity sets that are delivered at a particular level. The model then identifies the most direct funding route. This approach seeks to match: funds with core activities; in activity sets that can then be funded; and to get the funds to the right place in the quickest way possible. 36 Figure 10: Funding-of-Activities Approach in Rural Health Source: Authors The belief is that, when appropriate, it is better to avoid the bottleneck at the provincial HQ hub than to push through it. Some questions remain to be discussed and debated. Patient transfer is a significant and critical cost, but at what level should this amount sit and in which activity set? What are the implications of assigning this major cost to an activity set and will it work? Although the amounts allocated for health center maintenance and aid post costs are less significant, who should administer these costs and will it work? In reconsidering where funding resides and how it gets there, a better balance needs to be found between getting the money to where it needs to be spent and the pervading practice of centralized ex ante controls. There seems to be little merit in significantly increasing funding at the provincial hub if it fails to efficiently reach its spending location in a timely manner. After all, spending the money according to the financial management rules is insufficient consolation for a failure to deliver services. To arrive at the proposed solution, consideration needs to be given to: (i) matching funds with core activities (in activity sets that can then be funded); (ii) getting the funds to the right place in the quickest way possible; and (iii) determining what fiduciary controls are appropriate. Appropriate in this sense will depend on the amount involved (size) and the efficiency of the controls (that need to be achievable). 37 Issues Surrounding Provincial Prioritisation and National Transfers The impact of low funding for rural health in provinces with higher levels of own-sourced revenue [GST and royalties] needs to be considered. If rural health is not suitably prioritized and funded, rural health services in these provinces will continue to suffer. There is a need for engagement and advocacy in this area. There is a need to continue the dialogue at the national level around the timing of grant releases. Achieving a predictable timely release of funds – from the national level to the subnational level [and ultimate spenders] – is a prerequisite for improved service delivery. A standard schedule of cash release has been proposed by the National Economic and Fiscal Commission, widely discussed and supported by all national and subnational parties. Turning this consensus in to action is the next step. Developing System Capacity in Monitoring and Reporting This report recommends that the National Department of Health continue this analysis of subnational expenditure on a regular, preferably annual, basis. There is scope to consider expanding the analysis to include: subnational expenditure on church-run facilities; and expenditure by other key actors, such as the Provincial Health Authorities. The objective would be, to develop a sustainable monitoring and reporting framework that provides timely insight into the alignment and effectiveness of subnational spending on primary health. The capacity to monitor and report on expenditure, and its nexus with relevant aspects of performance outputs and outcomes, is likely to be even more critical given the changes [such as the advent of District Development Authorities] that are occurring in Papua New Guinea at the subnational level. Linking Spending With Performance: Gaining New Insight One of the most important dimensions of the World Bank analysis is to find meaningful ways to link ‘observed spending’ with ‘performance information’. This undertaking will ensure that the findings and recommendations are suitably grounded, and reflect the realities of rural service delivery across the country. Analysis of the most relevant health performance datasets that are currently available in Papua New Guinea is underway. The first dataset, and the primary point of reference, is the National Health Information System (NHIS) facility data that is collected regularly from all rural health facilities across the country. The second dataset, known commonly as ‘PEPE’, is a recently published survey of 142 health facilities spanning seven provinces and the National Capital District. The survey was conducted jointly by the National Research Institute and the Australian National University, and is entitled A Lost Decade? Service Delivery and Reforms in Papua New Guinea 2002- 2012. This spending-performance analysis has commenced. The results will be released to help inform our collective understanding and direct policy recommendations. A list of the questions and areas of interest to explore, are attached under Appendix 6. 38 APPENDICES Appendix 1: Frontline Spending Versus Cost Estimate Table and Explanatory Notes Facility Facility Outreach Distribution Patient Supervision Water Supply Operations Operations Patrols Transfer & Patrols MPA 1 MPA 2 MPA 3 Fiscal Capacity Funding Cost Per head Frontline Frontline Frontline MPA 1&2 1& 2 MPA District v Transfers Transfer Specific Specific Spending Spending Spending Spending District v Province Region full name Ranking Profile To Deliver Spending Spending CoS Spending PHQ % Of Exp. Level Spending Spending v CoS v CoS v CoS v CoS PHQ Services Level Per Capita Per Capita v CoS Western Southern 1 High OSR Very High Lower 6.5 39.6 62% 89% - 27% 77% - 6% - 18% 100% New Ireland Islands 2 High OSR Medium Low 5.5 21.2 81% 63% 24% AP's 76% 90% 41% - 4% 7% 30% Morobe Momase 3 High OSR Medium Lower 2.6 14.8 44% 59% - 40% 40% - 17% - - - West New Britain Islands 4 Mixed Medium Higher 8.4 16.9 128% 77% 11% 111% 139% 377% 17% 10% 79% 17% Enga Highlands 5 High OSR Low Lower 2.1 11.2 65% - - 35% 145% - 10% - 11% - Southern Highlands Highlands 6 High OSR Low Medium 3.4 11.9 90% 100% - 68% 196% 453% 2% 72% 4% - East New Britain Islands 7 Mixed Low Higher 7.9 14.8 147% 96% 92% LLG's 222% - 124% 11% 15% 85% 100% Gulf Southern 8 High Grant High Higher 15.3 27.7 247% 91% - 3% 454% 418% - - - - Oro Southern 9 High Grant Medium Low 4.4 18.1 68% 92% - 126% 4% - 3% - 15% 100% Manus Islands 10 High Grant Very High Higher 17.5 32.0 96% - - 85% 109% 269% 26% 61% 52% - Milne Bay Southern 11 High Grant Medium ? 2.2 22.3 42% 97% - 55% 1% - - 1% 13% 74% Western Highlands Highlands 12 Mixed Low Medium 2.8 9.4 144% - 53% HC's/Dist. 120% 105% 439% - - 11% - Eastern Highlands Highlands 13 Mixed Low Higher 4.4 10.0 219% 100% - 150% 398% 198% 8% 19% 16% 100% Central Southern 14 Mixed Medium Medium 6.7 22.9 70% 89% - 41% 123% 200% 11% 20% 40% 95% East Sepik Momase 15 High Grant Low Medium 5.7 17.1 116% 54% 11% 107% 85% 436% 23% - 37% 69% Simbu Highlands 16 High Grant Low Medium 4.0 11.3 127% - 6% 160% 9% - - - 38% - Sandaun Momase 17 High Grant High Low 5.8 27.3 103% 76% - 95% 90% 144% - 11% 19% 76% Madang Momase 18 High Grant Medium Lower 2.4 15.3 27% 45% - - 75% 188% 9% - 34% 54% max exp (kina) 2,036,900 559,327 684,084 672,863 306,000 min exp (kina) 401,107 24,179 27,981 9,600 22,266 ave exp (kina) 1,099,876 194,969 216,100 134,283 168,413 ave % 71% 66% 65% 64% 56% # of zero's 4 12 1 1 6 6 9 2 7 (NB: max, min and ave do not include provinces with zero exp) Source: NEFC cost and expenditure information and author's calculations Note: Additional information on maximum expenditure, minimum expenditure, average expenditure and average % etc. have been inserted only where the author believes they will add meaning for the reader. 39 The following explanatory notes support the preceding table: Funding Profiles: Provinces have different funding profiles that reflect their fiscal capacity and sources of funding. There are three broad categories: (i) some provinces have significant own- source revenue and receive lower grant transfers; (ii) others have little own-source revenue and are largely dependent on national government grant transfers; and (iii) the third category have a mixture of both own-source revenue and grants. Cost per Head to Deliver Services: This compares the cost estimate for frontline service activities in a province to its population (kina cost estimate/population). Highlands’ provinces with larger populations, higher population density and reasonable road access typically have a lower cost while maritime provinces and those with largely dispersed populations are more costly. The results are then grouped for readability–very high, high, medium and low. Frontline Spending Level: This compares spending on frontline service delivery activities in 2012 with service delivery cost estimates (actual spending/cost estimate). The results are then grouped for readability—higher, medium and low. Facility Operations and Patrols: These two activity sets (MPAs 1 and 2) are grouped together for two reasons. First, the same facility staff manages both activities. And second, it can be difficult to disaggregate the spending data as precisely as desired. There is a risk that spending may appear to be for funding facility operations when it is actually funding for outreach patrols and vice versa. Combining the data is one way of removing that risk. Spending v CoSS: These columns compare the amount actually spent in 2012 to the cost of service estimate for a particular activity. It shows how close a province is to spending what it needs to support that activity. 29 West New Britain Province, for example, is estimated to be spending 111 percent of what is required on facility operations and outreach patrols—a positive result. District v PHQ: The percentage represents the proportion of funding that is spent at the district level. This metric calculates the amount of spending recorded for particular districts—as opposed to unspecified provincial spending at the provincial headquarters. Typically, spending recorded at the district level provides a higher level of confidence that the money was actually spent appropriately and on frontline activities. Transfers as Percentage (%) of Expenditure: This percentage identifies any observed transfer (item 144) of funds to lower levels of government administration such as districts and Local Level Governments (LLGs). Although there is sporadic spending and/or transfers directed at specific facilities, instances of systemic transfers of grants to rural health facilities direct from provincial administrations could not be identified. East New Britain Province, for example, continues to transfer most (92 percent) of its facility funding to LLGs to administer. This suggests a real desire in East New Britain to make funding more accessible for frontline staff carrying out priority service delivery activities. Specific Spending: This compares spending that can be (more) specifically identified as spending on either facility operations or outreach patrols. Both activities have been grouped together however; each is compared to the relevant cost estimate. 29 The NEFC 2011 cost study counted all health facilities (both government-run and church-run) in calculating its facility costs. In undertaking the analysis for this report, and in seeking to create a relevant cost benchmark, we have sought to identify and remove costs that specifically relate to church facilities. Nevertheless, there remains a useful exercise to identify the activity functions churches are responsible for and those that remain as government functions. 40 Drugs and Medical Supply Distribution: In 2012, eleven provinces spent relatively well in the category of distribution. However, the NEFC’s cost estimate, while not unreasonable, may be overly conservative and, therefore, not fully representative of how much it would cost to effectively undertake the distribution activity in practice. 41 Appendix 2: The Analytical Methodology Objective: To systematically isolate and identify the spending that appears to support the activity being analyzed. Restrictions: Whilst the health sector in Papua New Guinea does have perhaps the most consistent Chart of Accounts of all the provincial sectors, the MPAs and other priority activities that are analyzed are not as transparent as they could be. 30 Data Notes Facility Operations • Rural health facilities include rural hospitals, health centers and aid posts. • Common expenditure types include grants and transfers to facilities, travel costs, maintenance costs, and ‘other’ (item 135). • Typical spending modalities include those from PHQ, DHQ, LLG and direct grants. • Specific spending includes spending that is designated as being for facilities. • The broader classification includes spending designated as ‘district health’ and provincial ‘transfers to churches’. Outreach Patrols • Specific spending includes spending designated as being for outreach work or immunization activities. • The broader classification includes spending designated as ‘Facility, district health, or family health’. This is then further narrowed to include only travel and subsistence, operational materials and supplies, transport and fuel, other operational and transfers (items 121, 124, 125, 135, 143 & 144). Drug and Medical • Specific spending includes spending designated as being for the Supply Distribution distribution of drugs and medical supplies. Water Supply • Specific spending includes spending that is designated as being for water supply. • The broader classification includes spending designated more broadly as ‘environmental health & water supply’. Patient Transfer • Specific spending includes spending that is designated for patient transfer. • Constraints: in reality there will be ad hoc spending at the provincial level and perhaps some at the lower levels (district) from various broad spending buckets on this activity. Whilst it may be possible to trawl the data at the transaction level to identify this spending, the value in doing so makes it impractical. The spending under this modality is not transparent and unsystematic, and as such, of limited value in assessing the provinces commitment to this activity. 30Provinces typically follow, to varying degrees, the ten-program structure that was established in health quite some time ago. 42 Appendix 3: Explanatory Note on the NEFC’s PER Methodology Elements of the analytical methodology for this report, and the original Below the Glass Floor report, can be found in the NEFC provincial expenditure review series (PER) conducted annually by the NEFC since 2005. The PER review has a focus on recurrent spending to support the government’s priority areas of service delivery–basic education, rural health, transport infrastructure maintenance, supporting primary production, and village courts. The review of the 2013 fiscal year is underway, and will be published by the Commission in 2015. This appendix provides a short summary in the form of frequently asked questions relating to the methodology employed by the Commission in conducting the review. What expenditure does the PER review? The review is focused on recurrent goods and services spending by provincial administrations. In other words, the operational spending that enables service delivery activities to happen. Does it include payroll and personnel emoluments? No. Most payroll items are funded centrally from Waigani, Port Moresby. Some payroll items such as, casual wages and leave entitlements are paid by the province, but these are not specifically the focus of this review. Does it include capital? The PER notes the capital spending recorded in provincial Treasury databases but it does not specifically focus on capital per se. Capital/development spending is large and irregular and outside the scope of this review at this time. Capital/development spending also comes from many different sources and collating this information and synthesizing meaningful messages would be a large exercise–and would serve quite a different purpose. Why does the PER focus on goods and services? Operational funding and spending is critical for several reasons–and yet it is often overlooked in preference to the imperative of funding staff or the more attractive area of development spending and the ribbon cutting that follows. Ironically goods and services funding (and spending) is the area of spending most closely aligned to the key service delivery activities themselves. As important as staff and capital infrastructure spending are, tracking spending in these areas will not help to monitor the recurrent service delivery activities themselves. What can be gleaned from a desk review? A surprising amount. The PER is based on the provinces own spending data and is augmented by spending from any known regular donor source (such as the Health SWAp HSIP mechanism and AusAID’s recent education assistance through the Education Capacity Building Program and the Basic Education Development Project. NEFC analyzes the spending by every province in the same manner so there is a consistency in the approach that has been refined over seven years. Can you get a sense of whether the money is spent as recorded in the budget? Yes. Spending is analyzed in a variety of ways to acquire a sense of whether the money was spent as recorded. This includes reviewing both summary and transaction level data. Spending on each function grant is assessed (as good, average, or not good) to get a sense of whether it was spent on the purposes intended. This includes reviewing the transactional level data. Spending on each MPA is also identified and compared against cost estimates. This area of analysis continues to be further sharpened as provincial compliance and coding improves. Critically the PER is an evolving analytical assessment. In practice this means that each year the NEFC considers what (new or adapted) analysis is necessary to paint as accurate a picture as possible of the service delivery context in sub-national Papua New Guinea. New analysis is added to the existing analytical routines to ensure a consistent time series is maintained to plot progress and trends over time. 43 How robust is the analysis? Each year the Commission’s analytical team collates the data it uses for the analysis from its various sources. Integrity checks are conducted to test the completeness of the data. The dataset is then cleansed, a painstaking process involving recoding thousands of lines of information, to ensure the data is standardized in a like manner enabling accurate comparison. The data is then analyzed, outliers are identified and validated, and the results synthesized for meaning. The use of transaction-level data in validating the summary level descriptors is somewhat unique. It enables a better assessment of the nature of the spending and helps provide the desktop study with a heightened level of veracity. This study takes several months of disciplined work by the NEFC team and is inflected with quality assurance processes at strategic points. Notwithstanding the limitations inherent in desktop analysis, the Commission believes the methodology and relevance of the PER is sound. Critically, the Commission internally workshops the findings of each PER and ‘tests the results for sense’. Using the NEFC teams’ collective understanding of provincial Papua New Guinea, any material aspects that fail to meet the ‘test for sense’ are identified and reviewed. Perhaps the greatest test is the use that the PER results have been put to over a number of years. It has been published and disseminated widely both nationally and provincially–and discussed publicly at length. At every opportunity NEFC has sought feedback on the results and invited comment from provinces–particularly if they have any concerns. On occasion concerns have been expressed, and NEFC has reviewed and acted to allay those concerns. Are there limitations to the analysis? Any desktop analysis on a national basis has limitations due to the nature of the analytical task and the time available for undertaking the review exercise. It is important to understand, however, that any analysis of such a comprehensive dataset will have its own limitations. Even regulatory audits are limited by time constraints, the audit techniques employed, and the underlying scope of the audit itself. The PER sets out to paint a picture of provincial spending and to help us better understand whether spending is aiding service delivery activities. How is it known whether the activity actually happened? You don’t. No single monitoring and review technique can give that level of assurance and it is not the PER’s intent. The PER is a fiscal monitoring tool, not an audit and is not conducted to monitor physical performance. Monitoring physical performance is a role for other agencies such as DPLGA and national sector agencies, and audit is the domain of the Auditor-General. All government systems rely on a variety of monitoring and accountability mechanisms that act collectively to promote and enhance better performance in service delivery. The PER contributes to this area by comparing a province’s actual operational spending to detailed cost estimates and then compares the individual provincial performance against other provinces. Importantly, it has a service delivery focus. The results are published and broadly disseminated and supported by a series of consultations at both the national and sub-national levels. NEFC believes that achieving a high level of transparency and visibility is fundamental to achieving improved performance. 44 Appendix 4: Health Funding Flows Figure 11 outlines in more detail the various participants that need to interact to ensure that health-funding reaches the various levels along the service delivery supply chain. This Figure illustrates the existing context, and highlights the involvement of multiple participants. The health funding flow relies not only on systems but, just as critically, on interagency and interoffice relationships. Figure 1: Health Funding Flows Source: Author. Note: The Office of Rural Development (ORD) is now known as the Department of Implementation and Rural Development (DIRD). 45 Appendix 5: Notes on Intergovernmental Financing Arrangements The Reform of Intergovernmental Financing Arrangements (RIGFA) In 2009 the Papua New Guinea government implemented the new intergovernmental financing arrangements that saw significant increases in transfers to the provincial level to support the delivery of basic services. These arrangements are often referred to by the acronym RIGFA—the reform of intergovernmental financing arrangements. RIGFA was based on the principle of equity and seeks to ensure that funding goes to those provinces that need it most and is, therefore, targeted at the delivery of basic services. RIGFA provided funding under a set of function grants for major service delivery sectors. One of these is the health function grant, which is specifically for the support of rural health services. Another of RIGFA’s features was the establishment of Minimum Priority Activities (MPAs). As the name suggests, MPAs are activities of fundamental importance to the service delivery mechanism and provinces are required to demonstrate that they are appropriately funding these activities first. It is important to note, however, that not all provinces benefit the same under RIGFA. Those provinces with higher levels of internal revenue (including GST and resource revenues) are expected to commit a significant proportion of that revenue to their service delivery responsibilities. As a consequence, provinces with higher levels of internal revenue get proportionately less from function grants. The importance of this should not be lost–rural health services in provinces with higher levels of internal revenue are proportionately reliant on that internal revenue for their funding. If those provinces with higher levels of internal revenue do not allocate internal revenue to support rural health then rural health services will not be delivered effectively. The 2011 Cost of Subnational Services Study (O&M) The Cost of Services Study was an ambitious piece of analytical work completed by the NEFC in 2005. 31 Expenditure references in this report are often benchmarked to the Cost of Services Study estimates. The Study sought to establish an estimate of the operational costs necessary to support sub-national administrative and service delivery activities. Costs were estimated at provincial, district and local levels and reflect the existing levels of infrastructure and staff numbers and the geographical realities that are relevant to conducting government business across Papua New Guinea. It would be wrong to assume that the cost estimates in the Study are necessarily adequate to meet all service delivery needs. The costing study was prepared for the purpose of establishing relativities between provinces in terms of the cost of their expenditure mandates, as a basis for dividing up a limited pool of funding. A primary objective in designing the methodology for the cost study was to be extremely conservative in the estimates, so that every single element of the costs could be readily justified. The NEFC wanted to be certain that it could confidently assert that any reduction in funding below the level of these highly conservative estimates would result in a reduction in service levels. For this reason the cost estimates should be viewed as a bare minimum benchmark while, in reality, the cost of providing rural health services is likely to be much higher. 31The scope of the Cost of Services Study covers all functional responsibilities of provincial and local governments including rural health. The study does not include the costs of provincial hospitals. 46 Appendix 6: Relevant Questions The set of questions that follow, arise from the World Bank analysis and are being used to help guide the triangulation of datasets [expenditure analysis, facility surveys and NHIS facility performance information] as well as the ongoing fieldwork that is presently underway [World Bank health facility efficiency study and the next phase of NRI/ANU research]. This is merely a sample of relevant questions and there will be others. 32 Overarching Questions The Disbursement of Funding From the National Level: 1 From our analysis, we can see that the release of health function grants from the national level to the provincial level between years and across provinces has been inconsistent and at times late and slow. a. Why is this? Gleaning national and provincial perspectives would be informative and enable triangulation. b. What can be done to achieve certainty over rural health’s major funding stream? Influencing the Provincial Budget Process: 1 What can be done to ensure adequate levels of own-source revenue are allocated to rural health? a. This applies particularly to provinces with large amounts of own-source revenue that receive small health function grants. 2 How can provinces present their budgets in a way to make spending on priority activities highly visible? Efficient Funding to the Facility Level: 1 One of the pressing questions that this analysis poses is what does an efficient system for funding rural facilities look like in Papua New Guinea? How do we ensure equity between facilities whether they are government-run or church-run? There is currently no way to know–let alone monitor–the amounts of funding that actually get to rural facilities. Activity Specific Questions Rural Health Facility Operations: 1 Where are funds for facility operations administered from–the provincial administration level, the district administration level, the LLG administration level, or the facility level? 2 Where do funds need to be administered from? a. Does the answer to this question vary depending on factors such as the proximity/availability of cash to the facility? b. If so how do we design a framework for deciding on the optimal location for facility funding? 3 Are facilities (still) reliant on user fees to fund their operations? 4 What is the most effective way in which to maintain facilities? a. Who needs to manage this activity–the facility, the district health officer or the province? b. Where should the funding for maintenance activities be located and administered? 32 The fieldwork conducted during the District Case Study (DPLGA 2009) will be a useful reference point in compiling questions suitable for this upcoming fieldwork. There is also other fieldwork being conducted at the sub-national level in Papua New Guinea at this time which the design will want to be mindful of, including some focused in aspects of rural health. This includes the National Research Institute/Australian National University research and the National Department of Education/NEFC work in sub-national education. 47 Rural Health Outreach Patrols: 1 Is the assumption that outreach activities are conducted out of rural health facilities correct? 33 a. Where are funds for outreach patrols administered from–the provincial administration level, the provincial hospital, the district administration level, the LLG administration level, or the facility level? b. Since 2009, are increasing amounts of provincial funding now accessible for outreach activities? Gleaning provincial and facility level perspectives would be informative and enable triangulation. 2 Where do funds need to be administered from? a. Does the answer to this question vary depending on factors such as the proximity/availability of cash to the facility? b. If so, how do we design a framework for deciding on the optimal location for facility funding? 3 Are facilities (still) reliant on user fees to fund their outreach activities? Drug & Medical Supplies Distribution: As we have discussed, there has been a recent recentralization of this function. 1 Is there clarity over who is responsible for the distribution function? a. What is the national responsibility for distribution? b. What is the provincial responsibility for distribution? c. What are the funding implications (if any)? 2 Is it appropriate for ‘distribution’ to remain an MPA? a. If yes, what is the new scope of this MPA for provinces? b. If no, does health need to identify a new MPA? Rural Emergency Patient Transfer: We need to develop a better understanding of what patient transfer happens from rural facilities to other rural facilities or to provincial hospitals. 1 How often does it happen and in what situations? How is it funded–from the provincial administration, provincial hospital, district administration, the sending facility or family? 2 Is it appropriate to allocate a budget for patient transfer? a. When should it be used? b. Where should it be located and administered from–at the provincial administration, provincial hospital, district administration, or the sending facility? Provision of Rural Water Supply: As a guide to what this activity may look like in practice, the Cost of Services Study assumes that each year 5 percent of villages in the province receive a new tank based water supply system adequate to provide water for 300 people. 1 In practice, we need to develop a better understanding of who provides the water supply (such as organizing the installation and maintenance of tuffa tanks) in rural settings. 2 Does this responsibility/activity need to be included in the DPLGA function assignment determination? 3 If it is seen to be a ‘rural health’ responsibility: a. Is there an annual program for this work? b. If yes, what is the scope of the program? c. How is it funded–from the provincial administration, provincial hospital, or district administration? d. Ideally, how should it be funded? Where should the funds best be located for this activity? 4 If it is not seen to be a rural health responsibility: a. Then whose responsibility is it perceived to be? Another sector? Is it a development issue–if so whose responsibility is it? 33 The underlying assumption in this paper is that outreach patrols/activities are normally conducted by facility staff and commence from the rural health facility. 48 b. Ideally, how should it be funded? Where should the funds best be located for this activity? 49 GLOSSARY Capital Describes spending to acquire or upgrade physical assets such as buildings, Expenditure roads, and equipment. Cost In the context of this report cost refers to what it is estimated it will cost, not what is necessarily actually spent. Cost of Describes an NEFC study that estimated how much it costs to support Services service delivery within a province (health and education) on a district-by- Study district basis. Fiscal Describes a province’s ability to meet its costs. It is expressed as a Capacity percentage and is calculated by dividing estimated costs by available revenue. Funding Gap The funding gap is the difference between the revenue a province receives and the amount it is estimated it would cost to deliver all the basic services the province is required to provide. Goods and A GoPNG term that refers to operational expenditure/costs. In our analysis Services goods and services excludes any personnel-related expenditure. Expenditure Grants Describes revenue that a province receives from the national government. Grants are normally provided to provinces for a specific purpose although some grants such as the block grant allow for provincial discretion on their use. Internal Describes all sources of revenue that a province may receive other than Revenue / national government grants and donor funds. The province makes its own Own-source decisions on how to allocate and spend the internal revenue it receives Revenue through the provincial budget. Item Numbers Refers to the GoPNG budget and accounting chart of accounts. Item numbers are common expenditure classifications used by all provinces such as Transfers being items 143 and 144, and Other Materials and Supplies being item 124. Personnel Describes expenditure that relates directly to staffing costs and includes Emoluments salaries, wages, allowances, retirement benefits, and gratuities. Expenditure Priority Gap The priority gap happens when a province has the revenue, but chooses to spend its money on other things–not supporting core services. Project Describes expenditure on a non-recurrent development activity, sometimes Expenditure related to a project jointly funded by a donor partner. Recurrent Describes spending that is directed to purchasing the regular routine Goods and operational supplies and services, transport costs and routine maintenance of Services buildings. It does not include personnel emoluments, capital, and project Expenditure costs. Service Describes what the various arms of government actually do for the people of Delivery Papua New Guinea but more specifically it comprises a range of specific health service delivery activities it would include such as conducting immunization extension patrols, school visits, and training for village birth attendants. 50 Financing the Frontline updates the expenditure analysis carried out in Below the Glass Floor (2013) and tests whether the spending patterns emerging in 2009 and 2010 in Papua New Guinea have been sustained or improved in 2011 and 2012. The review also supports a better understanding of the issues that confront frontline service delivery — such as the ambiguity of roles and responsibilities in some rural health functions — and proposes next steps. Concurrently, the National Department of Health performance information on facilities (from the National Health Information System) has been reviewed. The integration of the expenditure analysis, the NHIS performance information and the findings from the Promoting Effective Public Expenditure facility surveys will provide a rich source of information to help sharpen understanding and shape solutions. ABOUT THIS SERIES: This series is produced by the Health, Nutrition, and Population Global Practice of the World Bank. The papers in this series aim to provide a vehicle for publishing preliminary results on HNP topics to encourage discussion and debate. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations or to members of its Board of Executive Directors or the countries they represent. Citation and the use of material presented in this series should take into account this provisional character. For free copies of papers in this series please contact the individual author/s whose name appears on the paper. Enquiries about the series and submissions should be made directly to the Editor Martin Lutalo (mlutalo@ worldbank.org) or HNP Advisory Service (healthpop@worldbank.org, tel 202 473-2256). For more information, see also www.worldbank.org/hnppublications. 1818 H Street, NW Washington, DC USA 20433 Telephone: 202 473 1000 Facsimile: 202 477 6391 Internet: www.worldbank.org E-mail: feedback@worldbank.org