1 HEALTH FINANCING IN ZAMBIA MAY 2019 1 1. PAST AND RECENT DEVELOPMENTS IN THE HEALTH SECTOR IN ZAMBIA The 2012 national health policy is the autonomous public organization responsible overarching health policy framework in Zambia. for provision of health services through a The policy takes a human rights approach to provider-purchaser arrangement for 11 years health care provision, where all citizens are was abolished in 2006. The Ministry of Health entitled to basic health care (Ministry of Health took over the functions of the CBoH. In 2011, 2012). The policy is actualized through the primary health care (PHC) function successive five-year national health strategic (including the mother and child health plans. Operationally, Zambia’s health system is program) was transferred from the Ministry of centralized, with delegated responsibilities Health to the Ministry of Community from the center to lower levels of the health Development and Social Welfare, and this care delivery system. The Ministry of Health Ministry was renamed Ministry of Community plays a dual role of policy formulation and Development Mother and Child Health. strategic planning and delivery of health However, in 2015, the decision was reversed services, with provincial and district health and the PHC function was reverted to the offices being upwardly accountable to the Ministry of Health. Ministry of Health headquarters. Provincial health offices oversee a number of districts, The other set of institutional reforms and are responsible for providing guidance in commenced in November 2016 aimed at planning and budgeting, service delivery, enhancing operational efficiency and improving financial management, procurement, and health service delivery. This reform has led to an monitoring and evaluation. Delivery of primary increase in the number of departments at the health services is undertaken at district Ministry of Health headquarters from five in hospitals, health centers, and health posts 2016 to 12 by the end of 2018. Further, the while district health offices are responsible for Ministry of Health now has three permanent district-level planning and budgeting, fiduciary secretaries—one responsible for health management, and monitoring and evaluation. services, another one responsible for administrative services, and the third one for human resources for health training. In addition, the University Teaching Hospital now constitutes five specialized hospitals—Adult Hospital, Women and New-born Hospital, Cancer Diseases Hospital, Children’s Hospital, and Eye Hospital. Outside the health sector, several new districts have been created leading to an increase in the total number of districts in the country from 72 in 2011 to 116 in 2018.1 Implementation of the aforementioned health reforms in a short period of time coupled with Between 2006 and 2018, a number of the creation of more districts have affected the institutional and health financing reforms have planning process, resource allocation, and flow been implemented within and outside the of funds to districts and health facilities in the health sector in Zambia. Foremost, the Central health sector. Board of Health (CBoH)—which operated as an 1Atleast five of the new districts were not fully functional at the time of this study. 2 With regards to health financing, user fees were abolished in rural areas in April 2006, peri-urban areas in mid-2007 and the entire PHC level in January 2012. PHC facilities in Zambia include health posts, health centers, and district hospitals. All services provided under these facilities are provided free of charge. Further, patients referred from the PHC facilities to secondary and tertiary level hospitals are supposed to be treated free of charge in line with the user fees removal guidelines (Ministry of Heath 2007). A bypass fee is charged to Going forward, Zambia is in the process of patients who present themselves for treatment launching two major reforms which will further at a higher-level health facility without being affect the organization of the health sector. referred from a lower-level health facility These are (a) implementation of the National except for emergency cases. As an exception, Decentralization Policy, and (b) introduction of secondary- and tertiary-level hospitals (and a National Health Insurance (NHI) scheme. The some district hospitals in a few districts) are PHC function (including transfer of PHC staff to allowed to generate revenue from patients local government authorities) is among the who want express services or better outpatient front runner for decentralization. If national or in-patient services than those provided at decentralization is fully implemented, it will the free (or low-cost) sections of the hospital. affect the manner in which health services are In addition, some hospitals also operate some organized, delivered, and financed in the prepayment medical schemes where country. Thus, adequate preparations in the employers/companies, households, and health sector are required to minimize individuals make contributions to access a challenges. Secondly, Zambia enacted the NHI predefined package of health services when Act in April 2018 which provides the legal they get sick. However, there are no guidelines mandate to establish the NHI management nor consistency across hospitals on how much authority, and the NHI scheme. At the time of to charge, and how the revenues generated this study, it was envisaged that should be utilized. Further, though revenues implementation of the NHI scheme will be done are retained and used at the health facilities, in a phased manner with a view of covering the there is no legislature in support of this entire population in the medium to long term. practice. However, depending on the final design and implementation process, the NHI will have a “To implement future reforms and progress substantial effect on the financing and delivery towards universal health coverage, of health programs and services in Zambia. One of the immediate challenges will be providing adequate preparations and resources will be insurance cover to the informal sector and required. Given that Zambia is a lower indigent people in rural areas. About 84 middle-income country, there is need to percent of the labor force in Zambia works in urgently develop a strategy on how the the informal sector (Central Statistics Office country will transition from donor support 2015) with very low paying jobs2 while 77 and sustain health service delivery by using percent of the people in rural areas were living domestic resources.” below the national poverty line3 in 2015 compared to 23 percent in urban areas (Central Statistics Office 2016). 2 Average monthly earnings in the formal sector is ZMW 3,009 equivalent per month was estimated at ZMW 214 per month or (US$284) while in the informal sector it is ZMW1,214 (US$115). ZMW 7.13 per day in 2015. This is equivalent to US$29.32 per Source: Central Statistics Office (2015). month or US$0.98 per day in 2015 terms. 3The national poverty line comprises food and nonfood items to meet a minimum standard of living. The poverty line per adult 3 2. HEALTH FINANCING ANALYSES The Ministry of Health in collaboration with the (a) Estimate the level of health spending World Bank and the U. K. Department for by various sources; International Development (DFID) (b) Describe patterns of resource commissioned a series of studies that provide a allocation in relation to health comprehensive review of health financing, priorities; expenditure, and service delivery in Zambia over (c) Assess efficiency and equity of current the period 2006−2017. The level of financing, health spending; how the finances are mobilized, allocated, and spent, all affect service delivery and health (d) Examine public health provider outcomes. Thus, a review of health financing capacity, service availability, quality of and expenditure is crucial to progress toward services, and budget execution; and improving health outcomes and achieving the (e) Evaluate sustainability of health country’s universal health coverage (UHC) financing. goals (that is, access to essential health services and financial risk protection). This brief In this bulletin we present a synthesis of the key summarizes findings from four reports, namely findings, distil the policy implications, and the National Health Accounts (NHA) provide policy options for addressing challenges 2013−2016; the Public Expenditure Review in health financing and the health system in (PER) which covers the period 2006−2016; the Zambia. In developing this policy note, we Public Expenditure Tracking and Quantitative augmented findings from the four reports Service Delivery Survey (PET-QSDS) which highlighted above with findings from in-depth covers the year 2017; and the equity study interviews with key Ministry of Health officers, which is a repeated cross-section analysis of health sector Cooperating Partners, academics, financing and benefit incidence from three and other stakeholders. These interviews population-based surveys.4 Collectively, these focused on soliciting feedback from policy papers were prepared to address the following makers on the main findings from the reports, policy issues: relevance, and applicability of the recommendations. 4Raw data from the Zambia Central Statistical Office 2010 and 2015 Living Conditions Monitoring Survey and the 2014 Zambia Household Health Expenditure and Utilization Survey. 4 3. SUMMARY OF KEY FINDINGS AND POLICY HIGHLIGHTS 3.1 Tepid macroeconomic context provides constrained fiscal space for increasing domestic resource mobilization There is a realization that recent successes in increases in public health spending. Core improving health service coverage and health macro-fiscal indicators point to limited capacity outcomes will be threatened by fiscal by the government to significantly increase constraints which the country is likely to face domestic resource mobilization in the near now and in the near future. This is because the future. Notably, economic growth prospects context for domestic resource mobilization and are projected to be modest in the region, 3–4 health financing is set by the country’s percent, and this implies low tax revenue macroeconomic and fiscal outlook. The collections. Further, the high public debt country’s macroeconomic performance has repayments will likely undermine domestic over the past five years been modest, and this resource allocations to health and other social will make it difficult to mobilize significant sector 3.2 Overall health financing landscape shows inadequate level of domestic health spending, heavy reliance on donor funding, fragmentation in financing sources, and limited pooling Data from the NHA provides answers to four key aspects of health financing in Zambia, namely: (i) How much does Zambia spend on health care? (ii) Who pays for health spending? (iii) How are health care expenditures mobilized? (v) How are health expenditures distributed among health providers? 3.2.1 How much does Zambia spend on health care? The NHA and PER both show that total four-year period (or average of 3 percent per government health expenditure (GHE) has year), largely because of exchange rate losses. increased, although at a fluctuating rate. Table 1 Further, donor health expenditure declined by shows that, cumulatively, nominal GHE nearly 50 percent over the same period increased by 86 percent between 2013 and (average of 13 percent per year). Per capita 2016. On average, nominal GHE in kwacha total current health expenditure (CHE) in (ZMW) has increased by 21 percent per year, Zambia during the period 2013–2016 averaged while the increase in inflation-adjusted GHE US$70 in nominal U.S. dollar terms, with the was 10–12 percent per year. However, when notable exception of 2013 when it was US$90 converted into nominal U.S. dollar terms, total (Table 1). Consequently, per capita total health expenditure has not increased over the current health spending declined from US$90 period 2013–2016. GHE in nominal U.S. dollar in 2013 to US$59 in 2016, reflecting declines in terms declined by 13 percent over the entire expenditure by both government and donors. 5 Four points are crucial to highlight for policy: • The health sector still requires additional financial resources. GHE as a share of total government spending was 7.1 percent in 2016, which corresponds to ZMW 3.1 billion (US$302 million) below the Abuja target in monetary terms. Furthermore, total health spending as a share of the economy (GDP) at 4.5 percent (Table 2), is lower than what many countries with similar income level in the region spend. Zambia’s government spending on health as a share of total public spending is comparable to Ghana, Zimbabwe, and Mozambique, but is lower than countries with much lower GDP per capita such as Tanzania, Ethiopia, and Malawi. • The level of total CHE per capita in Zambia (US$59) is below the estimated minimum level of per capita health spending required to progress towards achieving UHC (US$86 per capita) (McIntyre, Meheus, and Røttingen 2017). The third edition of the Disease Control Priorities (DCP3) initiative further estimates the total cost per person of sustaining an essential UHC package at full coverage at US$110 in lower middle-income countries like Zambia (Watkins et al. 2017). • Notwithstanding the above, cross-country comparisons and international benchmarks are not universally accepted, and it is more useful to compare a country against what is fiscally feasible, what the country is trying to achieve, and how much is needed to cover an essential benefit package. For Zambia, one critical issue worth noting is that the cost of service delivery is far much higher than most countries in the region. It is not surprising, therefore, that cost estimates for 33 priority areas outlined in Zambia’s National Health Sector Strategic Plan 2017−2021 (Ministry of Health 2017) show that total per capita CHE has to more than double to US$149 to meet the needs of the health sector. However, given the shrinking fiscal space, this is overly unrealistic. • Zambia can still achieve more with the available resources. There are countries with better health indicators than Zambia that spend less than half the level of health spending as Zambia. Moreover, as pointed out later in this document, there are problems with budget execution, procurement, and absenteeism. Therefore, in the short-term, efforts could be directed to addressing these challenges while also advocating for additional money. 6 Table 1: Selected health expenditure indicators for Zambia, 2013–2016 2013 2014 2015 2016 Average Nominal total CHE (ZMW, millions) 7,098.90 6,396.78 8,134.79 9,674.31 7,826.20 Nominal total capital heath expenditure 296.92 500.09 304.48 521.30 405.70 (ZMW, millions) Nominal total CHE plus total capital spending 7,395.82 6,896.87 8,439.27 10,195.61 8,231.89 (ZMW millions)a Nominal total CHE (US$, millions) 1,317.05 1,040.13 942.62 938.34 1,059.54 Government CHE (ZMW, millions) 1,982.20 3,163.70 3,833.80 3,704.60 3,171.08 Donor CHE (ZMW, millions) 4,056.80 2,082.07 2,977.06 4,115.03 3,307.74 Households - Out of Pocket (OOP) 810.00 884.00 996.00 1,177.00 966.75 Expenditure (ZMW, millions) Employers CHE (ZMW, millions) 235.60 265.90 321.00 673.80 374.08 NPISH CHE (ZMW, millions) 11.60 0.40 3.90 4.30 5.05 Other institutions CHE (ZMW, millions) 2.30 0.90 0.90 1.00 1.28 Total CHE per capita (US$) 90.33 69.23 60.92 58.87 69.84 Government CHE per capita (US$) 25.22 34.24 28.71 22.54 27.68 Donor CHE per capita (US$) 51.62 22.53 22.29 25.04 30.37 Government CHE % total CHE 27.9 49.5 47.1 38.3 40.7 Donor CHE % total CHE 57.1 32.5 36.6 42.5 42.2 Total CHE % gross domestic product (GDP) 4.7 3.8 4.4 4.5 4.4 Government CHE % GDP 1.3 1.9 2.1 1.7 1.8 Government CHE % General Government 6.1 8.2 7.4 7.1 7.2 Expenditure (GGE) OOP Expenditure % total CHE 11.4 13.8 12.3 12.2 12.4 OOP Expenditure % GDP 0.5 0.5 0.5 0.5 0.5 Corporations CHE % total CHE 3.3 4.2 4.0 7.0 4.6 Source: Ministry of Health (2018c). Note: a. Total health expenditure is no longer allowed in NHA. However, this indicator is included for continuity reasons with respect to System of Health Accounts (SHA). See page 347 of the SHA 2011 Manual: OECD, Eurostat and WHO (2017). 3.2.2 Who pays for health care expenditure? The government and donors are the two biggest verticalized. Since 2014, the level of donor sources of health expenditure in Zambia, funding has stagnated at about US$23 per accounting for about 80 percent of total health capita in nominal U.S. dollar terms. Further, expenditure. For example, in 2016, donor CHE about 30 percent of the total CHE in Zambia is constituted 43 percent of the total health channeled through aid agencies and expenditure, while government CHE accounted nongovernmental organizations (NGOs) while for 38 percent of total CHE. Households government institutions only handle about 50 through OOP expenditure were responsible for percent of the total CHE. This situation has 12 percent of total CHE. The contribution from occurred at a time when perceptions about private companies through medical and weaknesses in the country’s public finance insurance schemes was about 9 percent in management and accountability systems have 2016. One major policy issue from this data is become commonplace, and caused significant the fact that donor funding flows have uncertainty among donors. It was highlighted stagnated and become increasingly during interviews that there is need to address 7 the causes for the implicit diminished makes any effort at planning and forecasting enthusiasm in health policy and planning in the fiscal space for health much harder. country. The changed dynamics among Additionally, planning processes for donor stakeholders in the health sector has made the funding which are not harmonized with district environment for health financing more or provincial health offices can undermine complex, especially the role of donors. There is allocation of donor resources to priority areas a need for all stakeholders to agree on the or integration of donor programs for greater contentious issues in the health sector that are effectiveness and sustainability. About 70 somehow affecting financing. percent of the total funding from donors in the health sector in Zambia is earmarked to It should be stressed that much of the progress HIV/AIDS and sexually transmitted infections that has been recorded in recent years in (STIs), and this needs to be addressed. maternal and child health in Zambia is the result of close collaboration of the Ministry of Health Finally, it must be pointed out that excessive with donors and other stakeholders; and high reliance on external funding to finance health levels of donor funding. Therefore, there is no service provision is unsustainable because doubt that to sustain recent improvements in Zambia is a lower middle-income country which service delivery and performance, the Zambian is expected to transition or graduate from donor health sector has to continue with effective financing in the near future. Ironically, it health sector collaboration and donor funding. appears that there is no strategy in place to Thus, increased verticalization of donor funding transition from donor support even though will bring forth major challenges at a time when several prominent donors in the health sector the level of donor funding is increasingly less in Zambia have indicated that they will wind up available. For example, vertical support is their support in the near future. harder to capture and account for, which Table 2: Total CHE in Zambia and selected other countries Country CHE as % of GDP CHE per capita Lesotho 8.4 90.85 Swaziland 7.0 232.72 Sudan 6.3 151.79 Ghana 5.9 79.59 Côte d'Ivoire 5.4 75.45 Kenya 5.2 70.06 Cameroon 5.1 63.63 Zambia 4.5 58.87 Nigeria 3.6 97.31 Congo, Rep. 3.4 58.79 Angola 3.0 108.56 Sub-Saharan Africa (excl. high income) 5.4 84.84 Lower middle-income countries 4.1 81.71 Source: All data from World Development Indicators as complied in World Bank (2018c). 8 Figure 1: CHE by financing source, 2013–2016 100% 3 4 60 4 7 5 90% 11 14 12 12 12 52 50 80% 70% 33 37 40 60% 43 42 57 30 US$ 50% 25 30 28 40% 25 23 20 30% 50 47 20% 38 41 10 28 10% 0% 0 2013 2014 2015 2016 Period Average Government Donor OOP Employers Government CHE per capita (US$) Donor CHE per capita US$ Source: Ministry of Health (2018c). 3.2.3 How are health care expenditures mobilized? One of the important functions of a health explain this apparent paradox. Secondary financing system is to ensure that financing is analysis in recent studies shows that the mobilized in line with the principles of removal of fees on primary health care in maximizing revenue and pooling, financial Zambia did not increase access or overall health progressivity, and minimizing financial burden service utilization (Lépine, Lagarde, and Le on patients. Different methods of raising health Nestour 2018; Masiye, Kaonga, and Kirigia revenue have different impacts on the 2016). That is, there has been no reduction in distribution of the financial burden, and access the proportion of the population that fail to to health care. Therefore, it is important to seek care due to cost barriers. Rather, as know the contribution from general taxes and patients (mostly the non-poorest) shifted from other forms of financing mechanisms; and the private facilities to free public health care, extent to which households are protected from household OOP health spending declined OOP spending. Figure 1 shows that about 41 significantly. But it is also plausible that low percent of the total CHE was provided by the level of public spending could also imply that government through the public allocation. Over patients are receiving inadequate or poor the four-year period 2013–2016, the quality of care. These findings indicate that a government share of total current spending has significant section of the population in Zambia increased from 28 to 41 percent, although the is still vulnerable to financial or impoverishing level of actual government health spending in health care expenditure due to inadequate per capita dollar terms has declined marginally prepayment and risk pooling mechanisms in from US$25 in 2013 to US$22 in 2016. Donors mobilizing health care financing. remained the second-largest financing scheme despite a decline from 57 percent in 2013 to 42 Finally, the NHI scheme was brought up during percent in 2016. In dollar terms, donor interviews as one of the options that the spending has declined by half. Ministry of Health is expected to implement in 2019, following enactment of the NHI About 12 percent of the total CHE was mobilized legislature in 2018. Details about how the NHI through OOP payments by households at the scheme will function, its benefit package, point of seeking health care. It is notable that contribution rate, and revenue potential are even with low public spending, OOP spending still being worked out. has also remained low. Some context can 9 3.2.4 How are health expenditures distributed among health providers? There are many providers of health services and is in line with government’s primary health care products in Zambia including hospitals, nursing approach. However, there has also been an and residential care providers, ambulatory upward trend in the share of total CHE on health care providers, retail sale and medical hospitals which increased from 24 percent in goods providers, and public health program 2013 to 34 percent in 2016. This suggests that providers. Figure 2 shows the distribution of the Zambia health system is still focused on health expenditures accounted for by each of hospital level care rather than ambulatory care. these providers for the period 2013−2016. On The results also explain why a large proportion average, about 30 percent of the total CHE was of total CHE in Zambia is concentrated on spent on hospitals during the period under curative care which has progressively increased review. On the other hand, providers of from 30 percent (ZMW 2.1 billion) in 2013 to 53 ambulatory health care accounted for about 10 percent (ZMW 5.1 billion) in 2016; while percent of the total CHE in 2013 rising to 19 expenditure on preventive care has been low percent in 2016. The increase in the share of (Ministry of Health 2018c). expenditure on providers of ambulatory health Figure 2: Distribution of expenditure by health care providers, 2013−2016 35 34 30 25 Percent 26 24 20 19 15 17 17 17 10 12 10 10 9 5 6 0 Hospital Ambulatory Preventive Administration Medical goods Others 2013 2014 2015 2016 Source: Ministry of Health (2018c). 3.3 Improvements in budget performance, efficiencies in spending, and management of key inputs could help increase availability and quality of health service delivery even at current levels of health spending Besides financing, the goal of UHC is to put in place efficient health service delivery systems and invest in critical health service inputs. Getting more from available health spending through measures such as improving resource allocation, reducing waste in procurement of drugs and management of human resources, and reducing the cost of administration would increase service outputs and quality. Comparing cross-country spending and a composite index of access and quality,5 shows that Zambia 5The health access and quality (HAQ) index (Fullman et al. 2018) was used in this analysis. The HAQ index incorporates 32 causes of disease and injury considered amenable to health care. In other words, death is not supposed to occur from the 32 causes if there is effective care. 10 fares poorly relative to several countries (Figure 3). In other words, Zambia has high cost per health service output which implies that there is room for more health care from available public health spending. This analysis suggests that the health system delivers its health services at a higher cost, mainly through higher wages and operational costs. Figure 3: Level of health expenditure, health access, and quality Source: World Bank (2018c). 3.3.1 Weaknesses in budget execution exemplified by low disbursement rates and absorption capacity at district level In 2016 and 2017, the Ministry of Health Ministry of Finance to DHOs. Bottlenecks in experienced a significant variance between disbursements of funds between the various budgetary allocations and actual disbursements, levels of administration in the public health and between actual disbursements and actual system results in considerable amounts of expenditure, with actual expenditure falling unspent funds being returned to the treasury. below half of budgeted amounts (Figure 4). As From a service delivery perspective, it implies observed in the PET-QSDS, a key contributor to that activities or programs in delivering health the poor budget execution is the erratic funding services are not undertaken. from the Ministry of Finance which often fails to remit the full budgeted amounts or remits “While the health sector still requires budgeted amounts with delays. And while additional financial resources, much more personnel emoluments tend to be predictable can still be achieved with the available and are released in full, releases for operational resources. Efforts could be directed to grants are erratic, which affects service delivery addressing inefficiencies in the health negatively. Delays in the transfer of funds from system while also advocating for additional District Health Offices (DHOs) to district hospitals and health centers are more money.” prolonged than disbursements from the 11 Figure 4: Budget, funding, and actual expenditure 12,000 M 10,000 M 8,000 M ZMW 6,000 M 4,000 M 2,000 M 0M 2012 2013 2014 2015 2016 2017* Total budget Release of funds Actual expenditure Source: World Bank (2018c). Note: * 2017 data were only available until November 2, 2017. 3.3.2 Investments in recruitment of health human resources are laudable though more effort is needed to address mal-distribution of health workers Since 2014, the government has given high investments in human resources are still priority to increasing the health workforce by needed to ensure that the acute mal- allocating an increasing share of public health distribution of health personnel across regions spending to new human resource recruitment. is addressed. For example, about half of all the In Figure 5, it is shown that the number of medical doctors in Zambia are based in Lusaka health workers have increased in both absolute which has a population of 16 percent, while 80 terms and in terms of staff per population. The percent of all the medical doctors in Zambia are increase in staffing at facilities is also evident in the four most urbanized provinces, namely: from the Service Availability and Readiness and Lusaka, Copperbelt, Southern, and Central. But Assessment (SARA) (WHO 2017). As a result, despite Lusaka Province having the largest the health sector has witnessed a reduction in number of doctors and the highest population the overall staffing deficit of core health staff density, the province also has the lowest from 69 percent in 2005 to 43 percent in 2016 number of admissions. (World Bank 2018c). However, more Figure 5: Trends in the health wage bill, training outputs, and staff in-post A: Training outputs and staff in-post B: Health wage bill 25,000 12 70% 11 61% 62% 58% 60% 54% 10 10 20,000 23,376 50% 46% 46% 48% 48% 8 43% 8 39% 15,000 40% 17,212 6 30% 25% 10,000 12,173 4 20% 16% 15% 14% 5,217 13% 13% 9% 10% 11% 11% 11% 9% 5,000 10% 2,463 2 1,101 0% 0 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2005 2011 2016 Core health workers in-post Training output Health PEs as a share of public expenditure on health Health PEs as a share of total public sector PEs bill SA per 10,000 Popupation Source: World Bank (2018c). Note: SA=skilled attendants (doctors, midwives, medical licentiates, clinical officers, and nurses), PE=personal emoluments. 12 3.3.3 While the number of graduates from health training institutions has increased, there is need for an innovative recruitment and retention strategy The Ministry of Health has performed very well are being replaced (Ministry of Finance 2018). in increasing the number of graduates from This suggests that the majority of the 20,868 health training institutions through the public health workers who will be trained over the and private sectors. However, it will be period 2018−2021 will most likely not be increasingly challenging to recruit all the employed by the government without the graduates due to budgetary constraints. For assistance of Cooperating Partners. This leaves instance, the Ministry of Finance only provided room for the private sector in Zambia and other treasury authority to recruit 1,000 health countries in the region to recruit them. workers in 2018 (Ministry of Finance 2017) Considering that a lot of taxpayers’ money is despite the annual training output of 5,217 being used to train these health workers, the (Figure 5). As a matter of fact, the Zambian government must come up with viable options government is currently implementing of how to retain these health workers in Zambia measures to cut public expenditure on personal and/or how to ensure that those leaving the emoluments. This is because personal country are reabsorbed back to Zambia as soon emoluments as a share of domestic revenues at as possible. Government-to-government 47.1 percent in 2018 is high and the contractual obligations could be another government intends to reduce it to 40 percent option. by 2021 so that the total public wage bill does not constrain other developmental expenditures (Ministry of Finance 2018). In other words, there are plans to reduce public expenditure on personal emoluments over the period 2018−2021 from 8.3 percent of GDP in 2018 to 7.7 percent of GDP in 2021 (Ministry of Finance 2018). To achieve this, new recruitments have been restricted to frontline personnel (including health workers), and only positions critical to frontline service delivery that fall vacant during the period 2018−2021 3.3.4 Recurrent spending needs to increase to match spending on human resources to support adequate service provision The increase in budgetary allocations to human diagnostic and therapeutic services such as CT resource, justified as it is, seems to have come scan, MRI, dialysis, surgery, physiotherapy, and at the expense of other important service other services (World Bank 2019). Finally, delivery inputs such as expenditure on drugs, because of the already high share of the budget medical supplies, operational grants, and allocated to the wage bill, even the ability of the maintenance of infrastructure which have government to meet its future human resource reduced in the last few years. According to the targets contained in the national Human PET-QSDS, the public health system has started Resources for Health Strategic Plan 2018−2024 to witness evidence of the strain of limited (Ministry of Health 2018a) will depend on an operational funding manifested in form of long increase in the share of the total public queues at facilities, long waiting lists for critical spending that is allocated to the health sector. 13 3.3.5 Despite improvement in recruitment of health staff, significant human resources hours are lost to absenteeism and idle human resources The PET-QSDS observes that there is level, and no system in place to discipline erring absenteeism and tardiness among health staff. workers at public health facilities for several hours each month. The number of hours lost due to absenteeism and tardiness amounts to 437 days per month which is equivalent to 11.5 full-time equivalent staff per month. This implies that human resources enough to manage three to four rural health facilities are lost to absenteeism and tardiness each month. About 54 percent of the staff who missed work were absent on account of sickness, 21 percent had official permission or were on leave, while 25 percent of the employees were absent mainly on sanctioned official duties (such as outreach services and working elsewhere within the government sector), while others were absent without permission. Further, an average of 37 percent of the health workers reported late for work at least once a month. Absenteeism has direct adverse consequences for health service provision. When health staff hours are lost, patients are denied timely services and quality of care is compromised. For example, where staff absenteeism is high, patient satisfaction is poor mainly because of long waiting times and short contact time with available staff, all of which affect the quality of service delivery. Perceptions on quality are proven drivers of decisions to seek health services, which means that absenteeism is likely to send patients away from health services. Due to the lack of a system to monitor staff absenteeism on a regular basis, the problem of absenteeism is overlooked. The PET-QSDS report shows that there is no system for monitoring staff absenteeism at the facility 3.3.6 Inadequate expenditure, wastage, and stock-outs of essential drugs are symptomatic of poor-quality service delivery Drug stock-outs were common in 2017, which is too low to guarantee an adequate supply of attributed to inadequate funding for drug drugs in the health system. The inadequacy of procurement, and wastage of available drugs expenditure on drugs is exemplified by the fact due to poor prescribing and management that this share is only about half the African systems. The first problem is that the current average. Although both the PET-QSDS and PER budgetary allocation for drugs (16 percent of report that the amount allocated to drugs has total public health spending was on drugs) is increased over the years, there is evidence that 14 the allocation is not enough. The 2019 budget The 2018 Zambia National Rational Use of shows a reduced allocation to the drug budget, Medicines Study shows that on average, only a situation exacerbated by an increased debt 44 percent of the facilities follow the standard on drugs that have been supplied to the public treatment guidelines (STGs) for malaria, with a sector in previous years through framework wide variation ranging from 6.7 to 76.7 percent contracts. across facilities (Ministry of Health 2018b). For cases with a diagnosis of acute respiratory Secondly, the PER report shows that significant infection (ARI)/pneumonia, adherence to STGs resources are being wasted through poor averaged only 31.0 percent (Ministry of Health procurement practices, delayed payments, and 2018b). Policy attention is needed to minimize expiry of drugs. The real value of the drug the irrational prescribing of medicines which budget is vulnerable to fluctuations in the only work to invariably increase health care exchange rate, and this exacerbated the budget costs and reduce health service coverage. deficit in the drug budget in 2017 (Chansa, Overall, inadequate allocation for procurement Sundewall, and Östlund 2018). The implication of drugs, inappropriate prescribing practices, is that poor patients who cannot afford to buy and challenges in the supply chain their own drugs go untreated or under-treated. management contribute to stock-out of Hence, there is need to provide an adequate essential drugs for considerable periods of time allocation for drugs, and to settle the (Table 3). For example, facilities experienced outstanding public debt on drugs. lengthy periods of stock-outs, with about 10 percent of the hospitals not having Coartem, Third, poor and inappropriate prescribing the first line antimalarial drug, continuously for practices cause the health sector to lose 10 months. significant resources in drugs and medicines. Table 3: Percentage of health facilities reporting stock-out of essential drugs Rural Health Centers Urban Health Centers Hospitals Drugs % reporting Average % reporting Average % reporting Average drug not duration of drug not duration of drug not duration of available stock-outs available stock-outs available stock-outs today (weeks) today (weeks) today (weeks) Coartem 5.6 9.0 2.5 12.0 10.0 44 Panadol 18.8 7.2 7.5 8.7 10.0 2 Septrin 25.6 36.0 30 13.7 26.7 29 ORS 7.5 19.8 10 2.3 10.0 2 Vitamin A 11.3 31.9 7.5 18.7 10.0 14 Ferrous Sulphate 11.9 7.4 10 5.5 13.3 21 Source: World Bank (2019). 3.3.7 Service delivery has improved but much more needs to be done to remove existing gaps and to attain full coverage Evidence from the PET-QSDS and the SARA most facilities were assessed to have an overall (WHO 2017) portrays general improvement in readiness to provide services in the range of the range of services provided and availability at 60–70 percent which implies that there are health facilities. However, the reports also point significant gaps in service delivery. Further, to significant bottlenecks and constraints on there are considerable differences in the the supply side in a range of core health magnitude of service delivery gaps across services. With the exception of HIV testing and provinces. To address these challenges, counselling, PMTCT, and malaria treatment, evidence shows that service coverage can be 15 extended by integrating service delivery considering that facility managers in the RBF arrangements at district and facility levels. One districts have financial and managerial such strategy is joint use of health care inputs autonomy, a major lesson is that RBF offers when delivering services. For instance, service some promise in improving staff satisfaction delivery in some districts and health facilities is and service delivery in the long term. fragmented, and replicated across health interventions. These gaps in service delivery often translate into unmet needs for patients. Finally, the PET-QSDS (World Bank 2019) shows that health facilities using results-based financing (RBF) performed relatively better in some measures of perceived quality of health care but had limited or no effect on staff satisfaction and absenteeism. This demonstrates how complex the issue of human resource management is. However, 3.4 There is need to improve resource allocation across the regions and districts to move closer to UHC targets 3.4.1 The gap between health outcomes and expenditure has widened across provinces Results from the PER (Figure 6) show wide the district level equitably, but not salaries and differences in per capita expenditures at the wages. The maldistribution of health workers provincial level, with provinces that are already exacerbates inequities in the geographical well-endowed continually spending more. allocation of financial resources. Henceforth, Generally, provinces with lower spending moving health workers into more remote areas (Eastern, Luapula, Muchinga, and Northern) (given that the wage bill is the largest have worse health outcomes; and this suggests component of health spending) would help to that public funding is exacerbating inequalities distribute resources equitably. Further, the in health outcomes across the provinces. This district resource allocation formula has become could be attributed to inadequacy of the redundant with the proliferation of new existing needs-based formula for distributing districts since 2011, and there is need to revise operational grants to districts. As highlighted in it. the PER, the district resource allocation formula has facilitated an equitable distribution of “Provinces with lower spending have worse operational grants to districts but not the health outcomes largely due to inadequacy distribution of salaries and wages which is of the existing formula for allocating dictated by the distribution of health workers. financial resources to the districts.” This suggests that continued use of the formula could help in allocating operational grants at 16 Figure 6: Provincial health expenditure and under-five mortality rate and stunting Source: World Bank (2018c). 3.4.2 Equity in financing and consumption of health benefits “There are some improvements in financial risk protection and consumption of health benefits by the poor but more effort is required to move closer to UHC targets.” The overall incidence of financing of health care Findings from other equity studies also confirm shows that methods of mobilizing health care that the removal of user fees on primary health payments are generally progressive (World Bank care, as well as the predominance of general tax 2018a), keeping with the principle that those and donor funding to fund health care makes with higher incomes contribute proportionately the Zambia health system more financially more to health care expenditure. However, progressive (Masiye, Kaonga, and Kirigia 2016). alcohol and tobacco taxes were found to be As compared to other lower middle-income generally regressive because the poor tend to countries, Zambia records a relatively low consume more tobacco and alcohol than the incidence of financial hardship and ill-health- rich. However, the tax system could be induced impoverishment. Having said this, considered equitable if the poor reduce their access to health care among the poorest still consumption of harmful products, and gain remains a key challenge. This is because larger health benefits (Bird 2015). Further, the analyses on financial protection and benefit national incidence of households facing incidence do not consider the population who catastrophic OOP payments (or payments fail to report illness or who do not report beyond 40 percent of their non-food expenditure. Further, even though there have expenditure) has been reducing across all been improvements in the receipt of total household income groups. For instance, the health care benefits in comparison to need for percentage of households incurring health care at household level between 2010 catastrophic OOP payments reduced from 10 and 2015, the poorest 20 percent of the percent in 2010 to 3 percent in 2015, indicating population still received lesser health benefits a high degree of financial protection. in comparison to their needs as compared to richer households (World Bank 2018 17 4. CONCLUDING REMARKS The four papers and other supplementary funding, there are weaknesses in budget evidence collectively highlight various areas of execution particularly at the primary health progress in health financing, expenditure, and care level while the high cost per health service service delivery in Zambia between 2006 and output suggests that more health services can 2017. We observe that government schemes be obtained from the available resources became an increasingly important channel for through improved efficiency in spending. pooling resources, the overall incidence of Further, significant human resources hours are financing health care is pro-poor, and the lost due to absenteeism and idle health country has a low incidence of catastrophic workers while there is inadequate expenditure, health payments as compared to other lower wastage, and stock-outs of essential drugs. All middle-income countries. These achievements these factors contribute to provision of poor- in financial risk protection in Zambia could be quality services and health outcomes. Lastly, attributed to the free health care policy and there is urgent need for the government to predominance of government (general tax come up with a viable strategy of recruiting and revenue) and donor funding. The reports also retaining the rising pool of unemployed health show improvements in the range and workers through contractual arrangements availability of health services, increasing share with Cooperating Partners and the private of expenditure on ambulatory health care sector; or at the least, to facilitate their (which aligns to government’s primary health recruitment in foreign countries so that they care approach and health vision), and a can acquire more experience while the country remarkable increase in the training and can also benefit from foreign transfer recruitment of health workers. payments. Despite the above successes, the reports also The data contained in the NHA, PER, PET-QSDS, highlight a number of challenges. In particular, and equity reports provide a useful backdrop for the overall level of health spending in Zambia at developing a fiscally sustainable, equitable, and US$59 per capita is not sufficient to meet the efficient strategy for financing health care in cost of attaining UHC. Further, the modest Zambia. In the next section, we present some increase in inflation-adjusted total CHE in the policy recommendations that could be used to past four years has been counteracted by address the challenges in the short to long stagnating donor health expenditure, and a term. decline in the share of total public spending allocated to health. Despite low levels of 18 5. POLICY RECOMMENDATIONS MEDIUM TO LONG TERM INTERVENTION HIGH PRIORITY: SHORT TERM (1–3 YEARS) PRIORITY (3–5 YEARS) Improve domestic • Revise the existing national health financing strategy • Develop a strategy on how resource to provide for innovative means of sustainable and the country will transition mobilization equitable health financing through domestic sources. from donor support and The strategy should identify and set specific and sustain health service actionable targets for domestic resource mobilization delivery by using domestic for the health sector in the short to long term. resources. • At the highest level of the Ministry of Health, lobby for increased government allocation to the health sector in line with the Abuja target of allocating 15 percent of total public resources to the health sector. • Develop a clear framework for re-engaging donors with a view to reducing the current uncertainty surrounding donor financing. • Given that most donor funds are increasingly targeted at specific programs or regions, it is recommended that a framework of common planning be implemented to ensure that allocation of all health sector resources is harmonized. Resource • Revise the district resource allocation formula for • Devise and implement a allocation operational grants to take into account new districts, new resource allocation and underlying inequalities in human resources, formula to optimize the health infrastructure, population density, and mode allocation of resources by of transportation. The existing district formula is not level of health care and sufficient as districts with more staff and health impact on the disease facilities tend to get more funding per capita. burden. • Develop a robust resource allocation for funding • Improve monitoring hospitals based on intervention set and disease systems for deployment of burden to more accurately reflect cost of hospital health human resources in care. rural facilities to ensure that staff are not migrating • Enforce implementation of the free user fees policy from rural to urban to foster financial protection. Evidence from the PET- facilities. QSDS shows that some user fees are still being charged at primary health facilities. • Conduct an assessment of priority package of benefits to be included in the proposed NHI based on cost-effectiveness, high financial burden, and equity. Improve • Consider direct disbursement of operational grants • Conduct a comprehensive predictability of from the Ministry of Finance to district hospitals and assessment of resource funding, efficiency health centers. This would improve timeliness of management in public and use of disbursement of grants while also providing for health facilities to improve managerial autonomy for health facility managers. 19 available • Conduct regular monitoring and assessment of grant efficiency of public health resources allocations and public health expenditure. spending. • Develop a harmonized, cost-effective and sustainable • Transform the government RBF model that could be scaled-up countrywide using operational grant into a government systems and finances. RBF grant, and scale-up RBF to all parts of the country. Improve planning • Increase budgetary allocation to drugs through a • Establish policy and for drug special drug fund. guidelines for purposes of procurement and comparing prices of all • Minimize costly accumulation of arrears by signing prescribing drug commodities to a contracts in the Zambian Kwacha, price locking, reference standard to payment of suppliers in full at the start of the obtain the best value for financial year, and effective management of money from available drug framework contracts. budget. • Explore efficient and cost-effective options for • Develop capacity in more national procurement of drugs. cost-effective medicine • Investigate magnitude and causes of wastage of prescribing practices. drugs in health institutions. • Develop a strategy to address irrational prescription of medicines, such as overuse of antibiotics and injections. Effective • Come up with viable options of how to recruit the • Develop a system for management of growing pool of unemployed health workers. monitoring productivity of human resources all types of health • Devise a strategy for monitoring how health worker personnel to get more absenteeism is reported and managed at district and health services out of facility levels. available health staff. • Distribute human resources based on where they would be most productive. Physical • Increase budgetary allocation for maintenance of • Construct new health infrastructure and existing infrastructure (buildings and medical facilities in rural areas to medical equipment). increase physical access, equipment and reduce waiting and • Standardize equipment listing to benefit from travel time. negotiated prices from service contracts for equipment maintenance. Buying same model of medical equipment will lead to savings from routine maintenance. Improve public • Improve financial reporting by harmonizing the finance various financial management software in the health management sector. • Institutionalize the NHA to provide data routinely for more effective planning and budgeting. 20 REFERENCES Bird R. M. 2015. “Tobacco and Alcohol Excise Taxes for Ministry of Health. 2007. Revised Guidelines on the Improving Public Health and Revenue Removal of User Fees at Government and Mission Health Outcomes: Marrying Sin and Virtue?” World Facilities in Zambia. Lusaka: Ministry of Health. Bank Policy Research Working Paper No. 7500, World Bank, Washington DC. ———. 2017. Zambia National Health Strategic Plan 2017–2021. Lusaka: Ministry of Health. Central Statistical Office. 2015. Zambia Labour Force Survey Report 2014. Lusaka: Central Statistical ———. 2018a. National Human Resources for Health Office Strategic Plan 2018–2024. Lusaka: Ministry of Health. ————. 2016. Living Conditions Monitoring Survey Report 2015. 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