Today more than ever, there is wide consensus that public, compulsory funds are key to achieving universal health coverage (UHC). The recent reforms by countries to finance UHC have renewed an interest in public financial management (PFM). While the path to UHC will be determined by decisions about how to allocate and use these funds in the health sector, the content and focus of the required PFM reforms, particularly from a health service provider perspective, remain unclear.
In low and middle-income countries (LMICs), PFM reforms often consist of a standard set of interventions to strengthen the overall strategic allocation and accountability of public funds. They are often not sufficiently customised or responsive enough to specific country contexts, sector needs or inadvertently inhibit the reform process.
If PFM systems are meant to support financial accountability through transparency and an overall good and efficient use of resources, they can – or should – simultaneously enable adequate delivery of services and create an enabling environment for effective funding. Yet, these links are not always thought through enough in advance during the design and implementation of PFM reforms.
To address this gap, we - a group of professionals working for various international agencies at the nexus between PFM and health policy and management – want to bring a health service provider lens to the PFM discussionRecognising that the quality and effectiveness of health service provision is closely related to how providers receive and are able to use financial resources, our goal is to promote a design and implementation of PFM reforms that reflect the role and needs of front-line service providers.
The following PFM-related challenges need to be addressed:
- Adequate planning of and access to funds: providers are often not involved in the planning and budgeting of expenditures, which are historically determined and managed by higher levels – such as district, provincial or central levels, and often transferred in-kind to front-line facilities. This lack of spending authority and access to funds severely impede the ability of facility managers to take responsibility for providing responsive service delivery to users.
- Timely release and use of funds: even when countries have moved toward output-oriented frameworks and mechanisms, funds often continue to be released by inputs to providers. As a result, the autonomy of providers in determining the best mix of inputs to deliver priority service outputs is limited. Similarly, rigid PFM rules, such as the inability to have carryovers from one fiscal year to the next, constrain their capacity to effectively manage funds in a more rational manner.
- Misaligned reporting systems: new financial management procedures and information systems are only introduced once they have been centrally adopted. Poorly developed and fragmented reporting systems hinder the consolidation with national finances and limits the impact that PFM reforms would otherwise have on transparency and accountability.
To increase the capacity and flexibility of health service providers to plan, use and report funds, enhanced dialogue and action involving ministries of health, finance and sub-national authorities is needed.This dialogue can be based on the following three guiding principles:
- Revising the status and functioning of health service providers: this implies recognising health service providers as “spending entities” with greater financial and managerial autonomy. Typically, this entails have a bank account and some degree of spending authority over the revenues received, as well as having an accountability system that ensures funds are adequately spent.
- Introducing greater flexibility in expenditure management for providers: this implies softening rigidities attached to input-based appropriations, especially when funds are released to health service providers. National level reforms should also include a re-thinking of the way providers are managed and paid; more flexibility at sub-national levels or with purchasing entities would facilitate a comprehensive and more efficient management of all costs related to health service delivery.
- Strengthening service providers’ financial management capacities: This is directly linked to the first two principles and will allow health service provider’s capacities to better plan and budget; receive; spend; account for; and report funds. While capacity building is critical, building confidence in facility managers would contribute to their empowerment. We believe that service providers entrusted with greater capacity and autonomy would likely perform better.
Approaching PFM from the perspective of health providers that deliver services to their citizens and communities allows stronger and more coordinated dialogue between the health sector and public finance reform specialists. Additionally, improving communications between health and PFM specialists could lead to re-thinking the reform agenda, while finding a balance between control and autonomy for providers to “buy the right thing” could result in improved sector performance without a loss in financial performance.
 The Group is composed of: Hélène Barroy (lead), Elina Dale & Grace Kabaniha from the World Health Organization, Moritz Piatti from the World Bank Group, Fabrice Sergent from the African Development Bank, Sheila O’Dougherty& Gemini Mtei from Abt Associates and Jason Lakin from International Budget Partnership. Valuable comments and inputs were provided by Mark Blecher (National Treasury, South Africa), Paolo de Renzio (International Budget Partnership), Joseph Kutzin (World Health Organization) and Magnus Lindelow (World Bank Group).