In August 2024, CABRI brought together 13 African countries’ ministries of finance, ministries of health, and local government representatives, to consider how each stakeholder can contribute to improved health outcomes in their countries by increasing primary healthcare (PHC) facility financial autonomy and flexibility. This blog reflects key insights from this event.

We were reminded once again of the value of bringing together ministries of finance and health (this time along with local government representatives). In line with our expectations, few finance officials, even those working directly with the health sector, arrived at the policy dialogue with an appreciation of why or how facility financial autonomy can contribute to health spending efficiency. Health representatives similarly lacked a comprehensive understanding of how PFM arrangements can help or hinder financial autonomy.

Through facilitated dialogue and development of country posters, like the one pictured here, we supported officials to not only learn from the experience of other countries, but also more about their own country context and the status of health facility financing. As Professor Kara Hanson of the London School of Hygiene and Tropical Medicine reflected, this event provided “country teams with a tremendous opportunity to build an understanding and the trust that will allow them to co-produce solutions going forward.”

The benefits of cross-country peer learning were similarly apparent, particularly providing space to hear from countries that apply pragmatic, localised solutions or fly under the international health financing community’s radar. The variety of approaches to increasing facility autonomy and the potential to learn from other countries’ experiences was highlighted by both Professor Sophie Witter of Queen Margaret University and Pura Angela Wee-co from Thinkwell. We heard from Dr Richard Kagambane from Uganda’s Ministry of Health, about the origins and progression of their decades-old, domestically driven, direct facility financing programme. While certain aspects of their reform may not align with best practice, the finance and health ministries worked closely with local government authorities and facilities to develop fit-for-purpose solutions to getting funds to the frontline. For example, rather than including all PHC facilities in the chart of accounts, often a very cumbersome task, facilities are grouped under local government authorities and report manually. The WHO’s Dr Hélène Barroy also shared the importance of a pragmatic approach and the interim measures that can be put in place while the PFM system adjusts to increased facility autonomy. This was the approach in Burkina Faso, as shared by both Dr Barroy and Ali Bamouni of the Ministry of Health, where rather than waiting for facilities to have bank accounts, they were given cash vouchers and later cheques.

We learnt that ministries of finance are, in principle, open to increasing facility autonomy, but will require a bit more convincing. They want to see that this reform will result in greater value-for-money. While there is evidence of cost-effectiveness from higher levels of care, we need to gather more evidence on this at the PHC level. Other arguments to advocate for more autonomy included the cost-saving potential of more patients seeking care at the PHC level. Dr Prithviraj Ramputty of the Mauritian Ministry of Health and Wellness lamented the cost implications of bypassing referral pathways in his country. PHC facility autonomy, said Dr Agnes Munyua-Gatome of R4D, by contributing to more responsive care, better management and fewer shortages of medical commodities and drugs, should be a determining factor in convincing patients to seek care at the primary care level, thus reducing costs.

Ministry of finance officials also seemed reassured by the reminder that we’re talking about really small sums of money, at least at the initial stages of increasing autonomy. PHC facilities do not require a lot of money. For smaller facilities, just USD 500 a month can be enough to cover basic operational expenses. Sums that the World Bank’s Moritz Piatti-Fünfkirchen reiterated are never going to pose a major fiduciary risk or threaten a country’s fiscal discipline, and so may not need to be subject to rigid ex-ante spending controls. Moritz also reminded us of the risks of conflating accountability with control. While we want more accountability, this is not necessarily always facilitated by more controls - unproductive controls can sometimes force people outside of the system, undermining accountability.

Another key aspect of selling this reform to the ministry of finance is illustrating that facility managers can manage and account for the financial resources they receive. Because facility managers are clinicians, typically without financial management background, it is crucial for them to receive adequate training and support. Small facilities, often headed by a nurse, can be assisted by local authority officers or accountants from larger facilities. In Uganda, for example, dispensaries are supported by the sub-county accountant. In cases where facility managers are to take on full accounting-officer responsibilities, it is crucial that the PFM regulations they must follow are simple, well-defined and clearly communicated. Several speakers emphasised the importance of not overburdening managers and taking them away from their core mandate of providing healthcare. This was a focus in Tanzania when the Facility Financial Accounting and Reporting System was introduced. It was seen as a priority that the reporting system, and associated technology, was simple enough that facility staff including nurses were able to use it. However, in some cases it was still necessary to hire accountants to support groups of facilities.

Facility managers’ financial responsibilities can be increased gradually through carefully sequencing the cost categories under their control. Sheila o’Dougherty, independent health financing expert, emphasised the importance of not “throwing the entire budget at facilities on day one”. Allowing facilities control over smaller sums of money initially can support their financial management capacity development and provide reassurance that they can manage larger expense categories associated with greater fiduciary risk. Sheila suggested that while we almost always want to increase facility autonomy over operational expenditure and purchasing of certain drugs, it is riskier to devolve responsibility for large capital investments and salaries (at least in the initial stages of increasing autonomy). Capital investment is best undertaken at system-level, to avoid over-utilisation and cost escalation (e.g. unnecessary diagnostic tests to recoup the cost of highly specialised medical equipment). And while hiring and firing responsibility is a key element of autonomy, devolving this to facilities prematurely risks undermining public funding of health workers and the equitable allocation of health workers. This does not, however, extend to contract workers and staff allowances. As Sheila explained, staff allowances are excellent costs for facilities to finance given their potential to motivate staff and improve service delivery.

How facility financing is approached should be driven by an understanding of the problems it aims to resolve.

What matters is not whether this reform is introduced, but rather whether it attenuates bottlenecks in delivering health services. While the benefits of getting funds directly into the hands of facilities were apparent throughout the event, it was also useful to be reminded that this may not be a priority in all contexts. Dr Agnes Munyua-Gatome suggested that in some cases it may be more pragmatic for a district health office to continue holding facilities’ financial resources. This is likely to be true when facilities resources can be shown to be equitably and reliably distributed, the facility in-charge has little to no financial management capacity, and the district is small enough to only have a few facilities under its jurisdiction. In Mauritius, it is felt that the status quo, in which facilities do not receive financial resources directly, works adequately. It was however acknowledged that taking advantage of the potential efficiency gains associated with output-based payments would require increasing facility financial autonomy.

The problem-driven iterative adaptation (PDIA) approach is well-suited for identifying these problems and determining how facility autonomy principles can (or cannot) resolve these. This was illustrated by alumnus of CABRI’s Building Public Finance Capabilities for Improved Social Services for Children, Moses Zuze and Yohane Nyanja from Malawi. Through this programme, their team worked to increase facility financial autonomy to tackle inequitable and inefficient allocation of PHC resources (shown in their fishbone deconstruction here). Other PDIA principles such as approaching solutions incrementally, prioritising change management and mobilising a wide contingent of stakeholders, are also key to successfully increasing PHC facility autonomy.

Some output-based payments, despite their significant potential to incentivise the provision of more cost-effective PHC care, may require a longer implementation horizon. Inke Mathauer of the WHO provided us with a comprehensive overview of different provider-payment mechanisms and their advantages and disadvantages. She stressed that facility autonomy is a prerequisite for leveraging the benefits of output-based payment mechanisms - facilities need to be able to respond to incentives and determine and procure the best mix of inputs. It was also reinforced that output-based payments are most feasible if the budget is also structured and spending controlled on an output basis, in line with a programmatic budget structure. However very few countries in the room control spending on an output or programme basis. This has led to difficulties in Egypt, as shared by Dr Ahmed Seyam of Egypt’s Universal Health Insurance Agency. The Agency purchases curative services from the Egyptian Health Authority on an output-basis. The Egyptian Health Authority, the country’s main medical service provider, however, continues to use input-based line-item payments for its facilities, nullifying any potential incentives. We also heard from Ali Bamouni from Burkina Faso how the country’s reliance on in-year cash rationing creates difficulties for facilities who are paid retrospectively for the outputs they deliver.

How facilities are included in budget formulation processes and how resources are allocated are not often given adequate consideration, but was of great interest to all participants. Tom Hart of ODI reflected on the importance of using evidence-based resource allocation formulae for facilities, and communicating ceilings early in the budget process to allow adequate time for submissions, feedback and integration. The role of the ministry of finance and health in providing guidance on the budgeting processes and what can be included in facilities budgets was also covered. We learnt that in Kenya and Tanzania indicative proportions for different cost items are included in the Ministry of Health’s guidelines to facilities. Simon Kaye from the Western Cape Department of Health in South Africa shared how district budgets are determined using a formula including needs-based and utilisation components, which is then split across facilities based on utilisation.