Recent Innovations to Improve the Effectiveness of Development Assistance for Health
In recent years, donor agencies working with developing countries have been testing—and in some cases rolling out on a large scale—a series of innovative approaches and instruments to improve the effectiveness of DAH. Those innovations include the use of broad budgetary support to countries with strong governance and institutions, the implementation of sectorwide approaches in health, the use of performance-based financing mechanisms, a shift to direct engagement with the private sector, and the implementation of programs designed to move resources expeditiously to the frontlines of the battle for improved health (that is, to communities). Evidence on the effectiveness of those innovative approaches and the conditions under which they tend to work is starting to accumulate.
Budget Support in Strong Policy Environments
In low-income settings where policies, governance, and institutions are sound, donors have increasingly sought to provide broad, untied, and flexible budget support to governments to help support a full public expenditure program aimed at raising the level of spending and the effectiveness of resource use for health. Frequently, this support has taken the form of PRSC operations, including grants and credits. The PRSC is typically built on the foundations of a national poverty reduction strategy that analyzes the links between poor health outcomes and income poverty and identifies policies that can improve the health of the general population, especially that of poor households. The policies are then used to design a medium-term public expenditure program or framework that, in turn, is backed by external funding from donors in the form of a PRSC.
This approach draws on three of the key lessons from decades of experience with DAH:
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A good policy environment improves the use of external financing.
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The fungibility of DAH makes it logical to allocate external funds to a general budget that prioritizes health rather than to narrow projects in the health sector.
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An integrated system for managing public finance for health improves national ownership of policies and programs to improve the health of the poor and raises the chances that such funding will be sustained over a long period and eventually will use domestic resources.
Plenty of examples are now available of the use of DAH for PRSCs that focus on improvements in health. The earliest health-oriented PRSCs were in Mozambique and Uganda, followed since by similar operations in Benin, Mauritania, and other low-income African countries. In Mauritania, for example, the country received a transfer of US$25 million in external financing to back a public spending plan that doubled health spending from about US$8 per capita in 2000 to US$16 per capita in 2004. The plan also emphasized increasing health investments that are designed to lower maternal and child deaths and combat communicable diseases by expanding rural health facilities, by providing higher pay and other incentives for health personnel working in rural areas, and by improving the availability of drug supplies at lower-level facilities. External financing was not earmarked for these actions in the health sector. Instead, the government committed itself to spending for these purposes from a consolidated national budget that was closely monitored by civil society, government officials, and donor representatives (World Bank 2004a). The early results from Mauritania are encouraging. Spending for health has risen, with most of the increase going to those parts of the country and for those kinds of services likely to have the largest effect on the health of the poorest households.
In middle-income countries, an analogous shift of DAH in strong policy environments has been the increasing use of single-tranche, programmatic, sector adjustment loans. These loans have emerged as a favored instrument for DAH in certain Latin American countries with sound management of public finances and internationally accepted procurement practices. Unlike the PRSCs, the programmatic sector loans have tended to target a single sector (such as health) or, occasionally, two sectors (such as health and education in the case of Brazil or health insurance and pensions in the case of Ecuador). Whereas the PRSCs have their analytical roots in poverty studies, the programmatic sector loans tend to be based on sector assessments. After the government has taken key legal, institutional, and spending actions to improve the efficiency of health spending or to target services for poor households, donor funds are transferred in a block or tranche to the government. In 2003, the World Bank approved four programmatic sector loans—for Brazil, Colombia, Ecuador, and Peru—totaling US$900 million (D. Cotlear, personal communication, December 12, 2003).
Another recent example is the World Bank's US$750 million Maternal and Child Insurance Program sector adjustment loan to Argentina, which followed decisions made by that government in 2003 to create a mother and child health insurance scheme for poor provinces, to increase spending for communicable diseases, and to establish a national health council to set policies on the sharing of revenues to be used for health between the central government and the provinces. The central pillar of this project, as well as the follow-on operation in 2004, is the implementation of the Maternal and Child Insurance Program. It delivers a publicly financed package of essential services to uninsured mothers and children at the provincial level. The donor funding is used in an innovative way to provide matching grants from the national to the provincial level, on the basis of a capitated payment per mother and child enrolled plus additional transfers to the province for performance. That performance is measured in terms of key health service goals (for example, coverage of vaccine programs, incidence of low birth-weight, and number of prenatal consultations). In the first four months of program execution, more than 100,000 eligible women and children joined the insurance scheme.
Pooling and Donor Harmonization
As mentioned earlier, another innovation in recent years has been the use of sectorwide approaches as a way for multiple donors to pool their funds for a commonly agreed-on program and to use similar, streamlined procedures for procurement, monitoring and evaluation, and reporting. Sectorwide approaches grew out of sector investment programs for health that were launched in the early 1990s as a way to bring donors together to support broader government objectives in health.
The main features of sectorwide approaches are as follows:
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a partnership among a broad coalition of donors, with the government taking the lead;
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a comprehensive sector policy framework to achieve goals over the short and medium terms;
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an agreed-on expenditure program;
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the improvement of management systems and capacity building (Swedish International Development Cooperation Agency 2003).
The main difference between sectorwide approaches and PRSCs is that, in the former, pooled donor funding is disbursed against specific expenditure items—for example, construction of health facilities or purchase of drugs—whereas in PRSCs, donor funds are transferred to the general budget, with disbursements triggered by policy actions.
A prime example of a sectorwide approach is the Ghana health sector support program, in which 17 donor organizations have committed US$442 million over a five-year period to improve the health status of the population while focusing efforts on reducing inequalities in health. The program includes the following main spheres of action aimed at strengthening priority health interventions: developing human resources for health services, enhancing infrastructure and support services, fostering partnerships for health, improving regulation, reforming organizational arrangements, improving health sector financing, enhancing financial management systems, strengthening management information systems and performance monitoring, and linking with traditional medicine.
Performance-based Financing
Developing countries and their international partners are increasingly adopting methods for financing health care activities that link the availability of funding to concrete, measurable results on the ground. Such performance-based financing was advocated a decade ago in the 1993 World Development Report (World Bank 1993) and in other policy documents in the early 1990s, although relatively little practical knowledge of this type of financing was available at the time. Since then, much more experimentation has taken place, and the important potential—as well as the challenges—of performance-based financing for achieving national and global health goals is becoming apparent.
Performance-based financing is now being widely and actively tested at several levels of the health care system. These tests include situations in which the following occurs:
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Governments of developing countries pay health care providers in NGOs and the private sector to deliver essential health services to poor households.
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Central governments determine the transfer of funds to local governments on the basis of their performance in strengthening health services.
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Donors release funding to recipients in developing countries as and when they achieve certain key health targets.
Performance-based Contracts with Nongovernmental Organizations
A number of governments in low-income countries are funding NGOs to deliver basic health services on a performance basis (Hecht 2004). Many of the earliest experiments are from Latin America and the Caribbean. In Haiti, for example, the government contracted NGOs to provide child health and family planning services. The government gave the NGOs an advance each year and then a quarterly sum based on a negotiated budget. At the end of the year, performance was measured against various indicators, including the extent of immunization coverage, the percentage of families using oral rehydration to treat acute diarrhea, the share of pregnant women attending prenatal care, and the average waiting times in clinics. The NGOs' performance determined the bonus they received, which could be up to 10 percent of the original negotiated budget. As a result, the Haitian NGOs made changes in their service delivery schemes and improved their performance in immunization and oral rehydration in particular (Eichler, Auxilia, and Pollack 2001). In Guatemala, the government is implementing a large performance-based program with NGOs that currently covers nearly 4 million people, mostly among the country's indigenous population (box 13.2). Similar schemes have been implemented in Argentina, El Salvador, and Nicaragua.
[Box 13.2]
More recently, countries in South Asia have begun to enter into performance-based health programs with NGOs. In Afghanistan, under a recently approved World Bank-financed project for health service rehabilitation, the government is contracting with NGOs to run health centers. NGOs that achieve specified targets will be eligible to receive additional payments of up to 10 percent of their baseline subsidies from the government.
In a similar vein, the central and state governments in India have started to reimburse NGOs and private providers on the basis of performance. The national TB program reimburses private laboratories for testing sputum samples to detect TB; it also pays NGOs and private doctors a fixed sum per infected patient who is cured using the directly observed short-course therapy approach. In one district of Kerala state where this scheme is well advanced, NGOs and private providers have helped boost coverage from some 55 percent of those infected with TB to 78 percent (WHO 2003).
In Cambodia, government agreements and funding to NGOs to operate district health services showed impressive results compared with the standard approach, whereby the government ran district services. The NGOs operated in one of two ways: (a) on a fully contracted-out basis, with complete responsibility for service delivery, including hiring and firing staff members and setting wages and procuring and distributing essential drugs and supplies, or (b) through a pure management contract, in which the NGOs worked within the Ministry of Health system and had to strengthen the existing district structure. The NGOs that were fully contracted out raised immunization rates by 40 percentage points between 1997 and 2001, twice the rate of improvement produced by the government-run districts. The rate of growth in prenatal care in the contracted-out districts was more than triple that in the government-run districts, and the use of modern contraception methods expanded 50 percent more in the contracted-out districts (Bhushan, Keller, and Schwartz 2002).
Central Government Transfers to Local Authorities
In Brazil's Family Health Project, the central government is making per capita transfers to local municipalities on the basis of planned increases in certain services, such as safe deliveries for low-income women and poor children treated for various illnesses and monitored for their nutritional status and growth. For example, at least 40 percent of babies are to be delivered in maternity facilities managed under the government's family health program. Participating outreach workers are to provide an average of at least nine home visits to targeted low-income families each year. All doctors enrolled in the program are to undergo special training. If the municipalities reach those targets and several others, they will continue to be eligible for future financial transfers; otherwise, the level of central government support will be reduced, and remedial measures will be put in place to try to improve the targeting and effectiveness of the activities run by the underperforming municipalities (G. M. LaForgia, personal communication, October 21, 2003).
Donor Disbursements to National Governments and Other Recipients
A number of innovative approaches are in place that make donor financing of health programs conditional on successful performance on the ground. One example is the World Bank's credit buy-down program for polio eradication (box 13.3).
[Box 13.3]
GAVI has also been a pioneer in the performance-based approach to grant assistance. Through its sister organization, the Vaccine Fund, which raises and disburses funds for the alliance, GAVI provides commodity assistance to countries in the form of new and underused vaccines (hepatitis B, Haemophilus influenzae type B, and yellow fever, with new products for rotavirus and pneumococcus to follow); safe injection supplies; and support for strengthening national immunization systems. In addition, GAVI allocates grant funds to countries on the basis of their performance in increasing coverage rates for diptheria-pertussis-tetanus immunizations. Countries' applications to GAVI specify current coverage levels. On the basis of these data, their performance is assessed annually, and US$20 per child is given to the country for each additional child immunized with the diphtheria-pertussis-tetanus vaccine.
In 2004, GAVI made its first payment for performance verified by means of externally audited health data. Eight countries received US$15 million in performance-based payments for their achievements in increasing immunization rates to reach an additional 750,000 children. Sierra Leone, for example, qualified for these payments on the basis of its performance in raising coverage from 44 percent of children in 2000 to 62 percent in 2002, as the country emerged from civil war (GAVI 2004a).
Stronger Engagement with the Private Sector
As donors have increasingly become aware of the extent of private sector involvement in the health sector in developing countries—that is, both the share of health services delivered by private providers and the share of total health spending coming from private sources, including out-of-pocket payments—they have sought to use DAH to engage the private sector in pursuit of basic health goals.
Innovative approaches include both the transfer of development assistance to the private sector through government channels in developing countries and the provision of direct financial support to private institutions (World Bank 2003b). In the former category, social investment funds have been established in many regions as a way to channel DAH to community groups and NGOs involved in running health centers and disease control programs (Jorgensen and Domelen 2001), especially in Africa and Latin America. In a similar vein, donors have been prime movers behind schemes to encourage governments to contract with NGOs and private hospitals and laboratories for basic services targeted to the poor, such as cataract surgery and TB case detection and treatment in India (Central TB Division 2002; World Bank 2002).
In terms of direct DAH financing to the private sector in developing countries, the most common and longstanding examples are in the social marketing of health-related personal products, such as contraceptives, kits for treating sexually transmitted infections, insecticide-impregnated bednets to prevent malaria, and point-of-use water purification kits. Donors are currently providing millions of dollars each year to subsidize the purchase of these items by poor families in developing countries. More recently, other donor engagements with the private sector have included the Global Alliance for Improved Nutrition, in which a consortium of donors that includes the Bill & Melinda Gates Foundation and the governments of Canada, the Netherlands, and the United States have pooled funds that can be used to expand the fortification of basic foods with micronutrients by private manufacturers. The Global Alliance for Improved Nutrition is helping to fortify wheat with iron in western China and in Morocco and fish sauce with vitamin A in Vietnam.
Another recent example of DAH going directly to the private sector is Avahan, the innovative AIDS prevention program that the Bill & Melinda Gates Foundation is financing in six Indian states. The program uses external financing to leverage financial and in-kind support from major Indian companies that can then be used to support a range of HIV prevention programs, such as condom promotion, peer education, and voluntary counseling and testing targeted at truck drivers, commercial sex workers, and others at high risk (Sengupta and Sinha 2004).
The other area in which donor funds are increasingly being used to stimulate private sector action and leverage private funding is through public-private partnerships for new health technologies, including vaccines, drugs, and diagnostics. Private financing, technical input, and management make sense in this area, because typically it is the private sector that has the technical knowledge and the manufacturing and distribution capacity to create and market new health products, but major scientific risks and the lack of an attractive market in poor countries are barriers to investment. The public-private partnerships aim to overcome those barriers through a combination of up-front financing for R&D (so-called push funding) and market guarantees for effective products (so-called pull financing). The 20 largest partnerships for new products have raised more than US$1.5 billion over the past decade and are beginning to see results, such as the development of new drugs for malaria and TB, promising vaccines for malaria and AIDS, and microbicides to protect against HIV infection (IPPPH 2004; Rockefeller Foundation 2004). The largest partnership, the IAVI, illustrates the innovative nature of these partnerships and the effective use of DAH (box 13.4).
[Box 13.4]
Getting Funds to the Front Line
Central government funds can easily leak as they move through the pipeline from the center to local levels. In addition, in the absence of local initiative and the right incentives, service provision can fail to reflect the views of local people. Effective DAH needs to address those impediments. It needs to channel technologies, ideas, finance, and technical assistance closer to households, health providers, and supervisory officials in ways that are consistent with national policies and are amenable to monitoring and reporting.
Development assistance for health is more likely to reach communities if they have the following:
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a decentralized system of fiduciary and technical management in the public sector
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a strong financial capacity in NGOs and private providers in cases in which the government's strategy for local development is to rely on private institutions
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a government body that is appropriately equipped and responsible for regulating the quality of public and private providers
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a balanced approach to community-driven development in health to ensure that financing for community health initiatives of the social fund type is sustainable.
Examples of DAH reaching frontline workers in an expeditious and sustainable way include block grants for districts in Uganda; social development funds in Central America; contracts with urban and rural NGOs under India's Reproductive and Child Health Program; and support to community-led initiatives under the Multi-Country AIDS Program, which financed an average of 10,000 local initiatives in each of its first four years in several African countries (World Bank 2004c).
