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Top-down approach

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Step one. Estimate the present level of aggregate financing, total and per head. Include all sources of financing. Private contributions, often unknown, can be very significant and should not be neglected. They vary dramatically across countries, and, given the dispersion of provider-patient transactions, are difficult to estimate. Censuses or household surveys, which usually supply this information, are in most cases not available, or cover only secure areas, i.e., very unrepresentative ones. Again, the judicious consideration of countries considered similar in terms of socio-economic development (but not victims of a serious crisis) can provide some indications.

Step two. Try to forecast the level of internal and external financing to be allocated to the health sector in the mid- and long-term, given macroeconomic perspectives (usually studied with some accuracy, by IFIs, independent analysts, donor agencies etc.). This depends on several factors, including economic growth, the government capacity to extract revenues, the priority given to health by decision-makers, the popularity of the country within donor circles etc. Build a set of scenarios (high-case, average and low-case). See Module 6 for a detailed discussion on forecasting financing levels.

Consider that in most war-torn countries fiscal capacity has suffered badly, when it has not altogether collapsed. Recovery from fiscal collapse is usually slow. Also, the substantial cost of the peace process, likely to be felt far in the future, may offset anticipated peace dividends. And other important sectors compete with health for government attention. Thus, be wary of over-optimistic forecasts, quite common in transitional environments, when expectations are high and the implications of rebuilding a devastated country are not appreciated in full.

Step three. Compare the global resource envelope likely to be available to the health sector in the mid- and long-term to equivalent figures for other countries and analyse what they have achieved. There is no reported example of a very poor country able to provide universal coverage with comprehensive basic services of acceptable technical quality to its citizens. A realistic estimate (Hay, 2003), which puts the annual minimum cost of a comprehensive, universal publicly-financed health care at between I$ 75 and 120 per capita, goes a long way towards explaining why the goal of universal coverage is out of reach for the poorest countries. Thus, the figure arrived at for the total resource envelope, which in most cases of poor, war-torn countries falls between the level of Afghanistan (2-3 US$) and that of Cambodia (22 US$), imposes on policy-makers very harsh decisions, in terms of scope, coverage, content, quality of the provided services.

Step four. Study the composition of health expenditure and assess whether it is balanced (in most cases it is not). In many disrupted health sectors, the information related to health expenditure is grossly inadequate, and only educated guesses are allowed. During the first years of physical reconstruction, investment expenditure may expand to absorb up to one third of the total, but later it should stabilize at below 20%. In a labour-intensive sector such as health, salaries should account for between half and two-thirds of recurrent expenditure. The balance of recurrent expenditure, after salaries are subtracted, may be apportioned (roughly in equal parts) between other recurrent expenses and drug purchasing (but drug expenditure may get a much higher share where private firms and brand medicines dominate the scene). If the total expenditure structure is found dramatically different from the described pattern, serious distortions are probably present and need to be addressed. For instance, the expenses related to security and logistic may absorb most available funding.

Step five. Identify the major flaws affecting the health sector and consider the realistic policy options available to decision makers (internal and external) to address such flaws, given the projected financing levels and the present situation in the health sector. The table presented later in this module includes some of the most common problems affecting health sectors emerging from a protracted crisis. Some of the policy options worth of consideration are sketched and commented. Annex 12 offers a tentative application of this conceptual approach to the Iraq health sector in 2003. Consider different service delivery models and service mixes (for a full discussion, see below, under Bottom-Up Approach, Second Round, and in Module 7).

Step six. Work out size and features of an affordable health sector, given existing constraints. Cost estimates of the sort described below, in the Bottom-Up approach, are needed to translate forecasted financing levels into number of facilities and health workers. Estimate the service coverage obtained by the health sector projected in the previous step. Consider the management systems needed to run the revamped health sector, according to proposed size, features and health care delivery model. Work out the legal, institutional and financial implications of implanting performing management systems. For a discussion of the issue, see Module 8.

Enlist the potential efficiency gains on offer and discuss the feasibility of measures aimed at achieving them. For instance, the introduction of a centralized mechanism to purchase generic drugs through international competitive bidding can boost drug availability through the health sector. Other savings, such as downsizing a bloated workforce through an aggressive retrenchment programme, can be politically much more difficult to enforce, particularly in a post-war environment.

Step seven. Consider the sustainability, balance, equity, efficiency, effectiveness of the projected health sector. Even if all these aspects have been considered earlier in the iteration, a fresh appraisal of the results attained is recommended. Identify the additional interventions deemed as necessary. Proceed to the needed adjustments. Consider whether the problems that would remain after revamping the health sector can be more effectively addressed by adopting an alternative service delivery model.

Common systemic flaws and possible policy responses [pdf 27kb]

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