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Analysing disrupted health sectors: a toolkit: Previous page | 1,2,3,4,5,6,7,8

Bottom-up approach

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Recurrent and capital unit costs for health facilities of different levels of care provide the starting point. As international experience has shown that in the long term the financing of recurrent costs is likely to constitute the most serious constraint for health sector development (Segall, 1991), the total cost incurred in operating a recovered health care network is given a dominant weight in the reasoning proposed below. All health facilities, public and private (for-profit and not-for-profit), should be considered in the initial analysis. Later, each sub-sector can be studied in isolation.

First round: elaborating a reconstruction scenario, while maintaining the present service delivery model

Step one: Obtain / formulate average total recurrent unit costs for different categories of health facilities and for different level of performance (satisfactory, average and poor). Given that they are expensive, labour-intensive and require adequate expertise to yield reliable results, costing exercises (commissioned by government, NGOs, charities or firms) are usually carried out on small samples of facilities. Obviously, the resulting costs can be used only when the studied facilities are representative of larger groups. In some cases, no estimate is available and figures from other countries considered reasonably similar to the one under study can be adapted as temporary proxies.

In a disrupted health sector, ‘facility unit costs’, both recurrent and capital, can be a very vague concept. Most derelict, under-supplied and underused facilities, offering dismal levels of care, yield low running costs when they are studied. Conversely, overstaffed facilities in secure areas, supported by well-resourced NGOs, incur very high running costs. Remote facilities performing outreach activities are more expensive to run (per unit of output) than urban ones with heavy patient loads. Thus, considerable caution is demanded when considering available unit cost figures. The values eventually accepted for facilities of ‘satisfactory’ performance should correspond as much as possible to the costs of a ‘normalised’ situation, where wartime distortions are removed, service delivery is largely an indigenous responsibility and operational standards have attained acceptable levels. An additional difficulty is posed by the categorization of existing health facilities, which can be extremely heterogeneous, particularly when built and operated by NGOs. A ‘shadow’ functional classification of facilities can be needed to strengthen estimates (see Module 9).

Cost figures should include both expenditure incurred at the delivery point and that paid for elsewhere, but related to the service production process, such as drug or food donations or in-service training provided by a third party. As in troubled situations a large part of the inputs consumed in health care production are not accounted for in the formal budget of the involved facility, a detailed inventory of the absorbed inputs must be carried out locally. As a rule of thumb, the total recurrent costs of average facilities increase several times moving upwards from one level of care to the next. Thus, the recurrent expenditure of a first-referral hospital may be 2-5 times higher than that incurred by a health centre offering a comprehensive basic package of services. These ratios, once refined according to size of facilities, number of beds, staffing patterns etc., provide precious indications about the optimal facility mix of the future network. Planners may present interesting options to decision-makers, such as between building an additional rural hospital instead of three health centres, or the other way round. In this way, decision-making gains content and policies meaning.

True story #12: Estimating the cost of revamping the health network in Mozambique

In 1992, the Ministry of Health of Mozambique finalized a strategy for post-war reconstruction (Noormahomed and Segall, 1994), which set the broad features of the future, recovered and sustainable health sector. In relation to the health infrastructure, the strategy aimed at significantly expanding the number and scope of PHC facilities and first-referral hospitals, while rehabilitating without enlarging tertiary hospitals. According to the chosen approach, cost estimates elaborated at the time assigned 55% of total investment (projected at approximately US$ 280 million) to PHC.

In 1998, when reconstruction was under way, new cost estimates were elaborated and compared to the original ones. While the PHC investment fit fairly accurately into the forecasted one, hospital costs accounted for twice the originally planned investment. This cost escalation took place without any increase in the number of targeted hospitals. In the new estimates, the share of investment allocated to PHC was reduced to 30% of the total. This substantive change was not due to mistakes in the original computations or to a policy change, but resulted from hospital recovery plans developed in isolation from each other. Architects and hospital doctors connived, on perfectly reasonable grounds, in identifying additional technical needs for each benefited facility, whose satisfaction sent the cumulative cost of reconstruction well beyond the ceiling originally agreed and considered sustainable.

Step two: Estimate the size and composition of the existing network, trying to remove ‘ghost’ facilities, i.e., those destroyed or permanently closed down, from available records. The cleaning of the available data may present considerable difficulties. Sometimes, the reliability of data can be improved by triangulating lists elaborated by different departments, such as planning, human resources and supply. Where an Essential Drug Programme is in place, its data can be very helpful in discriminating active facilities from inactive ones. Also, special programmes keep often information related to their specific area. Thus, a list of facilities providing emergency obstetric care helps to identify hospitals providing surgical services. Usually, the several available lists compiled by different parties present striking inconsistencies. A way to handle them is to build a nominal database of health facilities, with which many problems can be spotted and reconciled, after patient enquiry with health authorities, NGOs or knowledgeable people. Each facility must be characterized by key variables (number of beds, staffing, functioning laboratory, fridge, vehicle etc.), selected in order to determine its functional capacity. Given the quick pace of change typical of transitional processes, such a network database needs continuous updating to remain useful (see Annex 9 for a discussion of the details).

Classify existing facilities, according to their performance level. Reliable inventories of the network are rarely available, so that a rough estimate can be obtained by consulting a panel of knowledgeable people. Compute the total cost of operating the existing network at the present level of performance. To obtain the total cost of the health sector, add support systems (administration, training, transport, warehousing etc.). In most cases, these additional costs fall in the order of 10-30% of the total expenditure incurred by direct service delivery. Verify that the total recurrent expenditure computed in this way roughly matches the figure estimated from a macro perspective. Reconcile discrepancies, if found. Consider present levels of coverage and consumption of basic services. Compare them to the existing health care network, staffing patterns, levels of supply etc. In many instances, reported resources will appear large in relation to reported outputs. Identify major shortcomings and inefficiencies in service delivery. A common pattern is the underutilisation of peripheral facilities, both of primary and secondary level, due to inadequate support, reduced access, poor performance.

Step three: Estimate the total recurrent costs induced by a revamped network (setting, for example, that 80% of existing facilities perform at a satisfactory level), without changing its size and structure. As better quality of care is likely to induce increased utilization of services, a forecast of the levels of coverage and consumption of basic services that would be attained by revamping the performance of such a network can be formulated. Try to estimate the impact on utilization of a change in the existing user fee policy. When the new policy entails regulating a widespread practice, without increasing the cost to users of accessing services, its impact can be favourable. Conversely, a net increase in the cost shouldered by users could trigger a contraction of consumption. Disaggregate by regions, provinces or states, so as to spot underprivileged situations. Compute the total investment needed to achieve a satisfactory performance for the present health care network, including the revamping of management systems. Identify and cost interventions aimed at removing existing bottlenecks. For example, if skilled staff are absent in peripheral health facilities, building houses for them and/or providing hardship salary supplements may result more effective than training additional cadres.

Step four: Estimate the potential savings obtained by identifying and correcting some self-evident major inefficiencies, such as by closing down or downgrading redundant facilities in over-served areas, by re-deploying staff, by downsizing the workforce, by improving supply systems. Assess the political cost of the implied measures and the likelihood that they are adopted. Compute again total recurrent costs and projected coverages / consumption in a system where efficiency has significantly improved.

Estimate the additional expenses induced by integrating into the present health care network facilities run by hostile parties, or dismissed by the military, if the terms of the peace agreement imply such devolution. In some cases, like in Southern Sudan in 2004, the burden of running hospitals located in garrison towns and operated by the central government might be heavy, to the point of changing the whole financial outlook of the emerging autonomous health sector.

Step five: Project the additional infrastructure needed to correct existing inequalities in basic service consumption (split by high-case, mid-case and low-case scenarios, if possible). For instance, if baseline basic services are estimated to cover about half of the population, the implications in terms of new facilities to be opened, of staffing and supplying them and of increased recurrent costs could be explored for coverage targets of 60%, 70% and 80% (for a discussion of the problems related to population figures, see Module 2 and 4). The respective computations should pay attention to the diminishing returns of expanding the access to basic services, hence the increasing marginal costs of the projected growth. This is largely due to uneven patterns of population settlements. The initial service expansion is likely to benefit densely populated and easily reached areas, where health care is provided at lower unit cost. Later phases will demand the coverage of remote areas with sparse populations, where costs increase dramatically. Thus, if the standard basic health centre is planned to serve an average of 20,000 people, a ratio of 15,000 and even 10,000 might be appropriate to cover low-density areas (depending on settlement patterns).

Pay special attention to temporary population settlements, whose coverage with fixed services bears the potential of permanently distorting the health network. This problem can reach serious dimensions in situations where displaced populations (internally and abroad) are large. IDPs, usually poorly known and contended for by warring parties, pose a more difficult challenge than refugees, whose formal status generates better information about their number, settlement and health status.

Project the additional burden the HIV/AIDS epidemic is likely to place on the health sector within the planning timeframe. For countries already badly hit, the disease alters health care demand and the response(s) to it. Most aspects of health care provision, likely to be affected, must be considered by the recovery strategy. The demand for inpatient care, laboratory services, drugs, skilled practitioners and nurses are all expected to increase substantially. The ability of people to pay for health care is correspondingly reduced. Increased dependence on external assistance is in most cases an inevitable outcome. For a brief discussion of the relationships of HIV/AIDS and complex political emergencies, see Annex 4b.

Step six: Work out the total recurrent costs incurred by the expanded / restructured network and the consequent gains in terms of coverages and consumption. Work out the implications / constraints of the proposed expansion in terms of human resource requirements, management systems etc. Try to estimate the incurred costs of transforming the health sector according to the newly set targets.

Step seven: Choose the alternative considered as affordable from a macro perspective (in terms of recurrent expenditure), according to the estimates of total available financing developed in the Top-Down Approach. Work out the investment needed to attain the projected levels of coverage / consumption, also including support sub-systems, such as warehousing, transport and training. Establish a timeframe for health sector recovery, according to the chosen option. Seriously disrupted health sectors need long cycles (10-20 years) of sustained efforts to recover. Plans tend to underestimate the time demanded for huge, systemic interventions to approach completion. Model the evolution of available financing over time. In many instances, aid flows expand dramatically in the immediate post-conflict years, to recede quickly later, when most of the planned investment kicks off (Collier, 2002). Practical ways to address this mismatch must be identified and negotiated with financiers.

Consider the feasibility of the chosen option, given existing implementing capacity. In very poor countries, capacity may be as scarce as resources, in such a way that humble recovery plans become inescapable. In certain situations, where abundant mineral wealth encourages financially ambitious choices, capacity may become the decisive criterion for decision. Unfortunately, a common symptom of poor capacity is the unawareness of it. The Angolan health sector has consistently been fraught by the oil-induced perception of future opulence and by its capacity shortage. Overambitious, never implemented plans have regularly ensued. For a discussion of capacity, see Module 8.

Investment in human resources is particularly important, as its outcome materialises slowly and sometimes in ways diverging from the anticipated. Additionally, training is expensive, labour-intensive, culture-bound and technically demanding. And the workforce, appropriate and productive or not, will anyway absorb the largest part of the future recurrent expenditure. See Module 10. Pay special attention to referral systems, whose costs (both capital and recurrent) are always substantial. Rural first-referral hospitals are among the health sector components that suffer most from disruption and whose recovery presents special difficulties. See Module 9.

Second round: Introducing an alternative service delivery model, or a mix of old and new models

Particularly when the country has gone through a prolonged period of disruption, which has screened it from international developments in health care provision, the prevailing delivery model(s) may be perceived as outdated, particularly by new rulers. Policy makers (outsiders as well as insiders) may be attracted by new approach(es), potential candidate(s) to replace the old one(s). For instance, the Kosovo health sector suffers from a heavy hospital bias, inspired by Soviet planning criteria, bias which needs to be corrected if a viable system is to be built. In other contexts, major common distortions may include service fragmentation along vertical lines, overemphasis on facility-based care, out-of-control privatisation or, conversely, over-reliance on public provision (or a mix of most of these distortions). Old patterns of service delivery must be compared to alternative ones. Clearly, an alternative service delivery model must appear very promising, offering clear advantages over the old one, to be worthy of consideration. Health care delivery models are discussed in Module 7. Analysing Patterns of Health Care Provision.

A special case is posed by severe, protracted crises, whereby health service provision has evolved to such a degree to rule out the resuscitation of old models. In Afghanistan, where the public sector has closed down for years, a dominant share of health services is provided by NGOs. The reintroduction of the centrally-planned and financed public provision of health services in these settings seems out of question, at least in the short term. National authorities, encouraged by influential aid agencies, have opted for the formal regulation of the field, through the contracting out of service delivery to private non-for-profit operators. See Annex 7 and Module 8 for more details, respectively on contracting out and on regulation.

Adopting an alternative service delivery model usually implies the introduction of new management systems, or substantive changes to existing ones. These implications must be made explicit as soon as possible, before the choice is made. The financial and political cost of equipping the health sector with management systems adapted to a new delivery model may be substantial, and must be adequately considered when alternatives are appraised.

To elaborate costed estimates of the adoption of an alternative service delivery model poses additional difficulties, because data related to a different approach may not be available. In this case, experience from abroad may help. Also, small-scale pilots may contribute useful information to strengthen the computations. Tightly monitored experimentation in limited settings appears advisable, before a new model is adopted nation-wide. Considerable caution is needed in adopting successful pilot models for countrywide implementation, as pilots are by definition privileged endeavours, bound by nature to succeed in a way or another. Going to scale is always a challenge of different order.

New estimates must be elaborated as soon as reliable data become available. Despite the difficulties of costing the adoption of alternative service delivery models, this sort of estimates is needed to inform the policy discussion, which in their absence risks being driven mainly by ideological arguments.

Follow the same steps sketched in the first round and eventually compare projected results. Identify the most promising model (or a mix of models).

Materialising the recovery strategy: common pitfalls

A thoroughly crafted recovery strategy needs to be disseminated, understood and incorporated into the plans of the most important stakeholders, to stand true chances of being followed. To ensure widespread support to the strategy, negotiation and communication skills are as important as technical ones. Furthermore, awareness among its supporters of the priority of the recovery strategy over other concerns is paramount.

The recovery strategy may stumble, fail or become distorted, due to a host of reasons.

  • The discussion may remain within the health sector, without the adequate engagement of decisive players, such as the Ministry of Finance (where it works) and the IFIs. As a result, financiers may ruthlessly cut or altogether discard carefully developed plans, because of macroeconomic considerations unknown or not understandable to health professionals. Communication between economists and health professionals is often wanting. Financiers and service providers are sometimes at pains at understanding their mutual arguments. Translating a proposal in a format and language familiar to the counterparts may in some instance overcome the obstacle.
  • The concept of competing, mutually exclusive options to be considered for choice appears obvious to economists, but may fall on deaf ears among health professionals. Thus, the conclusions of the analytical work proposed above may be flatly rejected, when found restrictive, because they fall short of expectations, or because in a way they translate in concrete terms the objective poverty of the country, or because they may sound politically inconvenient. To involve decision makers in the actual computations may convert some of them to a measure of allocative discipline, but others will remain refractory to any ‘rational’ argument. A few key personalities may tilt the balance in one direction or in the other.
  • The chosen strategy may fail to gather adequate political support, or its political sponsors may run into difficulties, often unrelated to the health sector. For a discussion of the politics of health policies, see Module 5. Also, a resource-bound recovery strategy, even if developed and agreed upon by most stakeholders, may fail to ensure a measure of implementing discipline among some of them, who are unable of recognising the consequences of the endorsement of new ‘priorities’. In fact, particularly in severely resource-strapped contexts, a few departures (even if legitimate when considered in isolation) from the chosen strategy can wreck it. Every time proposals for major changes are put forward, the cost implications of them and the corresponding cuts in other areas must be reminded to their proponents. To a certain degree, this tactic can deter some of the proposed changes, or at least can reduce the inflicted damage. In many cases, decision-makers act under pressures that turn rational arguments irrelevant to them. When major departures from the adopted plans materialise, planners need to revisit the whole strategy, adapting it to the new reality.
  • The conclusions of the process may be misunderstood, distorted or misused by the media and the public. In the post-conflict sensitive or contested climate, redistributive allocations are particularly prone to be misrepresented,. Sensible decisions, easy to defend on technical grounds, can be exposed to political manipulation.
  • The chosen strategy may fail to guide field implementers because it remains too aggregated, with expenditure ceilings, global size of the workforce, total number of facilities and so on, elaborated only at national level. Implementation will inevitably be split into discrete components, particularly when NGOs are its main vehicle. These components will be managed by teams under different command lines and not always in touch with each other. If the national ceilings are not explicitly broken down to smaller units, implementers may find difficult to assess whether their provincial or district interventions respect them. Without this crucial step (which can may contentious, as some constituencies will complain they are neglected), the discipline embedded in the global recovery strategy is likely to be bypassed even by implementers with a genuine commitment to it. A global strategy cannot be too detailed and precise, because of the inadequate information it is built upon and the uncertainties about the way transitional periods unfold. And in any case, a detailed strategy is bound to become soon outdated, to such a degree to result useless. But broad quotas of the most important resources to be allocated, such as investment and staff, are paramount to guide field implementers. For instance, a province with 10% of the population, but 6% of beds and 5% of staff, might be attributed 15% of the investment planned over 5-10 years, to address its gap. Once more, quotas may be set broad at the start of implementation, and be revised later, when a better understanding of the field situation emerges.
  • A heavyweight player, such as an aid agency driven by strong ideological beliefs or structured approaches, may ignore the results of the analytical exercise and decide to move forward with its favourite interventions. For instance, an agency may be committed to ‘quick impact projects’, rightly dubbed by Johanna Macrae as ‘ephemeral impact projects’ (2002). The most disruptive initiatives are those unknown to partners, who cannot adjust their plans accordingly. Intelligence, political skills, peer pressure, patient bargaining are needed to minimise the damage caused by such behaviour.
  • Interest groups inside the health sector may feel threatened by the chosen strategy and react, sometimes openly but often quietly.
  • A recovery strategy may be associated to the agenda of a certain agency, and resisted on these grounds only, regardless of its merits. At the beginning of the recovery process, agencies are likely to differ in relation to the strategy formulation exercise, showing a range of reactions, from indifference to serious commitment. Their stance may evolve over time, as the strategy is consolidated and attracts attentions. Associating as many partners as possible since the inception of the exercise, to diffuse perceived entitlements to the strategy, is recommended.
  • The recovery strategy may fossilise, perhaps because its main authors have left the stage, and become increasingly irrelevant to the evolving policy context. The strategy may be implemented in a rigid way, as a recipe drawn from a cookbook. Continuous updating, adaptation to the changing environment, operational flexibility and common sense are essential to successful implementation.

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