Direct facility financing: concept and role for UHC

Overview

Direct facility financing transforms the way in which health facilities and their broader provider and community networks receive, manage, and account for funds to deliver health services. The approach establishes health facilities as autonomous management entities, able to receive many types of funds directly and manage them independently to meet the needs of beneficiaries. When implemented successfully, direct facility financing helps health facilities operate more equitably and efficiently, improves accountability, and creates an environment in which facilities are more likely to respond to financial incentives.

Three principles guide direct facility financing: facility autonomy, in which facility managers can determine how to use funds without rigid line item constraints; output-based provider payment, in which funds are allocated to facilities based on service outputs as opposed to inputs; and sound facility financial management, in which facilities have the systems and capacity to carry out appropriate financial management, accounting and reporting practices. Direct facility financing should not be considered a scheme or project but rather a set of attributes and actions that can help strengthen domestic health systems and support progress towards universal health coverage (UHC).

The aim of this brief is to highlight how direct facility financing contributes to national health financing reforms. The brief explains both global relevance and how countries can flexibly shape implementation to the needs of their unique environments.