Malawi Public Expenditure Review: Health Sector

1. Malawi Public Expenditure Review: Health Sector 21 November 2007

2. What have been the key expenditure trends? • Expenditures in health have been rising in real terms and as a share of total budget expenditures • However, funding for the sector remains insufficient for the delivery of the Essential Health Package • A large share of total expenditures in the health sector is provided by development partners

3. Main Findings

4. (1) There is a lack of trained professionals in the health sector • Lack of trained workers is a major obstacle to the delivery of quality health care • In antenatal care, each health worker faces 100 patients per 8-hour day, implying an average encounter of 4.8 minutes per patient, compared to the standard 30 minutes. • Shortage of skilled staff due to HIV/AIDS, poor working conditions, better paying opportunities abroad, & inadequate production of new trained workers • Trained staff are ‘down-loading’ clinical tasks, with weak and infrequent supervision, which also has serious effects on quality of care • Although, the Emergency Training Program & the salary top-up program is partly addressing the problem, the gap remains.

5. (2) There are still problems with drug procurement and delivery • 34 percent in CWIQ Survey in 2002 cited unavailability of drugs as a reason for dissatisfaction • Central Medical Stores has been plagued by institutional, management, and financing problems • In spite of well known problems there have been no institutional reforms to ensure improved procurement & delivery of drugs • CMS is currently being run by an external management team, but decision on next steps for reforms is still pending

6. (3) The potential for improving provision of health services through private-public partnerships remains under-exploited • Private health facilities offer potential to help deliver the essential health package especially in areas where there are no government facilities • However, for these private facilities to provide the health services on behalf of government, formal service agreements need to be signed. • So far, only 3 agreements have been signed with CHAM hospitals

7. (4) Quality of services in tertiary hospitals is also hampered by lack of hospital autonomy & insufficient resources • Lack of hospital autonomy is hampering the performance of central hospitals • Prevents strategic management, procurement, financial management, & human resource management • The lack of a proper cost recovery scheme in tertiary hospitals means that they do not have sufficient resources to deliver quality services

8. (5) There are significant inefficiencies in health expenditures • One third of recurrent health expenditures goes to administration • One fifth of recurrent expenditures is spent at headquarters • The method of financing referrals and medical evacuation abroad through direct budget support is inefficient, unsustainable, and lacks transparency • average cost is considerable at USD1,866 on average • scheme is non-transparent and prone to political interference

9. (6) The sustainability of the HIV/AIDS ART is in doubt • Up to 60 percent of health expenditures is devoted to HIV/AIDS-related programs • Current funding for HIV/AIDS related expenditures will be adequate until 2008 or 2009 • There is a need to secure medium-term financing to maintain current levels of provision of HIV/AIDS programs (of 31,000 receiving ART in 2005) • Funding gap is much larger when considering the GOM’s target to scale up provision in HIV/AIDS programs (to 240,000 ever started on ART by 2010)

10. Recommendations

11. (1) Need to invest heavily in skilled health workers • Secure funding for the continuation of the Emergency training Plan • Strengthen the Human Resources system to recruit, deploy, and evaluate workers • Introduce system to track trainees and recruit them at completion of training; include formal bonding arrangements for those whose training is subsidized by government • Design incentive program to staff hard-to-fill posts in rural settings through staff incentives and a financing mechanisms

12. (2) The procurement and delivery systems for essential drugs must be improved • Carry out comprehensive institutional reform of CMS • Independent Trust? Government needs to decide way forward for CMS • Moving this agenda forward requires the highest level of political support. • Rationalize procurement and drug tracking systems to improve drug stream and realize the cost saving benefits of bulk procurement • Switching to a demand-driven (requisition) system embodying principles of a “cash-and-carry” financing

13. (3) The potential for public-private partnerships should be better exploited • Evaluate experience with establishing service agreements with CHAM hospitals • Develop a more unified and comprehensive contract between the government as financier and the CHAM facility (or other NGO) as service provider

14. (4) Tertiary hospitals should be granted greater autonomy to improve quality of care • Enact and implement the hospital autonomy bill, to make tertiary hospitals legal corporate entities under the direction and control of a hospital board • Improve cost recovery at tertiary care facilities through design of a sliding scale fee structure that keeps up with current prices. • The fee structure should account for the variety of patients that tertiary hospitals have, and ensure continued access to the poorest • A Poverty and Social Impact Analysis should be carried out to inform the new fee structure

15. (5) Health expenditures should be rationalised • Improve monitoring of expenditures and outcomes is a prerequisite for increasing flow of resources to the health sector • Also need to increase the share of donor funding captured in the government budget • Need to carry out a formal quantification of the efficiency of public expenditures using a nationwide sample of health facilities

16. (6) Additional financing needs to be secured urgently for HIV/AIDS • Need to identify additional funds • Either from international sources or by reducing expenditures in other areas, or from alternative sources (other donors, domestic revenue, or the private sector) • None of these alternative sources appears likely to yield significant amounts, however • Need to apply for the new Rolling Continuity Channel of the Global Fund in November 2007 • Could potentially provide up to six years (3+3) of further funding for the HIV/AIDS national response (including ART) • Global Fund staff have signaled that they expect Malawi to present a budget for scaling up the current response