Patrick Osewe World Bank 20 th April 2012

1. Barriers to Efficiency in Public Spending for HIV/AIDS: Findings from Kwa-Zulu Natal, South Africa Patrick Osewe World Bank 20th April 2012

2. Presentation outline • Study rationale – why Kwa-Zulu Natal? Why PETS-QSDS? • Study methods and objectives • Macro and micro analyses of HIV/AIDS spending • Service delivery findings • Barriers to efficient and effective spending • Conclusions • Next steps

3. Why a PETS-QSDS study in KZN? • Kwa-Zulu Natal Province has the highest burden of HIV in the country: prevalence among antenatal clinic attendees of 39.5% in 2010. • Public sector allocations for HIV and AIDS have doubled over the most recent MTEF period (the last 3 years) • Increased funding has not resulted in a commensurate reduction in new HIV infections • Provincial Government is concerned that funds allocated for HIV/AIDS may not be reaching intended beneficiaries and may not be being spent effectively and efficiently • A hybrid study combining a Public Expenditure Tracking Survey and a Quantitative Service Delivery Survey is ideally suited to investigate these issues

4. What are PETS and QSDS? PETS (Public Expenditure Tracking Survey) • A quantitative survey of the supply side of public services • Collects information on facility characteristics, financial flows, outputs (services delivered), accountability arrangements, etc. QSDS (Quantitative Service Delivery Survey) • Can be used to investigate incentives that providers face, as well as the relationship of accountability between policymakers and provider organizations, including frontline service providers.

5. Objectives of the study The study was designed to assess indicators of the following: • Allocation, flow and spending of funds • Financial management skills of staff • Health service infrastructure and equipment • Key challenges for service provision • Patient satisfaction with services • Competence of technical staff • Management structures

6. Methods • The study consisted of three parts: • A rapid institutional assessment in 2 districts (May 2011) • A questionnaire-based survey of 20% of facilities across 5 of the Province’s 11 districts (November 2011 to January 2012) • Detailed analysis of financial records from 2008/09 to 2010/11 at National and Provincial Government and facility level (March to April 2012)

7. Facility survey sample size • Seven questionnaires were administered at district and facility level. • 725 staff were interviewed • 979 patients were interviewed • 100 facilities were visited on two occasions (one announced and one unannounced)

8. General Findings

9. The Budget Process • The budget process at national and provincial levels appears to be rigorous, transparent and credible • Detailed financial records are captured on the Basic Accounting System (BAS)– a nationwide computerised accounting system • District and facility funding allocations are decided by assessment of business plans submitted to the Province each year • Hospitals and community health care clinics use a combination of historical budgeting and zero-based budgeting (for demand planning) • Primary health care clinics do not follow a very formal or structured budget process

10. HIV/AIDS programs are funded mainly from a single central source • The majority of money for HIV/AIDS programs comes from central government through a ring-fenced fund with strict spending rules (the Conditional Grant for HIV/AIDS) • Small allocations for HIV come from education and social development (totaling around 3%) • There is little extra funding from Province’s own discretionary budget (Equitable Share) • Conditional Grant funding has increased over the study period (last 3 financial years) resulting in the perception that it is sufficient to cover all HIV-related activities. • A side-effect of greater reliance on this national fund for HIV is that the Province has less discretion over HIV spending

11. Distribution of HIV/AIDS Spending

12. Prevention is losing out to treatment • Anti-retroviral treatment has increased both as a proportion of spending and in terms of actual amounts during the last 3 years. • Most prevention-related activities have seen decreased funding as a result of increased focus on ART • Prevention of mother-to-child transmission dropped by 28% (107.4 million rand to 77.6 million) and spending on post-exposure prophylaxis has decreased by 25%. • If this pattern continues over the medium to long term, treatment has the potential to “crowd-out” spending on prevention programs. • TB/HIV co-infection funding was eliminated as a line item in 2010/11

13. Provincial level Findings

14. Source: GIS unit, Kwa Zulu Natal Department of Health http://www.kznhealth.gov.za/GISbooklet.htm

15. Provincial level financial analysis for 2010/11 • The Province under-utilised the Conditional Grant by approximately R18 million (US$2.3 million) • The average facility expenditure per district was approximately R2.5 million (US$320 000) • There was significant variation in facility expenditure between districts (eg, R1 million in Zululand and R4 million in eThekwini) • eThekwini, uMgungundlovu and uThungulu are the biggest consumers of the Conditional Grant - together they consume 47% of the money • There is significant variation of facility expenditure between districts and within districts

16. Comparisons between districts (2010/11)

17. WHy THESE DISCREPANCIES?

18. Snapshot of facility analysis (eThekwini)

19. Snapshot of facility analysis (UGU)

20. Snapshot of facility analysis (Umzinyathi)

21. THE VIEW FROM FACILITIES….

22. Financial management at facilities • Hospitals or clinics have their own bank accounts and no funds are transferred to the facilities (they receive budgetary allocations rather than actual funds) • Revenue collected is deposited into a single provincial health account and is not retained by the facilities • Most facilities use historical budgeting, where staffing is the main cost driver. • Prioritisation of funding is based on: existing service loads; needs of catchment population; historical patterns; Provincial priorities. • Finance managers frequently have limited financial experience.

23. Financial management challenges • Broad challenges that substantially influence efficiency of spending include: • Lack of financial autonomy at facilities • Poor leadership and management capacity • Lack of financial capacity • Constraints to efficient and effective service delivery include: • Inability to get posts created and filled to meet demand • Reactionary budgeting based on conditional grant budget ceilings instead of demand • Poor governance and oversight processes.

24. BUT….

25. Patients are satisfied with services • Friendly staff: 94.7% of patients reported that the staff was ‘friendly’ or ‘very friendly’ and were satisfied with the service they received • Reasonable waiting times: On average, patients waited 1..5 hours to see a medical professional and spent 2.5 hours in the facility • Technical knowledge: At least 80% of all staff correctly answered questions on HIV/AIDS treatment and care protocols and 99% of patients understood more about their condition after consultations • Clean facilities: Less than 2% of patients cited poor hygiene or lack of cleanliness as a challenge in facilities • No informal payments: There were no instances of any informal payments being requested at any level.

26. Staff are generally satisfied • Across all facilities 61.5% of staff answered that they are either ‘satisfied’ or ‘very satisfied’ working in their current facility • 25.4% reported that they are ‘dissatisfied’ or ‘very dissatisfied’ • Only 25% of staff cited low salary as a reason for dissatisfaction • Reasons for dissatisfaction: • #1 High workload (75 patients a day in hospitals, 25-35 in PHCs and CHCs) • #2 Lack of equipment, poor infrastructure, and limited space • #3 Salary

27. % of facility heads citing the following constraints to service delivery

28. Key service-delivery challenges • Access to basic utilities: only 65% of facilities have piped water • Very high vacancy rate (up to 100%) for specialized positions, particularly general doctors, pharmacists and pharmacy assistants • Absenteeism of staff: one quarter of staff (25.3%) were absent during the study visit • Medicines supply prone to stock outs – but stores of HIV drugs are 60% less likely to run out than other medicines • Procurement of equipment takes a very long time (8-14 months)

29. So what are the barriers to efficiency?

30. There are many! • Budgets don’t match activities or demand because they are mainly historical • Fiscal dumping of resources by national government late in the financial year hinders province’s ability to spend within time limits • Lack of incentives for facilities to collect revenue or introduce efficiency savings • Centralised procurement processes and lack of autonomy for facilities introduce delays and errors in equipment purchase and maintenance • Accountability of facility staff reduced because no actual money disbursed

31. Efficiency barriers (cont) • Lack of maintenance contracts and significant equipment repair challenges • Inadequate capacity at frontline facilities (quantity and skills) and increased workload as numbers on ART increase • Significant absenteeism amongst clinical staff (especially nurses) • Difficulty recruiting and retaining highly qualified specialists, particularly in rural areas • BUT some problems, especially for supply of medicines, are less severe for HIV/AIDS than for the rest of the health service

32. Next steps • Full analysis of PETS-QSDS data (May-June 2012) • Presentation to Provincial and National government to facilitate decision-making and action on identified challenges (June 2012) • Application of methodology to other Provinces in South Africa (July 2012-June 2013)

33. Patrick Osewe posewe@worldbank.org Thank you