Health Financing

1
• Health financing deals with approaches to
mobilize funds for health care and services

2
 Health financing sources
1- Tax

Advantages
– Easy to collect
– Low administrative costs
– Equitable if tax system is progressive

3
 Health financing sources
1- Tax

disadvantages
– MOH depends on MOF for yearly budget
– Insufficient
– Equity could be compromised
– Corruption

4
 Health financing sources
2- Insurance

Advantages
– Stable financial
– Equity
– Administrative costs-medium
– One or Few schemes

5
 Health financing sources
2- Insurance

Disadvantages
– Not all people are insured
– Only employees
– Pool is small
– Cost containment is difficult
– Not-insured people misuse the system

6
 Health financing sources
3- Foreign Aid

Advantages
– Brings extra money
– Brings in expertise
– Brings new perspectives
– Responsiveness to emergencies

7
 Health financing sources
3- Foreign Aid
Disadvantages
– Donors agenda
– Tied aid
– Coordination problems
– Capital fund rather than running costs
– Own procedures and rules
– Corruption
– Lack of absorption capacity
8
 Health financing sources
4- Private OOP payment

Advantages
– Creates extra funds
– Prevents frivolous use
– Can improve the service

9
 Health financing sources
4- Private OOP payment

Disadvantages
– Flat rates
– Flexible rates
– High administrative costs
– Liable for corruption

10
 Health financing sources
5- Private insurance

Advantages
– Consumer has a choice
– Competitions
– Efficiency

11
 Health financing sources
5- Private insurance

Disadvantages
– Risk rating
– Preventive services are not included
– High costs
– High flat rate-inequity
– Poor, high risk, CD are usually not insured

12
 Health financing sources
6- community Financing

Advantages
– Stable source of finance-rural areas
– Community participation
– Empowerment
– Risk sharing between health and ill

13
 Health financing sources
6- community Financing

Disadvantages
– Limited package of care
– Access for the poor is difficult
– Up scaling difficult
– Real needs not always met

14
 Health financing sources
6- community Financing

Disadvantages
– Limited package of care
– Access for the poor is difficult
– Up scaling difficult
– Real needs not always met

15
 Selection criteria

• Capacity to raise funds

• Equity
• Risk pooling
• Efficiency
• Quality of services
• Sustainability

16
 Direct provision

MONEY

Consumer Provider

Service

17
 Indirect payments

• Tax ----MOF-----MOH-----SERVICES
PROVIDED
• Consumers------MOH-----MOF-----MOH

18
 Conclusion

• Choice of Financing Scheme depends on

political, economic and cultural
characteristics of a society

• The used scheme has its consequences

on the system

19
 Some Figures
• Health sector consume around 11% of
PA expenditure
• The health sector received a minimum
of 20% of the total donors’ assistance to
the OPT.
• MoH budget around 500 million
• 50% employees
• Referral abroad (130)
• Drugs (60 million)
• Running costs 20
Total Health Expenditure in oPt

21
22
23
24
 Spending on health from GDP
OCED 9.5
USA 17.6
UK 9.6
PA 15.6
Turkey 6.1
ZE 7.5
Cannada 11.4
Japan 9.5
Jordan 9
Egypt 3.7
France 11.6
0 2 4 6 8 10 12 14 16 18 25 20
26
27
28
29
30
 Sources of funds

72
Public expenditure OECD
35.5

19.5
Households
37.5

UNRWA
12

NGOs
14

0 10 20 30 40 50 60 70 80 31
32
33
34
35
36
37
38
Total expenditure

39
40
41
42
43
44
45
 ‫إجمالي اإلنفاق العام على الصحة (ألف دوالر) وإنفاق الفرد‬
‫مع‪S‬دل ا‪S‬إلن‪S‬فاق للفرد‬ ‫‪576‬‬
‫‪4000‬‬ ‫ا‪S‬إلن‪S‬فاق ا‪S‬إلجم‪S‬الي‬ ‫‪3711‬‬
‫‪512‬‬ ‫‪3500‬‬
‫‪426‬‬ ‫‪3000‬‬
‫‪424‬‬ ‫‪2470‬‬
‫‪387‬‬ ‫‪543‬‬ ‫‪2500‬‬ ‫‪2171‬‬
‫‪483‬‬ ‫‪1936‬‬
‫‪2000‬‬
‫‪1596‬‬
‫‪400‬‬ ‫‪430‬‬
‫‪1500‬‬
‫‪357‬‬
‫‪1000‬‬
‫‪500‬‬
‫‪0‬‬
‫‪2020‬‬ ‫‪2025‬‬ ‫‪2030‬‬
‫‪2021 2022 2023 2024 2025 2026 2027 2028 2029 2030‬‬ ‫إنفاق‪ S‬حس‪S‬ب النس‪S‬ب الح‪S‬الية‪S‬‬ ‫إنفاق‪ S‬مع‪ S‬إح‪S‬تس‪S‬اب زياد‪S‬ة‪S‬‬

‫تم حسابه استناداً إلى المعدل السنوي لإلنفاق الصحي للفرد في السنوات الثالث الماضية (‪ )$337‬وأيضا ً بزيادة‬
‫اإلنفاق بمعدل ‪ ٪6‬سنويا ً (الزيادة السنوية من عام ‪ 2004‬حتى عام ‪ .)2020‬في عام ‪ ،2021‬كان اإلنفاق للفرد‬
‫سنويا ً ‪ ،$384‬عام ‪ ،)$332( 2020‬وكان اإلنفاق اإلجمالي ‪ 1.889‬مليار‪ ،‬ويعادل ‪ ٪10‬من الناتج المحلي‬
‫اإلجمالي‪.‬‬
 ‫اإلنفاق الصحي حسب مقدمي الخدمات ونظم التمويل‬

‫• إنفاق عالي على الخدمات العالجية (المستشفيات والخدمات العالجية الخارجية ‪.)٪69 -‬‬
‫• اإلنفاق على األدوية مرتفع جداً‪ ،‬يتراوح حوالي ‪ ٪8( ٪20‬في النرويج)‪.‬‬
‫• مساهمة الحكومة محدودة حوالي ‪ ٪42‬في عام ‪ ٪72( 2020‬في تركيا)‪ .‬مساهمة األسر المنزلية حوالي ‪،٪40‬‬
‫مقارنة بـ ‪ ٪19.5‬في منظمة دول التعاون االقتصادي والتنمية (‪.)OECD‬‬
Total forecasted recurrent health expenditure in $ USA million by years- 302
dollar per capita with 6% increase annually
Pharmaceuticals
 Current main Donors
Regarding donations, it reached around $ 13 million in 2011,
mainly in the form of medical equipment ($ 11 m). Currently,
the major donors are :
• Islamic Development Bank
• ICRC
• Islamic Relief
• Qatar Red Crescent Society
• Qatar Charity
• Human Appeal International
• NORWAC
• Arab Medical Union
• Egyptian Medical Syndicate
• Saudi Relief Committee
• Organization of Islamic Cooperation
• WHO
• Association of Professional Syndicates (Jordan) 51
52
53
54
55
56
 Donors in 2003
Source Humanitarian Development Total
Assistance Assistance Expenditure
and budget
support

European Commission 217.98 17.25 235.23

Other EU countries 59.09 154.34 213.43
Other European countries 37.98 26.85 64.83
World Bank 34.73 18.37 53.10
USAID 82.81 130.63 213.44
Other non-Arab countries 14.49 7.96 22.45
Arab countries 124.36 0.00 124.36
Total 571.44 355.40 926.84
IDB (Al Aqsa & Al Quds Funds) 101.76 53.43 155.19
Grand Total 673.20 408.83 1,082.03
57
Donors in 2003

58
Expenditure in 2011-Gaza

59
 Revenues
– MOH revenues in 2010, 2011 and 2012 was around $ 7 million
annually
– PHC services (38.1%)
– Hospitals (33.1%)
– Health insurance (24.3%).
– Regarding PHC revenues, copayment constituted the major bulk
with around 80% and eyes screening constituted around 19%.
Cost recovery of drugs at PHC constituted around 68-82% of its
costs.
– Regarding hospitals, Shifa Hospital constituted around 33.6% of
revenues followed by the EGH.
– Doctors’ visits to hospital constituted around 22% of total revenue.
– Revenues from health insurance were the highest in the first
quarter.
– Previously, copayments constituted 18.6% ($ 3,5 million) in
proportion to GHI which constituted 81.4% ($ 14.5 million).
60
 Co-payments in public health facilities 2003 (US$ and %)

Sector GS WB Total %

PHC 1,561,114 2,557,124 4,118,238 51%

Hospitals 991,452 1,186,279 2,177,731 27%

Other 786,564 1,070,540 1,857,105 23%

Total 3,339,131 4,813,944 8,153,074 100%61

Total GHI income 2003/Co-payments in public health facilities and GHI
premiums-US$

GHI Co-payments Total

WB 11,478,667 4,813,944 16,292,611

GS 14,588,667 3,339,131 17,927,797

Total 26,067,333 8,153,075 34,220,408

Total 76% 24% 100%

62
63
64
 Costing in 2003
Site EGH Ahli Arab Al Aqsa Ramallah
(AAH) (AQH) (RAH)
Beds 231 80 74 143
Average length of stay 3.7 3.2 1.8 2.7
Total cost US$ (2003) 8,735,877 1,641,433 1,796,822 4,188,379
Full cost per bed US$ (2003) 33,860 20,518 24,281 29,289
Full cost per admission (In-Patient 329 347 127 142
Dep-IPD. cost only) US$

Full cost per bed-day (In-Patient 90 108 73 53

Dep cost only) US$
Full cost per Outpatient (Out- 20 21 Na 13
Patient Dep. cost only) US$
Full cost per admission Accident 18 Na 8
&Emergency (A&E cost only) US$

Direct cost drugs per admission 32.04 19.85 16 17.5

(IPD) US$
Direct cost medical disp. per 7.6 4.73 12 5
admission (IPD) US$
Full cost per surgical operation US$ 174 88.3 Na 107.5

Full cost per lab test US$ 1.9 6.6 Na 0.5 65

Full cost per radiology exam US$ 18.3 26.8 Na 3.8
Workload, full cost per patient by clinic, direct cost per patient
at Rimal Clinic in 2003

Clinic Number of Total cost Full cost Drugs: Medical

patients US$ per patient Direct cost Supplies:
US$ per patient Direct cost
US$ per patient
US$
GP 91,484 510,684 5.6 1.1 0.1
Diabetes 5,253 92,218 17.6 9.8 0.9
Chest 163 35,755 219.4 96.4 8.8
Dermatology 6,764 108,023 16.0 2.0 0.2
Dental 1,896 135,070 71.2 2.4 0.2
MCH 1,118 86,524 77.4 8.0 0.7
OPHT 2,861 32,810 11.5 2.4 0.2
Hypertension 222 35,220 158.6 60.7 5.6
Mental Health 32 27,198 849.9 280.6 25.7
Total 109,793 1,063,502 9.7 2.0 0.2
66
Full cost by category of clinic at Rimal Clinic in 2003
Clinic Salaries Drugs Med. Lab Other Total cost Proporti
Sup. Sup. op. on of
cost costs

GP 334,508 101,015 9,243 39,914 26,003 510,684

48.02
Diabetes 28,611 51,630 4,724 2,292 4,961 92,218
8.67
Chest 14,990 15,714 1,438 71 3,543 35,755
3.36
Dermatology 82,965 13,469 1,232 2,951 7,406 108,023
10.18
Dental 120,346 4,490 411 827 8,996 135,070
12.7
MCH 67,635 8,979 822 488 8,600 86,524
8.13
OPHT 19,828 6,734 616 1,248 4,383 32,810
3.08
Hypertension 16,809 13,469 1,232 97 3,613 35,220
3.31
Mental Health 13,983 8,979 822 14 3,400 27,198
2.55
Grand Total 699,675 224,478 20,541 47,902 70,906 1,063,502 100

67
66% 21% 2% 5% 7% 100%
%
68
 In 2004
– 50% of that total health expenses were from local
sources.
– Of the local revenue, half was direct patient payments
which thus accounted for more than 25% of the total.
– The other half of the locally financed half came from
Palestinian Authority sources, namely directly from
the Ministry of Finance (15% of the overall total) and
from government health insurance premiums (7%).
– Fully 50% of all spending came from various (external)
donors. Half of that half was in the form of direct
grants to the MoH.
– UNRWA got 10% and the NGO sector 14% of total
health funding in that way .
69
 Some hints
Health sector expenditure
• The different departments (in MoH,
MoF and MoP) in charge of budgeting,
accounting and financial management
of the health sector should be audited
(organisational audit).
• Assessment of the interconnections
between the different tools and
harmonisation of the system.
70
 Continue
Key departments should be identified and
staff should be trained.
The increased transparency and consistency
in budgeting process, and the better
knowledge of actual health care costs
might have the additional benefit of
encouraging the donors to adopt budget
support or SWAp mechanisms rather than
project aid.

71
 Continue
Costing
Key departments and staff should be
identified, inside and outside MoH,
which will be trained to be involved in
health facilities costing studies. The
disparity of unit costs per activity
among health facilities of the same
level and capacity should be analysed
in terms of efficiency and
sustainability. 72
 Continue
Coordination of stakeholders and partners
– The MoH should strengthen its role in
coordinating the international aid effort in
its capacity of Chairman with the aim of
establishing a transparent framework,
which may lead to Sector Policy Support
Programme, SWAp and direct budget aid.
– Initiate a dialogue and Review roles of
partners and stakeholders

73
 Continue
Health sector financing strategy

The MoH should raise awareness and

knowledge of key departments and staff
on matters like health sector financing
strategies, provider payment
mechanisms, benefit package, health
service strategic purchasing, etc.

74
 Continue
The MoH should review, assess and improve its
contracting policy and its regulatory
framework that are necessary for an efficient
public/private mix approach and that will
enhance the global performance of the sector.

This will lead to the development of more

appropriate coordination and regulation
mechanisms that could be stated in a MoU
and that will be the core elements of an
improved regulatory framework.

75
 Inefficiency
• Miss-use of medication;
• Shopping around among providers; un-utilized NGOs
• Unjustified imaging services
• Low utilization of operating rooms
• Lack of evidence based practices
• Large proportions of managers in the health system in comparison
to staff
• Overstaffing of health facilities which is disproportionate to
workload volume.
• Having double management level for most senior position
• Huge volume of administrative staff in proportion to the technical
staff
• Failure of medical equipment due to lack of maintenance services
• Treatment abroad contractual issues; unjustified referrals
• Spending on expensive prophylactic drugs and medical procedures
• 76 Highly centralized structures
 What could be done
• Awareness about finance
• Currently, system is not sustainable
• Increase revenues, diversify funds
• Cost effectiveness studies
• Financial autonomy to hospitals at least pilot
• Interconnection among department
• Contracting policy
• Setting financial indicators
• Shift to SWAp approach
• Audit
• Lobby at PA to have financial autonomy

77