Five Lessons for Ministries of Health Seeking to Improve Health Budget Execution
The LHSS-JLN Health Budget Execution Learning Exchange
By Heather Viola
Better execution of health budgets ultimately supports better access to, and provision of, high-quality health services to meet population health needs. “Good” health budget execution cannot only be defined by high execution rates. It entails much more: alignment of budgets with priorities, timely and reliable disbursements, adherence to public financial management (PFM) policies and controls, and financial flexibility to accommodate shifting priorities throughout the fiscal year, among other features.
This was what ministry of health practitioners from eight countries agreed when they met in 2021, as part of the USAID Local Health System Sustainability Project (LHSS)-Joint Learning Network for Universal Health Coverage (JLN) Health Budget Execution Learning Exchange.
But even when this vision for good health budget execution is clear, how exactly can countries make progress towards these aims? It begins with an understanding of the root causes of poor health budget execution and the misalignment of health, finance, and other stakeholders that can stand in the way of government action to address the root causes.
Practitioners from Bangladesh, Ghana, Kenya, Lao PDR, Liberia, Malaysia, Nigeria, and Peru identified five key lessons for improving health budget execution.
While agreeing that improving health budget execution is a complex task, involving many government stakeholders across different administrative levels, and with no singular approach or solution that will fit all cases, the countries from the LHSS-JLN learning exchange identified the following lessons:
- Better health budget execution is ultimately a shared responsibility between ministries of health and ministries of finance.
There are steps that both ministries need to take independently and collaboratively to create an enabling environment for better budget execution. Ministries of finance are typically responsible for drafting PFM legislation and providing guidance on any reforms to the government-wide PFM system. The ministry of health is responsible for determining the consequences of budget reforms to health sector budget execution.
Learning exchange participants from Lao PDR indicated that the source of rigidities hindering budget execution stemmed from cumbersome ministry of health processes and regulations that were not aligned with ministry of finance updated guidelines, which offered greater flexibility to enable execution. Therefore, the ministries of health must play a proactive role in budget reform discussions with the ministries of finance as they pertain to the health sector.
These engagements can cover how government-wide budget reforms can be adapted to the health sector and how to address potential bottlenecks to implementation at each administrative level. By collaborating on PFM reforms, the two ministries can jointly agree on a stepwise implementation plan that is tailored for the needs and circumstances of the health sector.
A common diagnostic exercise where health and finance stakeholders together examine the root causes of poor budget execution can help build a shared understanding and partnership for action. At the 5th Meeting of the Montreux Collaborative on fiscal space, public financial management, and health financing, colleagues from the World Health Organization and the World Bank introduced their ongoing work to develop a framework and tool that can support a multi-stakeholder budget execution assessment exercise.
2. Better health budget execution involves some health-sector-specific tailoring of solutions.
Tailoring solutions to health sector specificities is critical for the successful implementation of government-wide budget reforms. These specificities include the sensitivity of health budgets to health emergencies; uncertainty about health utilization; and health sector financing arrangements (e.g., whether financing is centralized at the line ministry, via a separate purchasing agency, or decentralized).
Learning exchange participants from Malaysia, Ghana, Bangladesh, and Lao PDR recognized that budget execution reforms should be tailored to the health sector for full adoption, especially at the subnational level. For example, Malaysia invested in financial management training for county health staff for successful devolution of fiscal responsibility. In addition, new, automated health information systems such as those implemented in Ghana can serve as a bridge to other data systems through the integration of multiple data systems and improved alignment between budget formulation/decision making and population health needs.
3. Better health budget execution involves purposeful stakeholder engagement.
Stakeholder engagement within and outside the ministry of health helps with adoption and acceptance of budget execution improvements. Any budget-related reform is a learning process that requires purposeful engagement from many stakeholders for full adoption. For example, the role of external consultative sessions with the general public in Kenya served as a mechanism to both embed the public’s perspective in the budget process and ensure greater transparency and accountability in budget stewardship. When members of the public — the end users of health care services — contribute to the budget process or reforms, they serve as another layer of accountability to ensure that the budget is spent on health priorities.
4. Better health budget execution requires capacity development at all health system levels.
The implementation of reforms for improved budget execution (e.g., more sophisticated data systems or more flexible budget processes) requires capacity at all levels of the health system to ensure that everyone involved in executing the budget understands the PFM guidelines, knows what they mean for the health sector, and has the necessary tools, templates, and guidelines. Decentralization of fiscal responsibility can facilitate the implementation of reforms sub-nationally, but this won’t be successful without capacity development — as was demonstrated in the case of Malaysia’s transition to outcome-based budgeting. These processes also require significant time and resources, which must be built into the planning and implementation of efforts to improve budget execution.
Implementing budget execution reforms usually means changing stakeholders’ culture and behavior — an important but often challenging task. Consultations and trainings are useful for sharing information, addressing bottlenecks, and building trust among key stakeholders. For example, Bangladesh implemented annual performance reviews to enable a culture shift towards results-orientation and subnational trainings on the new IBAS++ information system to build trust and buy-in from health officials across administrative levels.
And once solutions are developed, significant investment is needed to build the capacity at all levels of the system to implement them effectively.
5. Better health budget execution is a long-term commitment and investment.
Finally, successful health system reforms entail a long-term plan that is phased and implemented incrementally. Circumstances don’t always exist for a “big bang” approach, but the learning exchange participants — such as Malaysia, which has been working to implement budget structure reforms for over 60 years — demonstrated that commitment to small steps applied consistently over time yields results. And as resources and capacity increase, systems enhancements can be iteratively refined over time.
The foundation of long-term reforms includes a gradual shift in mindset from a process- and input-orientation to a results-oriented approach — and towards a culture of greater transparency and accountability for good health budget execution overall.
Stay tuned for the final blog in our series, which will discuss how some of the country learning partners implemented the promising practices from the learning exchange.
About the author:
Heather Viola is a program officer at R4D and manages the LHSS-JLN Health Budget Execution Learning Exchange.
Karishmah Bhuwanee is a senior associate at Abt Associates and leads the LHSS Health Budget Execution Activity.
Cheryl Cashin is a managing director at R4D and the lead author of the joint R4D-WHO publication, “Aligning Public Financial Management and Health Financing.”
Miriam Omolo is a health financing expert and country facilitator for the LHSS-JLN Health Budget Execution Learning Exchange. She also serves as executive director at The African Policy Research Institute.
Aparna Kollipara is a health financing expert and a member of the technical facilitation team for the LHSS-JLN Health Budget Execution Learning Exchange.
Nivetha Kannan is a program associate at R4D and a member of the technical facilitation team for the LHSS-JLN Health Budget Execution Learning Exchange.