What Happened When Two Countries Applied Promising Practices to Strengthen Health Budget Execution
The LHSS-JLN Health Budget Execution Learning Exchange
By Karishmah Bhuwanee and Sarah Insanally
For countries wanting to strengthen health budget execution, learning about promising approaches used by others is one thing but putting them into practice is another. How does a ministry of health (MOH) adapt promising practices and begin to implement them?
This blog reveals how two countries, Lao PDR and Peru, did exactly that.
USAID’s Local Health System Sustainability Project (LHSS) helped Lao PDR and Peru identify and begin to implement first steps that could lead to improved budget execution, even while broader public financial management (PFM) or health financing reforms are still being planned. The effort focused on adapting promising practices for achieving good health budget execution identified last year by MOH practitioners from eight countries participating in the LHSS-Joint Learning Network for Universal Health Coverage (JLN) Health Budget Execution Learning Exchange.
A deep dive into the challenges
MOH teams in Lao PDR and Peru first scrutinized their health budget execution challenges to decide where to focus their improvement efforts. LHSS also helped them to study the flow of health funds in their countries.
This helped raise awareness of how fragmentation in fund flows and bottlenecks were impeding budget execution. Different funds — for example, for salaries and recurrent costs or national and subnational funds — can have different management systems and processes for planning and budgeting, provider payment, procurement, accounting, financial reporting, and monitoring. This multiplicity of systems and processes can exacerbate the inefficiencies and administrative burdens associated with poor budget execution (Insanally, Bhuwanee and Watson, 2022).
The Lao PDR and Peru teams also focused on the role of service providers. For example, the country teams sought to understand how to give health facilities more autonomy to provide health services while also making sure the facilities comply with PFM guidelines.
The country teams thought through how health facilities might eventually evolve from passive “spending units” to management entities with full control over their budgets and spending. They discussed how switching health spending from input- to output-based payments for health providers, accompanied by an appropriate delegation of rights, could give health providers more autonomy and flexibility to use their resources to respond to the specific needs of their patient populations.
First steps in Lao PDR
In Lao PDR, the government has streamlined the flow of health funds from the National Treasury to the subnational level, eliminating funds passing through the MOH. Through virtual workshops, LHSS collaborated with the MOH to identify ways for provincial health departments to work with health facilities to develop clear, precise health plans as a basis for allocating funding in alignment with priority programs and services.
LHSS also provided guidance on how the PFM guidelines recently developed by the MOH for the health sector could include roles for central-level MOH and subnational actors to develop health plans. Strengthening provincial and health provider planning helps the MOH select realistic national priorities and targets, mitigate the risks of losing control of funds, and better match budgets to health priorities and plans (Insanally, Bhuwanee and Watson, 2022). Involving health providers in developing annual plans and defining targets can also increase their commitment to achieving those targets.
This first step of collaboratively developing health plans is expected to pave the way for broader reforms. For example, having clear health targets would be helpful to the MOH if the government were to evolve to program-based budgeting and/or purchasing health services through output-based payment.
New health budget management guide in Peru
In Peru, fragmented flows of funds for MOH general revenues and social health insurance, without the flexibility for the MOH to adapt PFM rules and processes to the health sector, have caused delays in payments and administrative burdens for subnational units. LHSS discussions with the MOH explored the possibility of making general revenue funding output-based to be more harmonized with social health insurance payments.
A joint MOH-LHSS rapid assessment also revealed that Peru’s budget development process did not effectively reflect national health priorities, and that lack of flexibility hampered the ability of health providers to adapt to the needs of their patients.
Lao PDR and Peru’s experiences show how technical assistance can help countries adapt and apply promising practices from other countries by developing small implementation steps that can lead to longer term change.
LHSS worked with the MOH Budget Directorate to develop the Health Budget Management Guide, a manual summarizing the main rules and procedures for budget management in the health sector, and the flexibilities within the national PFM guidelines that could be leveraged. The guide will serve as a reference for the daily work of regional government officers and as induction material for all incoming staff of the MOH and budget units of regional governments.
Going forward, the MOH Budget Office plans to professionalize the role of budget management specialists by developing a certification process for those who complete a training program on the Health Budget Management Guide. In addition, the junior budget specialists and senior health finance specialists who helped develop the guide have formed a multidisciplinary community of practice to discuss financing for universal health coverage.
Lao PDR and Peru’s experiences show how technical assistance can help countries adapt and apply promising practices from other countries by developing small implementation steps that can lead to longer term change. Since MOHs may face many challenges in improving health budget execution, there may be a tendency to wait for budget execution improvements steered by the ministry of finance. However, ministries of health have the power to make incremental improvements that can improve health budget execution and facilitate, or even accelerate, government-wide PFM reforms.
About the authors:
Karishmah Bhuwanee is a senior associate at Abt Associates and leads the LHSS Health Budget Execution Activity.
Sarah Insanally, DrPH, is a health systems specialist at Abt Associates working on the LHSS Project.
See previous blogs in this series:
Supporting Country Progress Towards Better Health Budget Execution
Promising Practices That Are Helping Ministries of Health Improve Their Health Budget Execution
Ghana and Bangladesh Share Promising Practices for Health Budget Accountability
Five Lessons for Ministries of Health Seeking to Improve Health Budget Execution
See the report:
Improving Health Budget Execution: Learning from Country Experience
