Efficiency and equity through a sector-wide approach in Uganda

Financing Uganda's health care services used to be based on a minimum package which cost more than the financial resources available. Donor aid contributed between 40 to 50 percent of these costs. Financial allocations were also biased towards national level hospitals and wages.

For Uganda's health care system to become more efficient, reforms in the coordination and allocation of donor aid were essential. The first national Health Sector Strategic Plan (HSSP-1) envisaged strengthening a minimum health care package (MHCP) within a decentralised, district-based primary health care approach. Four main reforms aimed to improve the financing of health care from 2000 to 2005:

• formal suspension of user-charges in the public sector
• substantial increase in the health budget
• better coordination of donor aid
• redirection of resources away from tertiary level services towards primary level MHCP provision.

At the end of HSSP-1 in 2006, the Health Systems Development Programme evaluated the efficiency and equity of the health budget and donor fund allocation between 2001 and 2005. The main findings included:

SWAps in Uganda increased resources and allowed the Ministry of Health greater flexibility to implement reform

• The Ministry of Health (MOH) and donors were committed to sector-based planning and resource allocation: during this period the health care budget increased by 18 percent.
• Half of donor aid was channelled through the government's national budget as part of a budget support mechanism, but large volumes of donor funds were still channelled vertically.
• The suspended user-charges led to increased service use and demand for resources such as medicines, while workloads and staff shortages reached crisis levels. This pressure resulted in higher expenditure.
• Guidelines were introduced to improve the efficiency of financial resources. They included grants for private not-for-profit providers and mechanisms to protect funds for medicines and supplies. Overall, expenditure on medicines increased from US$0.88 to US$1.65 per capita.
• Vertical funding reduced from 45 percent of the health sector budget in 1990 to 2000 to 34 percent in 2003 to 2004. However, only 32 percent of donor project funds were assigned to priorities listed in the National Health Sector Strategic Plan. Technical and administration costs absorbed most of these funds.

Changes in health care consumption between 2000 and 2003 are also highlighted in household surveys undertaken by the Uganda Bureau of Statistics. Findings included:

• Self-medication reduced from 23 to 11 percent between 2000 and 2003. Although overall health service use remained low and hospital use declined from 20 to 11 percent, health centre use increased from 3 to 11 percent. This may demonstrate improved access to, and confidence in, lower level health service provision, in line with the national sector plan.
• Use of informal drug shops and the private-for-profit sector increased from 39 to 50 percent between 2000 and 2003. These increases, in a sector that depends on expensive out-of-pocket payments, indicate that further progress is needed to ensure resource allocation benefits most Ugandans.
• Shortfalls in medical supply budgets meant medicines were frequently out of stock. An estimated US$3.5 per capita is required for essential medicines (excluding anti-retrovirals) and US$28 for the MHCP. However only US$1.65 and a maximum of US$11 respectively were available during the review period.

These findings show that efficiency gains can be made with a minimal budget increase and shifting of budget priorities. For these shifts to be feasible and sustainable, more donor aid needs to be channelled in a way that enables sector planners and government to implement reforms that affect broader health systems.

The sector-wide approach (SWAp) in Uganda increased resources, allowed donor aid to be channelled through budget support arrangements, and gave the Ministry of Health (MOH) greater flexibility to implement reforms.

However, the findings also show that increased efficiency cannot necessarily fill the resource gap as needed to achieve sustained and broader welfare objectives. Although global financial initiatives can help to address the resource gap, they also need to strengthen SWAp arrangements, channel more funds through budget support and allow the MOH to adopt the long-term reforms needed for better health system developments.

Freddie Ssengooba
Health Systems Development Programme, School of Public Health, Makerere University, Kampala 7021, Uganda
Freddie.Ssengooba@lshtm.ac.uk