Resource allocation and payment

Resource allocation (RA) criteria define the flow of financial resources from the centre to decentralised levels of government and to health purchasers. Allocation can be based on inputs, incremental budgeting, or need and population. RA criteria can also ring fence resources to stimulate the provision of specific services. Thus, it is clear that RA criteria, although primarily concerned with allocating ‘money’, can bear a fundamental influence in defining the process of allocating ‘real’ resources such as health workers, and investments, which are vital to ensure pro-poor services.

The theory and evidence on payment systems in health show that different systems can lead to diverse outputs, in terms of type, quality and cost of services, because the payment system used is critical in influencing providers’ conduct. The literature shows that a unique optimal payment system doesn’t exist, and underlines the importance of the whole accompanying governing structure in determining the performance of the payment system.