Better Financing for Better Health Health Systems Financing (WHO/EIP/HSF)

Rationale for “memorandum” entries

Paris, 29 September 2005

Better Financing for Better Health Health Systems Financing (WHO/EIP/HSF)

Policy foundations: a will, a model, data

• Universal access and expenditure monitoring require a comprehensive measurement of total flows on pharmaceuticals

• A large share is channelled towards medicines • Facilitates linkages with specific accounts (e.g.

GAVI, HIV/AIDS-IST, malaria, reproductive health, etc)

Better Financing for Better Health Health Systems Financing (WHO/EIP/HSF)

Policy foundations: a will, a model, data

• ICHA Classifications display a large but only partial (mode of production determined) measurement of medicines – Provider (HP 4): retail sale in pharmacies (and other formal

retail outlets) – Functions (HC 5): apparent consumption (purchases) of

pharmaceuticals to outpatients only.• A homogeneous treatment of in-patient and of out-

patient care reinforces neutrality, inherent to accounting.

• This reduces asymmetries in measurement across countries.

Better Financing for Better Health Health Systems Financing (WHO/EIP/HSF)

Distributional channels in selected countries

0% 20% 40% 60% 80% 100%

Austria

Belgium

Belgium

Denmark

Ecuador*

Finland

France

Germany

Greece

Ireland

Italy

Netherlands

Norw ay

Slovenia

Spain

Sw eden

Sw itzerland

United Kingdom

Retail sale

Intramural care (hospital, other institutional care centers)

Other channels

Source: OECD Health Data CD, EFPIA, NHA Equatorian report Source: OECD Health Data CD, EFPIA, NHA Equatorian report

Better Financing for Better Health Health Systems Financing (WHO/EIP/HSF)

Functions: Total Pharmaceutical• Includes the provision of pharmaceuticals, medicinal

chemicals and botanical products used for therapeutic uses regardless of their distribution channel and their financing path.

• Comprises out patient plus in patient plus all other forms of consumption of these goods.

• Standard definition• Products for veterinary uses should be excluded.• Government and private in the cross-classified

tables.

Better Financing for Better Health Health Systems Financing (WHO/EIP/HSF)

Functions: Total ancillary services• SHA HC4 displays final consumption of

ancillary services in out-patient care. • In-patient ancillary care is treated as

intermediate consumption. Display of all components is needed for efficiency, effectiveness and neutrality grounds.

• Ancillary services are complementary to the provision of core curative, rehabilitative and preventive services. These are technologically and instrumentally independent.

• Standard definition

Better Financing for Better Health Health Systems Financing (WHO/EIP/HSF)

Provider: HCR (2-7)

• When an entry is included in total financing (HF), or in total final use (HC), a provision value must also exist (HP) so as to maintain the equivalence among the three dimensions (financing, production and consumption). This applies also to the HCR entries. As in the case of the other health care providers, the units reported include those internal and external to the health system. 

• Providers to be potentially reported include: entities involved in the provision of education and training of health personnel; research and development.

Better Financing for Better Health Health Systems Financing (WHO/EIP/HSF)

Financing and decision-making flows in contemporary health systems: an NHA representation

Stewardship functions and decision-making in financing strategies

Financing strategies and resource flows

Planning of financing policies

Strategies and regulation of resource collection for the health system by stewardship entities at national and supranational authorities

Resource management

Resource allocationPooling arrangements Cost sharing / recoveryRegulation

Health Care ProvisionIncentives/disincentives:

•payment and purchasing, •use of resources •the content of medical care

Quality (technical process)EfficiencyEmpowerment (at “clinical” level)Health system responsiveness

Health Benefits DistributionEquityTargetingEffectiveness (appropriateness & quality perception/ responsiveness) Empowerment (geopolitical, at supplier level, at user level)

Evaluation (feedback)

Financing Sources Agents

ProductionCost of factors Providers

ConsumptionHealth Functions Beneficiaries

The burden sharing, Payment and

purchasing schemes

Provision of health services and delivery of

medical goods

Health care consumption & investment

Distribution of benefitsChanges in level and distribution of health stock

Geopolitical subnational entities, Demographic & socioeconomic characteristics

Apparent health needs and interventions

Better Financing for Better Health Health Systems Financing (WHO/EIP/HSF)

Distributing the financing burden: Financing Sources

• Equity policies; health insurance reform monitoring; external funding strategies

• SHA HF combines the origin and the mobilization of funds.

• Splitting these in two allows to more easily identify origin and destination. This facilitates a better tracking of the contributions to and the pooling of the funds required by the system.

• a) General government• b) Private sources• The household total source entry is larger than the

household "financing agent" entry because notably of contributions to health insurance (public and private) and donations.

• c) External funds (non-resident institutions)

Better Financing for Better Health Health Systems Financing (WHO/EIP/HSF)

Financing and decision-making flows in contemporary health systems: an NHA representation

Stewardship functions and decision-making in financing strategies

Financing strategies and resource flows

Planning of financing policies

Strategies and regulation of resource collection for the health system by stewardship entities at national and supranational authorities

Resource management

Resource allocationPooling arrangements Cost sharing / recoveryRegulation

Health Care ProvisionIncentives/disincentives:

•payment and purchasing, •use of resources •the content of medical care

Quality (technical process)EfficiencyEmpowerment (at “clinical” level)Health system responsiveness

Health Benefits DistributionEquityTargetingEffectiveness (appropriateness & quality perception/ responsiveness) Empowerment (geopolitical, at supplier level, at user level)

Evaluation (feedback)

Financing Sources Agents

ProductionCost of factors Providers

ConsumptionHealth Functions Beneficiaries

The burden sharing, Payment and

purchasing schemes

Provision of health services and delivery of

medical goods

Health care consumption & investment

Distribution of benefitsChanges in level and distribution of health stock

Geopolitical subnational entities, Demographic & socioeconomic characteristics

Apparent health needs and interventions

Better Financing for Better Health Health Systems Financing (WHO/EIP/HSF)

A strategic production factor: Human Resources

• The largest cost component, over half of total expenditure. Evidence for analyses of efficiency and effectiveness, equity issues and incentive monitoring policies.

• It measures the remuneration of all persons employed by provider industries irrespective of whether their primary output relates to health care professions or not. All workers performing HC.1 to HC.7 are included, regardless of specialization, or kind of employment.

• Services contracted are considered as purchases and need not be reported under this item.

• Standard definition of compensation of employees