Advocating for Performance-Based Financing in Malawi
Actual Policy Use
The 2007 NHA (FY 2002/03-2004/05) revealed a huge annual increase in household spending in an environment of free public health care services, as well as increased donor expenditures for health. Although there was an increase in spending by donors and government during the period under review, there was no corresponding improvement in the quality of care and access to and utilization of public health care services. This finding has generated debate on the need for the government to review its funding mechanism (currently, the government and donors pay for inputs such as salaries, drugs and medical supplies, and equipment in the health sector and in return MoH provides free health care services to the population) for all its services and consider developing or strengthening alternative financing mechanisms for paying its providers (public and mission facilities) such as Performance/Output Based Financing and Conditional Cash Transfers to beneficiaries for specific outputs.
Currently, mission facilities charge fees for all its services while the MoH provides its services free of charge. Since 2006, the MoH has begun the process of implementing Service Level Agreements (Output Based Financing) for maternal and newborn care. The NHA findings provided evidence that despite increases in funding of the inputs by government and donors, very little in terms of quality of care, access to and utilization of public health care services has improved, hence great need to strengthen the Service Level Agreement/Output Based Financing by increasing the number of services to be covered under the agreements and expanding the performance/output based financing agreements to other NGOs including the public sector facilities. A review of the Service Level Agreements and incorporation of the full concept of Performance/Output Based Financing are currently underway.
Another one of the major findings of the 2007 NHA was that the MoH resource allocation between regions tended to follow infrastructure rather than health needs of the population. To this effect, the MoH has embarked on revising the resource allocation formula which was developed in 2001 despite the fact that this formula was being used to address inequities in health financing. The 2007 NHA report provided evidence that there was no change in spending patterns as the status quo continued and emphasized the need to revise it and start using it effectively.
1 An arrangement whereby Mission facilities are contracted by the Ministry of Health to provide Maternal and new born health care services free of charge and MOH District Hospital pays for the cost of the provision of the services once the mission facilities submit the invoice containing the number of patients treated and cost per patient.
