COUNTRY-LEVEL FINANCE

 

 

COUNTRY-LEVEL FINANCE NYHQ2010-2940

A pregnant patient waits as Nurse Fridah Musonda takes notes during a consultation at the Chimembe Rural Health Centre in Chimembe Village, Zambia, in October 2010. © UNICEF/Nesbitt

 

Definition

Country-level finance concerns how a state funds health services, including all supply chain functions, through a combination of external donations, internally generated revenue, and/or user fees. To ensure the functionality of supply chains, countries must have the capacity to manage their finances efficiently and effectively while ensuring that funding mechanisms do not inhibit access to life-saving commodities.

What is the problem?

LMICs often face budget constraints for key commodities and supply chain management, especially at lower administrative levels, which can constrain distribution of life-saving commodities to primary health facilities. Moreover, funds are sometimes used inefficiently, often because funding flows are slow or inconsistent, funding sources are not well coordinated, or access to funds is difficult when it is needed. This is compounded by reliance on donor funding, which distorts the in-country market and supply chain.

A poor understanding of costs and a lack of capacity to implement mechanisms to reduce both costs and prices further hinder decision-makers in planning and managing cost-effective supply chains. For example, public health supply chain funds are often distributed amongst numerous administrative levels, bundled in budget line items that contain non-supply chain functions (such as fuel & vehicle maintenance that is used for distribution and emergency transport of patients) or are not fully funded, relying on untracked ad hoc contributions from health workers who use out of pocket funds to pick up supplies.

In these cases, it is challenging for governments to understand their full costs and make cost-effective decisions. Ambiguous or amorphous business models within medical stores can also increase costs. All these factors can limit access to life-saving commodities by impeding the functionality of supply chains or by imposing costs on end users who may not be able to afford them.

Indicators to Measure Progress in Country-Level Finance

• The recommended performance indicator for country-level finance measures the percentage of service delivery points (SDPs) that offer life-saving commodities where patients are assessed any out-of-pocket charges.

• Additional indicators are:

– Total expenditures for the procurement of life-saving commodities

– Total expenditures on life-saving commodities as percentage of amount needed for procurement

Read the full Supply Chain Performance Indicators Guidance here.