Provider Purchasing and Contracting for Health Services_The Case

observed that the disbursement of funds was highly unpredictable and always delayed during
the first year after the dissolution of the Central Board of Health, they noted that the system
has improved slightly since 2007, both in terms of the predictability and amounts disbursed to
providers. However, some respondents observed that the flow of funds has worsened.
The Ministry of Health merged the disbursement of the basket (donor) funding and
government grant, as opposed to the Central Board of Health arrangement where the two
grants were disbursed separately. In this respect, some managers observed that the
disbursement of funds is much better under the current arrangement than it was under the
Central Board of Health. However, the variation between the approved budget and
disbursement still persists.
Although the merging of the basket and the Ministry of Health grant has relatively increased
the amounts being received by the providers, some respondents observed that this change has
adversely affected their delivery of health services. They argued that, while the basket funds
were always on time during the Central Board of Health era, a slight delay now has adverse
effects as it leaves providers without funds to run their operations. For example, one of the
managers observed that under the Central Board of Health, the basket funds were timely
while the government grant would be delayed for up to three months. At the moment, the
combined disbursements tend to be delayed for up to one month.
As a result of the continued delays in disbursements, respondents, especially in hospitals,
noted that they have to rely on other sources of funding to finance some items and activities
that are ideally supposed to be covered under the operations grant. This occurs although the
budget ceiling provided by the Ministry of Health (at the budgeting stage) does not take into
account all the needs of the District Health Management Teams and hospitals. While District
Health Management Teams and hospital managers prepare action plans and budgets based on
the expected service volume, input requirements, and prices, the Ministry of Health issues a
budget cap at the launch of the budgeting process through the indicative planning figure.
Although respondents stated that the Ministry of Health, like the Central Board of Health, has
not been meeting financial obligations to the full, their average expenditure data for 2005 and
2007 reveal that the actual receipts exceeded the targeted funding levels. As table 10 shows,
the excess expenditure over targeted expenditure under both systems arose from more than
programmed expenditure on allowances. 7 This was more rampant under the Central Board of
Health than the Ministry of Health (see table 10).
A closer examination of the expenditure patterns under the two regimes shows that the
Ministry of Health has been closer to meeting the programmed expenditures on all cost items
than the Central Board of Health.
7 This could be explained by the fact that a number of health workers employed by the boards were not on the
government’s payroll. Their salaries were paid from allowances.
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