Maureen Lewis

Governance and Corruption in Public Health Care Systems

What factors affect health care delivery in the developing world? Anecdotal evidence of lives cut tragically short and the loss of productivity due to avoidable diseases is an area of salient concern in global health and international development. This working paper looks at factual evidence to describe the main challenges facing health care delivery in developing countries, including absenteeism, corruption, informal payments, and mismanagement. The author concludes that good governance is important in ensuring effective health care delivery, and that returns to investments in health are low where governance issues are not addressed.

Who is Paying for Health Care in Eastern Europe and Central Asia

Informal payments in the health sector in Eastern Europe and Central Asia are emerging as a fundamental aspect of health care financing and a serious impediment to health care reform. Informal payments are payments to individuals or institutions in cash or in kind made outside official payment channels for services that are meant to be covered by the public health care system. Such private payments to public personnel have created an informal market for health care within the confines of the public health care service network, and are a form of corruption. Unlike gratuity payments to providers, informal payments are required, not discretionary. Part of the problem can be traced to declining revenues without commensurate downsizing of buildings, hospital beds and health personnel, which has meant reductions in salaries and in some countries chronic arrears. Informal payments compensate for lost earnings. Reforms to modernize the Region’s health systems must compete with the personal revenues from informal payments, making change difficult. The frequency of informal payments exceeds 60 percent in the CIS countries for which there are data, reaching 91 percent in Armenia, and are reported in all but a handful of Eastern European countries. Inpatient care carries the highest costs, but pharmaceuticals are the most frequently purchased health service that public providers do not finance. Informal payments have become a major impediment to health care access leading to both reduced consumption due to unaffordable cost and the selling of personal assets to finance care. Systematic reports of delayed care in Poland, 37 percent reduction in prenatal care in Tajikistan and the fact that 45 percent of rural patients sold assets to finance health care in the Kyrgyz Republic suggest rising inaccessibility and declines in equity. Options for addressing the problem include comprehensive anti-corruption policies, downsizing of the public system, paring back the set of services subsidized by government, encouraging cost sharing for those who can afford it, improving accountability, and promoting private alternatives.

Governance in health care delivery: raising performance

The impacts of health care investments in developing and transition countries are typically measured by inputs and general health outcomes. Missing from the health agenda are measures of performance that reflect whether health systems are meeting their objectives; public resources are being used appropriately; and the priorities of governments are being implemented. This paper suggests that good governance is central to raising performance in health care delivery. Crucial to high performance are standards, information, incentives and accountability. This paper provides a definition of good governance in health and a framework for thinking about governance issues as a way of improving performance in the health sector. Performance indicators that offer the potential for tracking relative health performance are proposed, and provide the context for the discussion of good governance in health service delivery in the areas of budget and resource management, individual provider performance, health facility performance, informal payments, and corruption perceptions. What we do and do not know about effective solutions to advance good governance and performance in health is presented for each area, drawing on existing research and documented experiences.

Measuring public hospital costs: Empirical evidence from the Dominican Republic

Effective analysis of hospital performance requires the existence of accurate cost and output data. However, these are missing ingredients in most developing countries due to lack of information systems or other sources of data. Typically, expenditures are substituted for actual costs in analyzing hospital finance. This paper presents a methodology and analysis of the actual costs of inpatient, emergency, and outpatient services in a Dominican hospital. Through applying a set of survey instruments to a large sample of patients, the study measures and costs all hospital staff time, in-kind goods (drugs, medical supplies, reagents, etc.), overhead, and the depreciated value of plant and equipment related to the treatment of each patient. The results are striking. The budget is over 50% higher than the actual costs of services, reflecting the high cost of waste, down time, and low productivity. For example, high fixed costs translate into immunizations that on the average cost over 20% more than outpatient surgical interventions. The most disturbing finding is that although physicians represent the bulk of personnel spending, the surveys could account for only 12% of the contracted time of staff physicians, including time dedicated to treatment, supervision, administration, and teaching. As a proportion of the hospital total budget, personnel spending represents a high 84%. Yet staff costs for patient treatment never exceed 12%. These results suggest gross inefficiency, chaotic medical care organization, and poor hospital management.

Health Investments and Economic Growth: Macroeconomic Evidence and Microeconomic Foundations

This paper reviews the correlations and potential links between health and economic growth and summarizes the evidence on the role of government in improving health status. At the macroeconomic level, the evidence of an impact of health on growth remains ambiguous due both to difficulties in measuring health, and to the methodological challenges of identifying causal links. The evidence on the micro linkages from health investments to productivity and income are robust. Progress in life expectancy over the past two centuries has been spectacular, fueled by: improved agriculture that has increased food quantity; knowledge of disease transmission, and effective public health interventions that have controlled communicable diseases such as malaria, yellow fever, and hookworm; and, most recently and importantly, investments in very young children that pay off in healthier and more productive adults. Whether public investments in medical care affect health hinges on the quality of health institutions. In much of the developing world, factors such as chronic absenteeism among public providers, poor budget execution, ineffective management, and virtually no accountability weaken public efforts. Institutional issues are central in efforts to enhance public health investments, which in turn have a direct impact on the populations welfare and, perhaps over the long term, improvements in national income.

Addressing the Challenge of HIV/AIDS: Macroeconomic, Fiscal and Institutional Issues

After decades of neglect the HIV/AIDS epidemic has rightly become one of the highest priorities on the global agenda. Funding pledges from the donors have doubled resource commitments between 2002 and 2004 to over

Financial Crises and Social Spending: The Impact of the 2008-2009 Crisis

6 billion. That surge in funding belies the volatile nature of contributions to HIV/AIDS initiatives at the country level. The paper analyzes the impacts of abrupt HIV/AIDS funding on macroeconomic stability, fiscal health and the development of health institutions. The macroeconomic effects are ambiguous, but depend on the overall level of aid flows, as well as those for HIV/AIDS, the management of foreign exchange inflows, and effective spending policies. The fiscal ramifications revolve around the jump in external funding that reached around 1000% in Lesotho and Swaziland, and 650% in Zambia between 2002 and 2004, and the required rapid scale up if resources are to be used productively. At the same time, the new HIV/AIDS monies are swamping public health budgets in some cases exceeding 150% of the government’s total allocations for health. The vertical HIV/AIDS programs and the set aside funding threaten to undermine the very institutions that will need to carry forward the long term HIV/AIDS prevention and treatment agenda for each country. Health systems are already fragile, and governance problems and uneven productivity compound the challenges. Health institutions require funding and attention to strengthen them in the fight against HIV/AIDS. While the committed funds are desperately needed, solutions to the dilemma will require creative options to ensure the flow of funds, manage the economic implications and ensure effective service delivery. These are explored in the concluding section.

Governance in Education: Raising Performance

This paper examines the impacts of the 2008-2009 economic crisis on social spending, drawing on evidence at the global, national, and household levels, to provide a sense of the nature and the effects of the worldwide downturn on spending in the social sectors. It summarizes existing empirical evidence on the relationship between crises, or other serious dislocations on education, health, HIV/AIDS, and nutrition as background to the analysis of growth and social spending. The paper analyzes the relationship between GDP growth, growth in education and health spending, and projects expenditure responses to 2012, to illustrate how expected changes in future economic growth are likely to affect both absolute spending and growth in social expenditures. It provides an analysis of the effects on HIV/AIDS spending, a relatively new funding category and therefore outside the purview of the econometric analysis. It examines the responsiveness of Overseas Development Assistance (ODA) to financial crises in terms of subsequent allocations from the developed world, and the impacts on ODA spending for education and health in developing and transition countries. The paper concludes by citing existing evidence on regional impacts of the crisis on public spending, and the effects on household budgets in Eastern Europe and Central Asia, the region hardest hit by the current crisis.

The Economic Implications of Epidemics Old and New

The impacts of education investments in developing and transition countries are typically measured by inputs and outputs. Missing from the education agenda are measures of performance that reflect whether education systems are meeting their objectives; public resources are being used appropriately; and the priorities of governments are being implemented. This paper suggests that good governance can serve as an entry point to raising institutional performance in the delivery of education services. Crucial to high performance are standards, information, incentives and accountability. This paper provides a definition of good governance in education and a framework for thinking about governance issues as a way of improving performance in the education sector. Performance indicators that offer the potential for tracking relative education performance are proposed, and provide the context for the discussion of good governance in education in the areas of budget and resource management, human resources, household payments, and corruption perceptions. What we do and do not know about effective solutions to advance good governance and performance in education is presented for each area, drawing on existing research and documented experiences.

Falling short of expectations: public health interventions in developing and transition economies

The outbreak of Severe Acute Respiratory Syndrome (SARS) in the winter of 2002–03 raised the specter of a new, unknown and uncontrollable infectious disease that spreads quickly and is often fatal. Certain branches of economic activity, notably tourism, felt its impact almost at once, and investor expectations of a safe and controlled investment climate were brought into question. Part of the shock of SARS was the abrupt reversal of a mounting legacy of disease control that had altered societies’ expectations from coping with waves of epidemics of smallpox, cholera, and measles, among other diseases, to complacency with the virtual elimination of disease epidemics. This paper analyzes the economic implications of the Great Plague in the fourteenth century, the 1918–19 influenza epidemic, the HIV/AIDS curse and SARS to demonstrate the short- and long-term effects of different kinds of epidemics. The magnitude and nature of economic effects vary according to the duration and characteristics of the