August 2008, Waly Wane
Health centers in Chad received less than 1 percent of the Ministry of Health’s non-wage recurrent expenditures set aside for their use in 2004.These figures were obtained by combining data from 281 primary health centers and 20 hospitals with data on the share of public expenditures making its way through the four levels of the health system. The study showed a direct relationship between funds that do not reach frontline health clinics and an increase in out-of-pocket expenses by users.
Chad is one of the poorest countries in Sub-Saharan Africa, ranking 100th out of 103 countries on the Human Poverty Index. Average life expectancy is 43 years. Despite a 24-percent increase in the government health budget in 2003 and significant increases in resources allocated to health in the past decade, the incidence of malaria, diarrhea, respiratory infections, parasites, meningitis, and cholera remains high.
Health centers that do not receive public support charge much more for medications than centers enjoying public resources. The higher prices for medication sold to patients by health centers constitute a major barrier to treatment. Out-of-pocket spending for drugs can often exceed 70-80 percent of the cost of a visit. As the figure below shows, the number of patients treated could have doubled had these fund reached local clinics.
The left side of the figure shows a paradoxically negative association between public resources in health and performance and the right side shows this result does not hold once leakage is taken into account.
Source: Gauthier and Wane (2008).
Public health resources are not allocated well. Richer people will bypass nearer low-quality public providers to visit private providers, and the poor will bypass nearer private providers they cannot afford to seek care in a lower quality public health centers. This bypassing behavior reflects the larger number of service providers in urban areas and suggests a mismatch in the allocation of public health resources.
Rural facilities are often overcrowded despite their low quality, and urban public facilities, bypassed by the better-off in favor of private and faith-based providers, attract few clients. Ultimately, careful monitoring of public funds is needed to ensure that additional public resources reach rural facilities and the underserved poor.
A few simple policy mechanisms would greatly improve the transfer of public funds. A set of clear allocation rules at the ministry level about materials and medications to regions and districts would reduce the discretionary capture by regional and district administrators. Better recordkeeping on resources received by health centers from higher administrative levels and how the money is spent would contribute to transparency and accountability by public officials. Providing the public with access to information on transfers can also be effective in ensuring public funds reach health clinics.
1. The survey, designed and organized by the author, examined various levels of the health sector, collecting the most complete information possible on resource use, delivery processes, health outputs, and pricing behavior.
2. Gauthier, Bernard, and Waly Wane. Forthcoming. “Leakage of Public Resources in the Health Sector: An Empirical Investigation of Chad.” Journal of African Economies. (Based on World Bank Policy Research Working Paper 4351, September 2007).
3. Gauthier, Bernard, and Waly Wane. 2008. “Bypassing Health Providers: The Quest for Better Price and Quality of Health Care in Chad.” World Bank Policy Research Working Paper 4462, January.
4. For example, a public information campaign in Uganda reduced the capture of school grants from 80 percent in 1995 to less than 20 percent in 2001.[Reinikka, Ritva S., and Jakob Svensson. 2004. “The Power of Information: Evidence from A Newspaper Campaign to Reduce Capture.” World Bank Policy Research Working Paper 3239, March.]
Waly Wane is an Economist in the Development Research Group (Human Development and Public Services Team). His research interests include the effect of frontline provider-level incentives provided by both government and local communities on the determination of both the quality and quantity of supplied public services. Email: firstname.lastname@example.org
Bernard Gauthier is Professor of Economics at the École des Hautes Études Commerciales in Montreal. Email: email@example.com.