Health Systems & Reform ISSN: 2328-8604 (Print) 2328-8620 (Online) Journal homepage: http://www.tandfonline.com/loi/khsr20 From Stumbling Block to Enabler: The Role of Public Financial Management in Health Service Delivery in Tanzania and Zambia Moritz Piatti-Fünfkirchen & Pia Schneider To cite this article: Moritz Piatti-Fünfkirchen & Pia Schneider (2018) From Stumbling Block to Enabler: The Role of Public Financial Management in Health Service Delivery in Tanzania and Zambia, Health Systems & Reform, 4:4, 336-345, DOI: 10.1080/23288604.2018.1513266 To link to this article: https://doi.org/10.1080/23288604.2018.1513266 Published with license by Taylor & Francis Group, LLC© 2018 International Bank for Reconstruction and Development / The World Bank Accepted author version posted online: 26 Sep 2018. Published online: 06 Nov 2018. Submit your article to this journal Article views: 370 View Crossmark data Citing articles: 1 View citing articles Full Terms & Conditions of access and use can be found at http://www.tandfonline.com/action/journalInformation?journalCode=khsr20 Health Systems & Reform, 4(4):336–345, 2018 Published with license by Taylor & Francis Group, LLC ISSN: 2328-8604 print / 2328-8620 online DOI: 10.1080/23288604.2018.1513266 Research Article From Stumbling Block to Enabler: The Role of Public Financial Management in Health Service Delivery in Tanzania and Zambia Moritz Piatti-Fünfkirchen* and Pia Schneider Health Nutrition and Population Global Practice, World Bank Group, Washington, DC, USA CONTENTS Abstract—The way governments manage resources through the Introduction budget cycle has important implications for health policy and Materials and Methods whether governments achieve societal objectives such as efficiency, How Public Financial Management Relates to Service Delivery equity, quality, and accountability. Studies found a positive associa- Results from Country Cases tion between health service delivery outcomes and good governance Discussion and Conclusions of public finance; however, the mechanisms through which public financial management affects service delivery remain underex- References plored. This article maps the three stages of the budget cycle to common performance criteria used in health service delivery. It applies this approach to experiences in Tanzania and Zambia. The findings point to a number of stumbling blocks, including the lack of flexibility to provide additional resources for unexpected demand for care, misalignment between budgeting and planning, fragmen- ted funding sources, rigid internal controls, insufficient budget provision leading to arrears, and a budget evaluation system that is excessively compliance driven and gives inadequate attention to issues of equity, quality, and efficiency in service delivery. INTRODUCTION Public financial management (PFM) relates to how govern- ments manage resources through the budget cycle. This makes PFM a key vehicle through which governments implement policy—including health policy—and achieve their economic and societal objectives.1 Thus far, the asso- Keywords: budget management, facility management, health systems, per- ciations between budget formulation and approval, budget formance budgeting, program budgeting, public expenditure management, execution, and budget evaluation and health service delivery public financial management, service delivery have not been examined. A discussion of how these elements Received 16 April 2018; revised 31 July 2018; accepted 12 August 2018. of the budget cycle affect health service delivery is thus *Correspondence to: Moritz Piatti-Fünfkirchen; Email: mpiatti@worldbank.org important. © 2018 International Bank for Reconstruction and Development / The World Bank The World Health Organization defines health service This is an Open Access article distributed under the terms of the Creative delivery as the “immediate output of the inputs into a health Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, system” (p. 2).2 Health service delivery depends on provided the original work is properly cited. 336 Piatti-Fünfkirchen and Schneider: From Stumbling Block to Enabler 337 numerous aspects, including government and private finan- Well-functioning PFM systems are essential for good cing, infrastructure, human resources, management prac- governance of public finance and health service delivery. In tices, and organizational culture, to name a few. PFM, or countries with good governance, health spending was found the processes through which public funds are managed, plays to have a significant effect on reducing infant and child an important role in service delivery because it sets the mortality.8 Welham et al.9 use average scores from PEFA framework for how public funds are used to finance the assessments as a proxy for PFM quality to regress PFM provision of health care. As such, PFM influences how quality on health outcomes. The PEFA dimensions included service delivery contributes to health system objectives of in the proxy were budget reliability, transparency, manage- efficiency, equity, quality, and accountability and ultimately ment of assets and liabilities, policy-based fiscal strategy and to better health status and financial protection.3 budgeting, predictability and control in budget execution, The three overarching objectives of public financial man- accounting and reporting, external scrutiny, and audit. agement are aggregate fiscal discipline, operational (or tech- Controlling for gross domestic product per capita, female nical) efficiency, and allocative efficiency.4 Aggregate fiscal literacy, and HIV prevalence, they find that a one-point discipline is about governments prudently balancing aggre- improvement in the PEFA score is associated with a 20% gate revenues and expenditures, which is important to ensure fall in under-five mortality, a 17% fall in infant mortality, sustainable and predictable revenue streams for service and a 2% increase in life expectancy at birth. More detailed delivery. Operational and allocative efficiency pertain to qualitative analysis would be needed to show how the differ- operating at minimal cost and allocating funds in accordance ent PFM dimensions affect health service delivery and to government priorities. These are also common objectives outcomes. in health service delivery. If implemented well, public finan- Although this has been recommended by different studies, cial management can enhance efficiency and quality health the mechanisms through which PFM affects health service service delivery, and it can help keep providers accountable. delivery have rarely been examined.5,10,11 A World Bank Public financial management, through its budgeting modal- study shows conceptually how PFM can affect health finan- ity, can, for example, impact operational efficiency in hospi- cing and service delivery.12 The report also examines supply- tals. A hospital budget that is defined based on the number and demand-side barriers in service delivery, including phy- of beds will set different incentives for efficiency in resource sical barriers to care, as well as issues associated with avail- use and health service delivery than an output-oriented bud- ability of inputs and the budget process. Chakraborty et al.5 get that rewards hospitals for better quality care. Similarly, and Cashin et al.6 discuss at a theoretical level how public weak budgetary controls and accounting can create bottle- financial management reform and health financing are necks and leakages and contribute to inefficient provision of aligned. They conclude that synergies between PFM and services. In such cases, PFM becomes a stumbling block for health financing contribute to better results for health finan- the provision of health services.5,6 cing reforms. Conversely, when alignment is weak, such as Several governments in East and Southern Africa have in PFM environments that excessively emphasize expendi- strengthened various components of their PFM systems, ture control, this threatens the ability of health financing including planning and budgeting systems, budget execution, reforms to sustain policy objectives. There is, however, and accounting and reporting. These reforms have been insufficient analysis on how PFM could advance service evaluated in public expenditure and financial accountability delivery. More practical advice on this was provided by (PEFA) assessments. A review of the latest PEFA assess- guidance manuals on the PFM and sector ministry intersec- ments shows that by and large PFM systems in countries in tion by the Swedish International Development East and Southern Africa perform reasonably well.7 South Cooperation13 and the German Gesellschaft für Africa has the best PFM system, followed by Rwanda and Internationale Zusammenarbeit.14 Both of these manuals Ethiopia, whereas the Comoros, Madagascar, and Zimbabwe outline various PFM reforms such as the introduction of a have the weakest PFM systems based on a composite rating medium-term expenditure framework and financial manage- of 28 dimensions across the PFM spectrum including the ment information systems and describe how they are likely formulation, execution, and evaluation of the budget. Higher to be important for service delivery. Still, a recent literature income countries in the region tend to perform better on review on PFM in health suggests that ”the overall evidence most PFM dimensions, particularly in credibility and com- in this field appears to be patchy” (p. 28),5 with many prehensiveness of the budget, budget execution, and account- hypotheses remaining largely underexplored and insufficient ing and reporting. evidence to identify causal effects. 338 Health Systems & Reform, Vol. 4 (2018), No. 4 This article maps the three stages of the PFM budget make them interesting cases for comparison. Though the two cycle to common performance criteria used in health service countries provide valuable insight, a sample of two is small and delivery. The analysis uses experience from Tanzania15 and does not suggest that findings have external validity. Rather, the Zambia16 to show how deficiencies in the PFM environment two countries are used illustratively to show how various PFM can create stumbling blocks for health service delivery and interventions can affect service delivery at the facility level. to explore how PFM can act as an enabling instrument in Findings from the country case studies were compared to evi- improving health. Evidence from other countries is presented dence identified in the literature review. to help interpret findings from these two countries. MATERIALS AND METHODS HOW PUBLIC FINANCIAL MANAGEMENT RELATES TO SERVICE DELIVERY This article uses qualitative methods, a systematic review of the literature, and two country case studies to examine the connec- The nature of the budget cycle has been discussed extensively tions between the PFM dimensions and health service delivery. in the literature.4,6,12,17 The three stages in the budget cycle are The literature was identified through a Boolean search strategy linked to service delivery as follows: (1) budget formulation: using the term PFM, or a synonym thereof, in combination with how public spending priorities in health are determined and “service delivery” and “health.” A manual review of titles and included in the budget, approved, and funds allocated to health abstracts found 12 relevant studies of sufficient quality. activities; (2) budget execution: how budgets are used to The review of the literature has two purposes. It provides a finance the provision of health services; and (3) budget eva- conceptual discussion of the theory on how the budget cycle luation: how the implementation of the budget is evaluated and relates to the provision of health services, and it identifies current used to inform the next budget allocation. Others have visua- evidence on the link between PFM and service delivery. Because lized the budget cycle in four or seven stages.1,7,18 The authors the literature does not show how the various dynamics actually chose a shorter, three-stage version to simplify and make play out at the country level, this article subsequently explores points more clearly. Together these three budget stages affect these dynamics through case studies from Tanzania and Zambia. how well a health system can deliver services efficiently, These two countries were selected because of new information equitably, of high quality, and by keeping managers on their public financial management that has been collected in accountable.3,6 Figure 1 shows this relationship. A more public expenditure reviews by the World Bank. Furthermore, the detailed discussion of the three stages and their relation to characteristics of the health systems in Tanzania and Zambia service delivery goals is provided below. FIGURE 1. From PFM to Service Delivery Goals: A Conceptual Framework. Based on Andrews et al.1 and Cashin et al.6 Piatti-Fünfkirchen and Schneider: From Stumbling Block to Enabler 339 Budget Formulation all financial transactions to be captured by the accounting sys- Fiscal discipline governs budget formulation and puts pressure tem, which is fundamental for accountability in budget execu- on the sectors to formulate their budgets in a responsible way tion. In an input-based budget, the execution is to pay for the that reduces the fiscal risk for the government. During the planned line items such as salaries and medical material. This budget formulation process, health facility managers develop also applies for output-based budgets, but facility managers have their activity plans against the budget ceilings provided by the more flexibility to reallocate funds to deliver specific outputs. government and in alignment with sector priorities. All plans Though budget execution rules introduce some financial are then submitted to the higher administrative level where discipline, they can also limit health service delivery perfor- they are compiled for annual budget proposals. Plans are often mance. Line item budgets, for example, can lead to ineffi- extended beyond the next fiscal year to allow for a multiyear cient service delivery when facility managers are prohibited perspective. The structure of the budget proposals is classified from reallocating funds across line items to finance overruns against the chart of accounts of government. Most proposals in wage expenditures to respond to unexpected needs. In show economic classification (e.g., salaries, pharmaceuticals) addition, health budgets may arrive late in the year, which and administrative classification (such as the Ministry of can lead to arrears to suppliers or to charging unofficial fees Health), but some go beyond to include information on activ- to patients, which may affect equity in access. ities or specific functions or programs such as primary health care. Governments in East and Southern Africa predominantly classify their budgets as line items by economic classifica- Budget Evaluation tions. Other budgeting methods in health include activity At the end of the budget cycle, governments are required budgets, which disburse based on the number of activities to send their annual financial reports to independent agen- provided; program or performance budgets, which reimburse cies for external audit and accountability processes.1 for a specific performance agreement; or global budgets for Budget evaluation is the stage where the government hospitals, which provide a fixed amount to hospitals to cover examines how effectively funds have been used to achieve the aggregate costs of delivering a set of services. In many policy objectives, which is important to inform countries, governments tend to use a mix of these budgeting budget allocations for the subsequent year. However, bud- methods in health. get evaluation processes tend to be focused on financial The budget formulation process aims to enhance alloca- compliance rather than how efficiently and of what quality tive and operational efficiency; however, it can lead to inef- services were delivered. In addition, budget evaluation ficient health service delivery when there is a disconnect processes tend to not assess equity in access to inform between planning and actual needs; for example, because of future allocations. unexpected higher demand for health care. Equity and health A caveat needs to be made on how health facilities can service quality may be negatively affected if the necessary manage funding. Health services are delivered by health provi- budgetary provisions are not made to treat lower income ders owned by central and local governments and, in some groups or to ensure the availability of medical supplies. countries, the private or voluntary sectors who contract with And budget formulation does not keep health facility man- government. This means that the degree of financial autonomy agers accountable if future planning is not informed by an given to a health facility as well as the maturity of the PFM evaluation of past performance. system affect how health facilities process and manage their budget. Introducing these different levels of budget management would be beyond the scope of this article, which focuses on the experiences of public health facilities in Tanzania and Zambia. Budget Execution Once the budget is enacted, health facilities are given the man- date to execute the budget according to plan and with financial RESULTS FROM COUNTRY CASES discipline. Spending guidelines govern the mechanisms by which health budgets are executed. Guidelines specify who This section uses the above framework (Figure 1) to examine has to sign off on spending requests, what funds can be used how the three stages in the budget cycle affect efficiency, for, and what flexibility facility managers have in moving funds equity, quality, and accountability in health service delivery across line items. The execution of the budget is subject to in Tanzania and Zambia. Table 1 summarizes possible stum- internal controls that are enforced through the government’s bling blocks that can be created during the budget cycle and financial management information system. PFM rules require maps them against the four goals in health service delivery. 340 Health Systems & Reform, Vol. 4 (2018), No. 4 Health service delivery objectives Budget cycle Efficiency Equity Quality Accountability Budget Budget system rigidities slow Budgets are developed Budgets are developed with Facility managers are formulation down additional allocations to with insufficient insufficient attention to not kept accountable finance unexpected demand attention to equity service quality for financial for care management Budget ceilings can lead to cuts without prioritizing health activities Fragmented funding sources undermine effective planning Budget Rigid internal controls limit Budgets that are Budgets that are insufficiently Lacking financial execution flexibility in budget execution insufficiently funded funded can compromise accountability Insufficient budget provisions can compromise equity service quality undermines the lead to arrears and price Slow and irregular cash foundation for increases releases can compromise autonomy service quality Budget Budget evaluation that Budget evaluation tends to Budget evaluation tends to be Lack of integrity in evaluation inadequately informs the next be compliance driven compliance driven and gives capturing and budget cycle compromises and gives inadequate inadequate attention to quality reporting efficiency attention to equity transactions undermines budget evaluation and accountability TABLE 1. Mapping PFM to Health Service Delivery: An Overview of Challenges Efficiency will need to be ratified by the legislature, as shown by The efficiency of health service delivery is impacted by all the following example. three stages of the budget cycle, including budget formula- One example of a disease spike is the cholera out- tion, execution, and evaluation. break in Zambia between September and December 2017, when 547 cholera cases were reported.19 This resulted in an unanticipated increase in patients who Budget System Rigidities Slow Down Additional had not been budgeted for and for which Zambia did Allocations to Finance Unexpected Demand for Care not have a contingency budget line available. The onset During the budget formulation process, health facil- of cholera required additional resources to finance sur- ities plan their activities to treat the expected need for veillance, health education, chlorine distribution, contact services by patients. In Tanzania and Zambia, the gov- tracing, and environmental health monitoring. However, ernment releases funds against the budget, and health supplementary budgets require legislative approval and facilities are expected to implement activities as outlined are usually not passed more than once a year in in their plans. However, demand for health services can Zambia. This restriction can become a stumbling block. change; for example, if there is a spike in disease inci- It makes facilities slow to react to emerging needs, dence. Often countries have a contingency budget line to which undermines their operational efficiency. finance such unexpected demand. Responding to an Expenditure caps at the program level, rather than the increased demand for care would require a swift adjust- facility level, could address this issue but are in practice ment to the total finances allocated to health and a difficult to manage because this could lead to large change to the purpose for which funds can be used. unwarranted expenditure inequities across facilities. To This process, however, can be cumbersome and slow, respond to the crisis, the Zambian government relied on because supplementary budgets may be required that extensive assistance from the international community Piatti-Fünfkirchen and Schneider: From Stumbling Block to Enabler 341 and the Zambian army, in part due to financing needs but facility management, and efficiency, because the various also because of budget rigidities that slowed down the protocols are insufficiently coordinated at the facility level provision of additional funds to finance cholera and lead to rigidity in the use of funds. An unforeseen treatment. shortfall of funds from one source cannot easily be replaced with another during budget execution. This has been found Budget Ceilings Can Lead to Cuts without Prioritizing to affect drug availability in health facilities and the adequate Health Activities, Population Groups, or Expected Outputs provision of medical supplies to provide care. Anecdotal and Outcomes evidence suggests that facilities take a pragmatic approach and use RBF funds for investments and salary top-ups Planning is a bottom-up exercise in both countries. Health because they cannot use other resources such as basket facilities develop plans to deliver activities to their population funds for these expenses. In Tanzania, the problem is par- and achieve specific outputs and outcomes such as vaccination tially addressed through investments in information systems coverage. Facilities submit their plans to the district authorities and consolidated facility plans that should provide better where they get collated and then passed on to the legislative for oversight until purchasing reforms are implemented. Other approval. In Tanzania, however, facility plans tend to be too countries attempted to mitigate fragmentation through sec- aspirational. During legislative enactment, the proposed plans tor-wide approaches. A review of Sector Wide Approach were adjusted by administrators to be within budget ceilings (SWAPs) concluded that they contributed in harmonizing that were set after the planning stage and without adequate development assistance but were only modestly successful consultation with the health sector about priorities. Once actual in improving efficiency in resource use through using joint budget ceilings were established, health facilities were not financing modalities.23 Fragmented funding can also create given the chance to prioritize their plans adequately. The result- adverse financial incentives. If patients, health insurance, ing misalignment between planning and budgeting undermines and RBF all pay providers a fee for specific services, then the purpose of bottom-up planning. It is also inefficient because some procedures can become “cash cows” for providers, administrators who are unfamiliar with the resource needs in which may cause providers to deliver more of these services health facilities decide on their behalf.20,21 In Tanzania, the and contribute to growing expenditures. situation has improved somewhat in recent years in part due to efforts in making indicative budget ceilings more realistic and by discouraging wish-list proposals from facilities. Rigid Internal Controls Limit Flexibility in Budget Similarly, in Kenya, the misalignment between planning and Execution budgeting was found to weaken prioritization of activities in the Health facility managers in Zambia and Tanzania do health sector, and the integration of these processes through not have the necessary autonomy to reallocate funds to information technology investments would strengthen the pol- changing needs such as to finance higher drug expendi- icy orientation of the budget.22 tures during the year. This limits their ability to allocate funds effectively. The execution process of line item Fragmented Funding Sources Undermine Effective budgets entails controls that ensure that funds can only Planning be requested against items in the budget that were pre- Health facilities in Tanzania and Zambia receive funds viously committed to and approved by the legislature. from several sources, including budgetary allocations from For example, commitment control would ensure that the government; results-based financing (RBF) and basket funds allocated for utilities are actually spent on utilities fund allocations from donors provided directly to facilities; and not diverted to other items such as goods and ser- user fees paid by patients, which are retained by facilities; as vices or wages. Tanzania has recently introduced a pro- well as revenues from health insurance when facilities are gram-based budget classification at the local government reimbursed for treating insured patients. These funding level that disburses the budget against programs like sources have their own protocols on how funds can be primary health care and preventative care. However, dur- used. For example, in Tanzania, health facilities must follow ing budget execution, the commitment control still guidance notes on resource use for RBF funds, protocols for applies to inputs and activities instead of outputs. the use of user fees and health insurance reimbursements, Similarly, in Zambia, program budgets have been intro- and a negative list on the use of basket fund resources. The duced and are reported against, but execution continues negative list identifies all items that may not be purchased to enforce strict line item control. Inefficiencies in ser- with basket funds. This undermines effective planning, vice delivery arise because facilities are bound by 342 Health Systems & Reform, Vol. 4 (2018), No. 4 original activity plans and thus unable to adjust to chan- Equity ging priorities in service delivery in an output- or pro- Equity in service delivery is mostly affected by budget gram-based budget. planning. In both countries, high levels of control during execu- tion mean that the Ministry of Finance lacks confidence Budgets Are Developed with Insufficient Attention to in the prudence of spending units. In both countries, the Equity program or output budget reforms are therefore not Tanzania recently introduced an output orientation to the effectively utilized. Strict line item–based ex ante com- traditionally input-oriented budget. Zambia has been using mitment control would not be necessary, and facilities multiyear program budgets. However, budget formulation is could instead report against line items after expenditure insufficiently informed by equity criteria. Relevant factors has been concluded. In Tanzania, an enabling factor was such as disease burden, poverty rates, and changes in popula- that line item control was aggregated to allow for greater tion density are not adequately taken into consideration during flexibility within that budget line for health facilities. the budget development stage, which contributes to inequalities Further, automatic virement (transfer from one part of a over the years. In Zambia, annual non-wage budgetary alloca- budget to another) for limited budgets is permitted (e.g., tions were guided by a formula to account for inequalities; up to 10% between budget lines). This approach did not however, non-wage government spending covered only 16% fully address the problem of insufficient flexibility of total expenditure. The formula consisted of a deprivation imposed by the rigorous line item commitment control, index that estimated relative need based on several factors but it removed some of the inflexibility by allowing for including population size and density, disease burden, and shifting some of the funds. various poverty proxies. However, the formula was not updated over time and was ineffective in addressing equity. The physi- Insufficient Budget Provisions Lead to Arrears and Price Increases cian-to-population ratio for the top quintile is about five times that for the bottom quintile, compared with around 3.5 times for Arrears in the health sector are a concern in Tanzania and nurses and midwives.27 Furthermore, the formula did not Zambia and affect efficiency. They are most common in non- extend to lower levels of local government and adjust for wage recurrent expenditures but can also accrue for wages and inequities within districts, which can be higher than inequities salaries, which make up the larger share of the budget. In across districts. Adjusting the full budget, including human Zambia, multiyear framework contracts were signed with sup- resources by area-specific equity criteria, would provide greater pliers but not captured in the financial management system. budgets to facilities in disadvantaged areas that generally find it Contracts have, however, frequently exceeded budgeted problematic to attract staff to work there. amounts, and budgets have been released with delays such that suppliers were not paid on time. This has resulted in a significant buildup of arrears. By 2015, Zambia had 30 million USD of Quality accumulated arrears for drugs and pharmaceutical supplies, The quality of health service delivery was found to be corresponding to about 7% of general government health expen- impacted through deficiencies in the budgeting and execu- ditures. A subsequent depreciation of the kwacha against the tion processes. USD further worsened the fiscal implications of arrears (denominated in USD). Arrears can lead to a price increase Budgets That Are Insufficiently Funded Compromise because suppliers adjust prices to accommodate for risks of Service Quality late payment. In Zambia, suppliers refused to deliver drugs In Zambia and Tanzania, the credibility of the budget, which until arrears were settled. Thereafter, suppliers built in a risk is the degree to which budgets were honored, was found to be premium and increased prices, which negatively affects efficient inadequate and the government disbursed funds late in the year. use of funds. Efficiency in service delivery was undermined If budget appropriations are not honored, this has important because it required more resources to deliver care. Higher prices implications for facilities’ abilities to deliver quality health also led to periodical drug shortages in health facilities. In services. Though wages are usually paid, budgetary allocations Tanzania, arrears affected efficiency through late payment for nonsalary recurrent expenditures or capital expenditures penalties.21,24 Arrears are problematic in other countries too, fare worse. The quality of health care suffers if facility man- including in Malawi, where the public expenditure review iden- agers do not have the necessary funds available to pay for tified arrears due to poor financial management.25,26 medical material, pharmaceuticals, and facility maintenance. Piatti-Fünfkirchen and Schneider: From Stumbling Block to Enabler 343 And staff cannot work effectively if they lack the necessary provide decentralized services in health facilities. In Zambia, medical supplies to provide care. Stock-outs cause patients to for example, financial accountability of facility managers is purchase their own medical supplies and medicines from phar- weak. More than 55% of funds spent at the district level cannot macies, which can reduce equity in access to care. In Zambia, be mapped against budgets or spending categories, and facility delays in salary payments negatively affected the morale among managers and district authorities have not been kept accounta- staff and encouraged absenteeism and moonlighting in the ble for the missing 45%. Unsurprisingly, this has been a stum- private sector. In Tanzania, about 14% of health staff are absent bling block in the effort to reduce control measures and give and the rate is much higher among medical doctors.28 Similarly, more financial autonomy to facility managers. In Tanzania, in Zambia, the caseload is extremely low, with one to two however, significant investments in information systems were patients per doctor per day,16 suggesting that doctors are absent. made that have strengthened financial management. These The absence of health staff affects service quality and can cause investments were fundamental for channeling funds directly to delays in treatment. In Uganda, absenteeism among health staff facilities and giving them more spending autonomy. Because has resulted in an increase in emergency caesarean sections, financial information systems were only established in late with complications and worse outcomes.29 2017, the impact on service delivery remains to be seen. This makes capacity building in financial management and control an enabling factor for increased spending autonomy in health Accountability facilities. Accountability of service delivery permeates through the full budget cycle. The case studies point to accountability issues Budget Evaluation Focuses on Compliance and Gives in budget execution and evaluation. Inadequate Attention to Performance The budget evaluation phase should ensure accountability Facility Managers Are Not Held Accountable for and value for money in financial activities.1 In Tanzania and Financial Management Zambia, budget evaluation has tended to be compliance driven, In Tanzania and Zambia, health facility managers plan their with inadequate attention to value-for-money measures, equity, activities and district health authorities manage the financing of and quality. As a result, performance indicators on efficiency these health activities. Facility managers thus are accountable for and equity in service delivery and quality of care are not used the delivery of services but not for financial management, which to inform budgetary decisions for the next year. Public expen- creates an accountability gap. Facility managers may not know diture and financial accountability assessments in Tanzania whether they are within budget with their activities, which makes and Zambia point this out and emphasize that even when it difficult to hold them accountable. Facilities are also not kept value-for-money audits are done, results are not used in the accountable to the population they serve because they can argue next budget formulation process and they are not communi- that resources from the district are slow to arrive and insufficient. cated back to providers. This has affected service delivery Similarly, district authorities are responsible for managing health because providers do not receive the necessary information funds but they are not responsible for how health services are and resources to adjust their performance and improve equity, delivered and for health outcomes. To address this accountability quality, and efficiency. As long as governments face high gap, donor basket fund allocations and performance financing fiduciary risks, performance audits are unlikely to be priori- schemes are now disbursed directly to health facilities in tized. Though this area is largely understudied, limited evi- Tanzania. Increased financial responsibility for facility managers dence from the Middle East and North Africa regions suggests has been accompanied by capacity building in financial manage- that performance management information and internal audit ment at the facility level to align processes and incentives. The can help strengthening service delivery.30 effectiveness of this policy shift has not been evaluated yet because direct disbursement to facilities was only introduced in early 2018. But it will provide increased financial autonomy to DISCUSSION AND CONCLUSIONS health facilities. The way in which public funds are planned and managed has important implications for health service delivery. Yet, there Financial Accountability Provides the Foundation for is limited evidence on how financial management affects Autonomy health service delivery, and some pathways about how the Confidence in payment and reporting during budget execu- budget cycle affects service delivery remain underexplored. tion is necessary to keep managers financially accountable and The budget formulation, execution, and evaluation processes 344 Health Systems & Reform, Vol. 4 (2018), No. 4 can create stumbling blocks that affect service delivery. DISCLOSURE OF POTENTIAL CONFLICTS OF These stumbling blocks stem from the lack of flexibility to INTEREST provide additional resources for unexpected demand for care, No potential conflict of interest was reported by the authors. late budget ceilings that do not allow for prioritization of health activities and volumes, fragmented funding sources that undermine effective planning, rigid internal controls that REFERENCES limit facility autonomy during implementation, insufficient 1. Andrews M, Cangiano M, Cole N, De Renzio P, Krause P, budget provision that can lead to arrears, and budget evalua- Seligman R. This is PFM. Center for International tion practices that are compliance driven and give inadequate Devleopment. Cambridge (MA): Harvard University; 2014. Working Paper(285). attention to issues of equity, quality, efficiency, and account- 2. World Health Organization. World health report. Geneva ability in service delivery. 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