A report by the World Bank on Kenya’s health system has raised the alarm over poor financing of hospitals and clinics, despite the sector getting billions of shillings from taxpayers annually.
The report has proposed that the government compensate health facilities for the lost revenue after it abolished user fees in health facilities. The document, Public Expenditure Review 2020-21, explored public spending in health, with a focus on efficiency, effectiveness, and equity. It revealed that with the removal of the user fees, public hospitals are struggling and this is not compensated by the exchequer.
“Most of the facilities are left to cover operating expenses because the reimbursed funds are often swept to County Revenue Fund and do not reach health facilities. Compensation for the removal of user fees is deemed inadequate as the allocation is not being adjusted for the increasing number of health facilities and inflation,” states the report.
It recommends that the government introduce reforms to accelerate the flow of resources to front-line facilities and strengthen the linkages between payments and performance and achievement of results. “The national government should work with the county governments to ensure conditional grants flow directly to health facilities, rather than cascading slowly and irregularly through different layers of the intergovernmental financing framework.”
The report, motivated by an unexpected increase in public debt stock, adds that the government is prioritising financing of specialised care rather than primary healthcare (PHC), thus creating a wrong foundation for the implementation of Universal Health Coverage.
The Bretton Woods institution report indicated that with the increasing burden from non-communicable diseases (NCDs) and the high burden from communicable diseases that are preventable, both of which will require investments in prevention and routine services for chronic diseases, there is a need for the government to turn to the PHC strategy.
“This is wrong if the government is to make progress towards UHC in a sustainable way; it needs to prioritise investments in PHC moving forward,” it states.
To provide a glimpse into how sector investment should be made in future, the report raises concerns that the sector has been accumulating huge pending bills, which undermine the provision of quality and essential health services.
Pending bills arise when an entity fails to settle invoices for goods and services properly procured, by the end of a financial year. In 2019/20, for instance, the national level health sector, consisting of the Ministry of Health and semi-autonomous agencies, accumulated pending bills to a tune of Sh50.2 billion, though marking a drop from the Sh95.2 billion in 2018/19.
County pending bills as of 2019/20 amounted to Sh113.9 billion, up from Sh34.5 billion in 2018/19. “A bigger share of the national level pending bill is attributable to the ministry’s headquarters, accounting for about 85 per cent of the total pending bill in the last financial year,”
Using institutional deliveries and infant mortality as an example, the report shows a weak correlation between financing, outputs, and outcomes. It suggests, therefore, that to increase the value of money allocated to the health sector, there is a need for an increase in the efficiency of public spending.
The national government should work with the county governments to ensure conditional grants flow directly to health facilities
The pending bills, according to the report, accumulated as a result of a lack of liquidity and budgetary provision with the latter accounting for the largest share of the total national level spending bill.
“The national and county governments should ensure effective management of pending bills by aligning procurement plans to cash flow projections and ensuring that their budgets consider pending bills (as a first charge) before funding new programs and interventions,” the report recommends.
It suggests that to increase the value of money for the health sector there is a need for an increase in the efficiency of public spending.
“A simple comparison of health spending with service coverage and health outcomes shows that Kenya is not achieving the highest return on investments as compared with regional peers and aspiring countries,”
Similarly, using institutional deliveries and infant mortality as an example, the report shows a weak correlation between financing, outputs, and outcomes.
It recommends that the government implement strategies to continue improving budget execution, absorption of development budget, and disbursement of funds from the exchequer.
