Differential financing of public health facilities

Abstract

The health systems in India suffer from low level of public spending and high out of pocket payment. Public health facilities are funded on a fixed and uniform basis irrespective of their needs and performance. The National Rural Health Mission has introduced an innovative approach of flexible financing to public health facilities under Untied Funds (UF), Annual Maintenance Grant (AMG) and Aarogya Raksha Samithi Corpus Funds (ARS) @ of Rs.10000 at Village Health and Sanitation Committee (VHSC), Rs.20000 at Sub-centre (SC), Rs.175000 at Primary Health Centre (PHC), Rs.250000 at Community Health Centre (CHC) and Rs.500000 at District Hospital (DH) Though funds are provided to healthcare facilities with adequate guidelines and flexibility, utilization is poor. Given the limited resource available for healthcare in the country, there is a need to rationalize the distribution of funds and allocate them efficiently. With an objective to work out a differential financing model for public health facilities, a cross sectional study of 46 primary and secondary level facilities was conducted in two districts of Karnataka in the year 2011-12. Retrospective data on resources, finance and performance of 2008-09, 2009-10 and 2010-11 were collected and the members of ARS committee responsible for taking decision on spending were interviewed. The study found that utilization at health facilities are influenced by per-capita allocation, distance from district headquarter, availability of equipments and infrastructure. There is no definite trend of impact of availability of human-resource, number of beds, staff residing at the facility compound, training, cooperation among members, availability of guidelines on utilisation of funds at health facilities. The study proposes formula for allocating funds on differential financing method: VHSC @ Rs.10 per-capita, SC @ Rs.4 per-capita, PHC @ Rs.6 per-capita, CHC @ Rs.1.04 per-capita and @ Rs.4167 per functional bed and DH @ current norm of 500000 per DH.