Why is it so difficult for the Global Fund to show value for money?

Abstract

The paper in The Lancet Global Health by Victoria Fan and colleagues1Fan VY Duran D Silverman R Glassman A Performance-based financing at the Global Fund to fight AIDS, Tuberculosis and Malaria: an analysis of funding practice, 2002–11.Lancet Glob Health. 2013; 1: e161-e168Summary Full Text Full Text PDF Scopus (21) Google Scholar is important because it describes what several people close to the Global Fund to fight AIDS, Tuberculosis and Malaria already know: there is a problem with its disbursement mechanisms. Fan and colleagues correctly state that the Global Fund should “redesign this system to explicitly link a portion of the funds to a simple performance measure in health coverage or outcomes, measured independently and robustly”.1Fan VY Duran D Silverman R Glassman A Performance-based financing at the Global Fund to fight AIDS, Tuberculosis and Malaria: an analysis of funding practice, 2002–11.Lancet Glob Health. 2013; 1: e161-e168Summary Full Text Full Text PDF Scopus (21) Google Scholar I applaud Fan and colleagues for having done the number-crunching, which involved 508 projects over a 10-year period. Yet they did not analyse the underlying reasons for this poor linkage between funding and performance and did not provide practical suggestions about what should be improved. This Comment aims to fill that gap.First, the Global Fund uses the term “performance-based financing” in a confusing manner because it refers to a contractual relationship at the macro level between the Global Fund and the recipients. Yet a rapidly growing number of countries (at least 30) use the term performance-based financing in a different manner. For them performance-based financing is a health-reform movement with a clear definition, best practices, and implementation instruments.2Cordaid, SINA HealthPBF in action: theories and instruments. PBF course guide.http://www.sina-health.com/wp-content/uploads/PPFCourseBookCordaid-SINA-TheoryActionEng-V240613.pdfGoogle ScholarMoreover, experts2Cordaid, SINA HealthPBF in action: theories and instruments. PBF course guide.http://www.sina-health.com/wp-content/uploads/PPFCourseBookCordaid-SINA-TheoryActionEng-V240613.pdfGoogle Scholar suggest that only by applying a minimum number of best practices and instruments can a programme be labelled as performance-based financing. The criteria include the existence of autonomous management for health facilities; a competitive environment for contracts with both public and private providers; good governance by separating the functions of provision, regulation, contract development, and payments; and moving away from input financing to performance payments. It is clear that the Global Fund's interpretation of performance-based financing does not meet these criteria, which explains the difficulty in finding a positive link between funding and performance.Fan and colleagues are kind to the Global Fund by only addressing the issue of linking predictors to fund disbursements. They could also have ventured into sensitive qualitative issues such as the corruption charges in Malawi, Mauritania, Mali, Zambia, and Djibouti.3AnonCleaning up: can the Global Fund to fight Aids, Tuberculosis and Malaria restore its reputation as the best and cleanest in the aid business?.Economist. Feb 17, 2011; (accessed Aug 8, 2013).http://www.economist.com/node/18176062Google Scholar Yet, according to performance-based financing theory, the transparency problems were likely to happen because the Global Fund's performance-based financing approach stops at the national level and fails to work with recipient governments or organisations on how to ensure “performance” at the level where it matters: the health facilities, the community, and the patients. Good governance issues such as separation of functions are not addressed at the Global Fund, which, like several other aid agencies, supports corrupting input monopolies such as centrally buying essential drugs and equipment. Its projects require hundreds of millions of dollars' worth of drugs, equipment, bednets, ambulances, etc, instead of injecting money into the local economy through competitive contracts with health facilities and thereby directly paying for performance in terms of outputs, quality of services, and equity.In 2012, I attended a few meetings between Global Fund managers and the Government of the Democratic Republic of Congo and noted that it was unclear what was expected in terms of performance. When challenged, the Global Fund managers claimed to be mere administrators and not technical (health reform) experts. Yet the Global Fund demands all kinds of data on indicators and audits, which the government representatives felt were confusing. One indeed needs to collect indicators at national level, but field workers know that in many countries such data—if available at all—are of very poor quality. Therefore if the Global Fund wants quality data, it should discuss with the recipients about how to acquire this.In summary, the Global Fund should assist recipients with: (a) setting up decentralised contract development, verification, and coaching agencies that feed into the national level; (b) assuring the separation of functions between regulation, provision, contract development, and payment at all levels of the health system; (c) stimulating competition between health facilities for scarce government or aid agency resources; and (d) moving away from central and monopolistic input financing towards a system whereby health facilities buy their own inputs from competitive distributors.Until a few years ago, the World Bank had similar problems to the Global Fund, but after painful lessons the Bank is now firmly moving towards the wider health-reform approach of performance-based financing. I hope Global Fund representatives will not be defensive but pick up the suggestions here and start reforming their manner of working.I declare that I have no conflicts of interest. The paper in The Lancet Global Health by Victoria Fan and colleagues1Fan VY Duran D Silverman R Glassman A Performance-based financing at the Global Fund to fight AIDS, Tuberculosis and Malaria: an analysis of funding practice, 2002–11.Lancet Glob Health. 2013; 1: e161-e168Summary Full Text Full Text PDF Scopus (21) Google Scholar is important because it describes what several people close to the Global Fund to fight AIDS, Tuberculosis and Malaria already know: there is a problem with its disbursement mechanisms. Fan and colleagues correctly state that the Global Fund should “redesign this system to explicitly link a portion of the funds to a simple performance measure in health coverage or outcomes, measured independently and robustly”.1Fan VY Duran D Silverman R Glassman A Performance-based financing at the Global Fund to fight AIDS, Tuberculosis and Malaria: an analysis of funding practice, 2002–11.Lancet Glob Health. 2013; 1: e161-e168Summary Full Text Full Text PDF Scopus (21) Google Scholar I applaud Fan and colleagues for having done the number-crunching, which involved 508 projects over a 10-year period. Yet they did not analyse the underlying reasons for this poor linkage between funding and performance and did not provide practical suggestions about what should be improved. This Comment aims to fill that gap. First, the Global Fund uses the term “performance-based financing” in a confusing manner because it refers to a contractual relationship at the macro level between the Global Fund and the recipients. Yet a rapidly growing number of countries (at least 30) use the term performance-based financing in a different manner. For them performance-based financing is a health-reform movement with a clear definition, best practices, and implementation instruments.2Cordaid, SINA HealthPBF in action: theories and instruments. PBF course guide.http://www.sina-health.com/wp-content/uploads/PPFCourseBookCordaid-SINA-TheoryActionEng-V240613.pdfGoogle Scholar Moreover, experts2Cordaid, SINA HealthPBF in action: theories and instruments. PBF course guide.http://www.sina-health.com/wp-content/uploads/PPFCourseBookCordaid-SINA-TheoryActionEng-V240613.pdfGoogle Scholar suggest that only by applying a minimum number of best practices and instruments can a programme be labelled as performance-based financing. The criteria include the existence of autonomous management for health facilities; a competitive environment for contracts with both public and private providers; good governance by separating the functions of provision, regulation, contract development, and payments; and moving away from input financing to performance payments. It is clear that the Global Fund's interpretation of performance-based financing does not meet these criteria, which explains the difficulty in finding a positive link between funding and performance. Fan and colleagues are kind to the Global Fund by only addressing the issue of linking predictors to fund disbursements. They could also have ventured into sensitive qualitative issues such as the corruption charges in Malawi, Mauritania, Mali, Zambia, and Djibouti.3AnonCleaning up: can the Global Fund to fight Aids, Tuberculosis and Malaria restore its reputation as the best and cleanest in the aid business?.Economist. Feb 17, 2011; (accessed Aug 8, 2013).http://www.economist.com/node/18176062Google Scholar Yet, according to performance-based financing theory, the transparency problems were likely to happen because the Global Fund's performance-based financing approach stops at the national level and fails to work with recipient governments or organisations on how to ensure “performance” at the level where it matters: the health facilities, the community, and the patients. Good governance issues such as separation of functions are not addressed at the Global Fund, which, like several other aid agencies, supports corrupting input monopolies such as centrally buying essential drugs and equipment. Its projects require hundreds of millions of dollars' worth of drugs, equipment, bednets, ambulances, etc, instead of injecting money into the local economy through competitive contracts with health facilities and thereby directly paying for performance in terms of outputs, quality of services, and equity. In 2012, I attended a few meetings between Global Fund managers and the Government of the Democratic Republic of Congo and noted that it was unclear what was expected in terms of performance. When challenged, the Global Fund managers claimed to be mere administrators and not technical (health reform) experts. Yet the Global Fund demands all kinds of data on indicators and audits, which the government representatives felt were confusing. One indeed needs to collect indicators at national level, but field workers know that in many countries such data—if available at all—are of very poor quality. Therefore if the Global Fund wants quality data, it should discuss with the recipients about how to acquire this. In summary, the Global Fund should assist recipients with: (a) setting up decentralised contract development, verification, and coaching agencies that feed into the national level; (b) assuring the separation of functions between regulation, provision, contract development, and payment at all levels of the health system; (c) stimulating competition between health facilities for scarce government or aid agency resources; and (d) moving away from central and monopolistic input financing towards a system whereby health facilities buy their own inputs from competitive distributors. Until a few years ago, the World Bank had similar problems to the Global Fund, but after painful lessons the Bank is now firmly moving towards the wider health-reform approach of performance-based financing. I hope Global Fund representatives will not be defensive but pick up the suggestions here and start reforming their manner of working. I declare that I have no conflicts of interest. Performance-based financing at the Global Fund to Fight AIDS, Tuberculosis and Malaria: an analysis of grant ratings and funding, 2003–12The Global Fund's present performance-based funding system does not adequately convey incentives for performance to recipients, and the organisation should redesign this system to explicitly link a portion of the funds to a simple performance measure in health coverage or outcomes, measured independently and robustly. Full-Text PDF Open Access