Hospital autonomy: the experience of Kenyatta National Hospital.

An increasing number of countries are exploring the introduction or expansion of autonomous hospitals as one of the numerous health reforms they are introducing to their health system. Hospital autonomy is one of the forms of decentralization that is focused on a specific institution rather than on a political unit. It has gained much interest because it is an attempt to amalgamate the best elements of the public and private sectors in how a hospital is governed, managed and financed. This paper reviews the key elements of the concept of hospital autonomy, the reasons for its expanded use in many countries and a specific example of making a major teaching hospital autonomous in Kenya. A review of the successful experience of Kenyatta National Hospital and its process of introducing autonomy, with regard to governance, operations and management, and finances, lead to several conclusions on replicability. The legal framework is a critical element for successfully structuring the autonomous hospital. Additionally, success is highly dependent on the extent to which there is adequate funding during the process of attaining autonomy due to the length of the transition period needed. Autonomy must be granted within the context of the national health system and national health objectives and be consistent with those aims and their underlying societal values. Finally, as with decentralization, success is dependent upon the preparation done with the systems and management necessary for the proper governance and operation of autonomous hospitals.

Public policy and private sector provision of health services.

Public sector policies often try to extend access and redirect public resources, depending on private sector actions. These strategies focus on reducing demand, improving efficiency, and generating increased revenues in the public sector. In order to provide incentives for efficiency, acquire capital, and redirect limited public resources to public priorities, there must be an expanded role for the private market in the provision of health services. This presents opportunities to improve the focus of resources on high-priority health activities in the public sector and to make more effective and efficient use of the resources of the private sector. The authors discuss the form that such policies may take. However, while the overall set of options available to policy makers can be identified, what is an effective strategy in one country may be neither appropriate nor feasible in another. The challenge to policy research is not to identify what works, but rather to understand the conditions that make a policy effective in some settings but not in others. The objective is not to prescribe the actions to take but to understand the factors that create the current experience in a specific setting.

Developing countries' health expenditure information: what exists and what is needed?

In the past decade, the scarcity of financial resources for the health sector has increasingly led countries to take stock of national health resources used, review allocation patterns, assess the efficiency of existing resource use, and study health financing options. The primary difficulties in undertaking these analyses have been 1) the lack of information on health expenditures and 2) not using existing information to improve the planning and management of health sector resources. The principle sources of available health expenditure information are reported by organizations such as the World Bank, WHO, UNICEF and OECD. Special studies and non-routine information are a second major source of information. This existing data has a number of difficulties, including being sporadic, inconsistency, inclusion of only national level public expenditure, high opportunity and maintenance costs, quantitative and qualitative differences across countries, and validity and interpretability problems. Reliable health expenditure data would be useful not only for in-country, national purposes, but also for cross-national comparisons and for development agencies. Country uses of health expenditure data include policy formulation and planning and management, while international uses would facilitate examination of cross-national comparisons, reviews of existing programmes and identification of funding priorities. Collaborative efforts between countries and international development agencies, as well as between agencies, are needed to establish guidelines for health expenditure data sets. This development must ensure that the resulting information is of direct benefit to countries, as well as to agencies. Results of such collaborative efforts may include a set of standardized methodologies and tools; standardized national health accounts for developing countries; and training to enhance national capabilities to actively use the information. The opportunities for such collaboration are unique with the issuance of the World Development Report 1993, to build on this work in clearly identifying what is needed and proposing a standardized data set and the tools necessary to regularly and economically gather such data.

Tackling wastage and inefficiency in the health sector.

Governments and the public are concerned about waste and inefficiency in the health sector. Although there are likely to be various underlying causes, wastage often results from limited information and from limited accountability for decisions about the use of resources. Corruption and fraud occur where there are conflicting interests in combination with limited accountability. Policy-makers, managers, providers and service users should feel responsible for ensuring that scare health resources are used efficiently. They should actively combat wastage by identifying the causes, and then make corresponding changes in policy, management and technical procedures.

PIP: While governments and the public worldwide express concern about the best use of scarce resources for health care, reports from developed and developing countries point to examples of the waste of money, health personnel, time, and supplies. Inefficiency occurs when more resources than necessary are used to obtain a result. Wastage occurs when resources are carelessly squandered. Allocative inefficiency occurs when decisions on the use of limited resources fail to yield the greatest possible health gains at the lowest possible cost, and technical inefficiency occurs when the costs of providing specific services or goods are higher than necessary. Decisions made at various levels result in waste. For example, policy makers may overemphasize urban vs. rural services, managers may underutilize health staff, health care workers may prescribe excessively expensive drugs, and users of services may demand inappropriate prescriptions. It is difficult to measure the magnitude of wastage, but estimates are in the billions of dollars annually. Corrective action relies on data obtained from efficiency studies of single elements or subsystems of the health sector. The savings attainable by various actions can be derived by making judgments based on experience and knowledge of the health care system. Combining individual estimates will reveal the cumulative effect of different actions. In addition, cost-effectiveness analysis can be used to determine the magnitude of specific wastage problems. Wastage can be reduced by making changes in policy decisions, management, training, education, and communications. Efforts to reduce waste should concentrate on areas where the greatest savings will result and should take into account the cost of making the necessary changes. Decision-makers can be made aware of the costs and impacts of different health actions through an assessment of available resources and a general understanding of their use. Decentralization of health facilities can also reduce waste by providing improved information and feedback for decision-makers, increasing the control of managers and providers over factors affecting wastage, and increasing the accountability and responsiveness of the health system to its stake-holders.

The public and private sectors in health: economic issues.

Major changes in the public/private mix of health services are occurring in many countries. These changes may be analysed by examining the financing and provision of services and subsidization of the purchase of the factors of production. The public sector and not-for-profit and for-profit elements of the private sector must be viewed as separate entities in such analyses due to their differing objectives, motives and form of operation. The issues to be dealt with by countries in finding the public/private mix which is appropriate for their health system and achieves their objectives include efficiency, quality, regulation, equity and consumer choice and satisfaction. The recommendations for action for countries include: promoting collaboration between private and public sectors; testing different public/private mix models; identifying appropriate expansion paths for private sector services; improving information for policy and planning decisions; enhancing management capacity; and, reviewing programme and project support. International agencies also have a role in this process by supporting countries through the provision of technical assistance, financial aid, promoting policy reviews, and facilitating the sharing of information and experiences among countries concerning these public/private mix issues.

A survey of Papua New Guinea's health sector financing and expenditure.

As a result of increasing economic constraints in the health sector of Papua New Guinea, the Department of Health embarked upon a major financial policy review program in 1986, which incorporated several studies in key areas. This paper presents the results of one component of the review, a health sector financing and expenditure study, which was undertaken for the 1986 financial year. The study found that: 1) 88% of health sector expenditure was provided by the public sector; 2) over 95% of expenditure was used for recurrent costs and there was poor utilization of overseas aid for capital projects; 3) the balance of expenditure between primary and secondary health was appropriate; 4) there were regional inequities in expenditure; and 5) a disproportionate amount of recurrent expenditure was consumed by personnel costs. The need to increase nongovernment expenditure on health was identified and further investigation of alternative sources of financing the health sector is required.

Length-of-stay variations within ICDA-8 diagnosis-related groups.

The number of bed days per inpatient episode, the length of stay (LOS), is a major indicator of hospital performance and a basic measure of patients' resource consumption. Hospital reimbursement on the basis of treated cases requires a system for accurately identifying case categories. Diagnosis Related Groups (DRGs) have been proposed for this purpose. An initial study to analyze variations in length of stay and resource consumption within DRGs is presented. Regression analysis of variation in ALOS for 7 DRGs, in terms of 8-10 independent variables not included in the classification scheme itself, was done. Results indicate that 30-65% of the large intra-DRG LOS variations are explainable by indicators of case complexity and severity despite the homogeneity claimed for the DRGs. For certain DRGs, such variations are also related to admission factors. Results indicate the need for more precise patient taxonomies than the ICDA-8-based DRGs.