Financing health care at the local level: the community drug funds of Honduras.

In response to UNICEF's Bamako Initiative, hundreds of privately run Community Drug Funds were established in Honduras during the 1990s, generally under the auspices of a non-government organization and usually with the financial assistance of international agencies. Honduras' Community Drug Funds (CDF) are rotating drug funds intended to: (1) serve as a means of increasing access to care in isolated rural populations, (2) promote the more rational use of medicines and (3) promote community participation in the financing and oversight of primary health care activities. This study is the first to analyse empirically the impact and efficiency of these institutions, relying upon primary data obtained from a survey of 51 of the 450 active CDFs in Honduras. Archival data from Ministry of Health and other sources were also analysed. The structure, operations, and impact of CDFs are detailed, with special attention given to access and quality of care issues. The study found that CDFs are rapidly becoming under-capitalized because of basic management problems, principally in pricing and in medicine purchasing practices. These shortcomings, and more generally, increasing financial pressures on NGO sponsors, are negatively affecting quality and access to care. Given the rate of erosion in CDF assets, unless they are recapitalized, the current average estimated lifespan of a CDF is 5.5 years. If these funds are to be sustainable, changes in their financing, training and supervision will be required. In addressing these issues, Honduran health policy-makers must decide how best to balance the competing goals of holding down costs, while maintaining adequate quality and improving access to care.

Risk adjustment and hospital cost-based resource allocation, with an application to El Salvador.

Ignorance about the costs, case loads and case mixes of different hospitals within the public health system constitutes an important obstacle to reforming health care spending in many developing countries. National (tertiary) hospitals generally receive significantly larger budgets, per patient, than lower-level (district) hospitals. One reason for these differential allocations is the widely held belief that national hospitals treat persons with more difficult illnesses and persons who are more severely ill than do other, non-national, hospitals. This belief is but a presumption and one that warrants investigation. This paper analyzes expenditures among public hospitals in El Salvador over a 12-year period to address this question. While controlling for patient morbidity, outputs and other characteristics, district hospitals are found to be substantially underfunded relative to national hospitals. Four policy options to redress this situation are examined.

Public hospital resource allocations in El Salvador: accounting for the case mix of patients.

National hospitals in developing countries command a disproportionate share of medical care budgets, justified on the grounds that they have a more difficult patient case mix and higher occupancy rates than decentralized district hospitals or clinics. This paper empirically tests the hypothesis by developing direct measures of the severity of patient illness, hospital case-mix and a resource intensity index for each of El Salvador's public hospitals. Based on an analysis of inpatient care staffing requirements, national hospitals are found to receive funding far in excess of what case-mix and case-load considerations would warrant. The findings suggest that significant system-wide efficiency gains can be realized by allocating hospital budgets on the bases of performance-related criteria which incorporate the case-mix approach developed here.