Jennifer López

The FHCI required two immediate financing changes: first, ensuring that there was sufficient

quantity of finance; and, second, that there was sufficient liquidity for it to go where required. More

specifically, the removal of user fees (for the FHCI targeted groups) created cash management challenges at local facilities and deficits in the financing of salaries and drugs, given increased utilisation (Amara, 2010).

The FHCI finance subcommittee was set up to look at these issues. Its four main responsibilities were to: 1) compile the costing of all FHCI implementation activities and identify funding gaps; 2)

22 _{The health care system is largely financed from three main sources: the consolidated fund, donor finance and direct funding by} patients. Community financing is limited to loan schemes while employer-based social insurance is restricted to a small number of private companies.

23 _{Government expenditure figures provide more up-to-date and disaggregated data than the government expenditure data reported in} the NHA.

develop funding mechanisms for the implementation of the FHCI policy; 3) mobilise GoSL and donor resources to fill the short-term funding gaps; and 4) consider the long-term sustainability of financing for the policy.

5.1.1.1 Anticipated financing needs

The estimated cost (GoSL, 2009a) for the FHCI at the time was US$ 90 million for year 124 _(2010),

decreasing to US$ 50 million in year 2 (although a later estimate from the GoSL put this at US$ 35 million (MoHS, 2011).25 _{As the stakeholders interviewed acknowledged, these estimates (see}

Table 6) were ‘rough’, with limited data to plan more accurately. However, they provide a useful description of where the government saw the main cost items resulting from the FHCI, namely salaries and drugs, as well as the magnitude of funds required. These estimates also provided the government with an indication of the expected financing gap – US$ 20 million – they would need to bridge in order to implement the FHCI (see Section 4.1.5 below for ex-post calculations of the cost of the FHCI). To put this US$ 20 million financing gap into context, this was double the total health expenditure (THE) by MoHS in the preceding year, 2009.26

Table 6: Estimated financing required for Year 1 of FHCI (2010)

Cost items US$ (millions)

Committed funds by development partners

to RCH

Government structures put in place 2 GoSL 12.5

HR (salaries and performance-based

scheme) 38 GAVI 5.6

Logistics (including drugs and

medical consumables) 44 Global Fund 12

Communications 3

Multilateral (World Bank; African Development Bank (AfDB)) 12.8 M&E 4 Bilateral 10 UN 6 NGOs 12 Total 91 Total 71

Total funding gap (US$ millions) 20

Source: GoSL (2009a)

The late introduction of the FHCI in 2009 meant that its additional costs were not reflected in the 2010 Budget. For example, there was a significant gap in the funds available for paying for health worker salaries that was not resolved until after the FHCI’s start (Witter et al. 2014, 2010; Amara, 2010). Donors were reluctant to provide further funding given the problems of ghost workers in the sector but, as Donnelly (2011) documents, the perseverance of the government (and their own increased financing), alongside the acceptance of donor-financed payroll assistance, had the effect of convincing donors to commit further funds.

Significant resources were subsequently mobilised, with donors providing funds for salaries (DFID and Global Fund) and drugs (DFID).27 _{DFID provided £10.3 million in support of health worker}

24 _{An early estimate, which did not include the salary uplift or some drugs, put the figure at US$ 33 million (Amara, 2010).} 25 _{Second year costs included US$ 20.5 million for salaries and US$ 20.7 million for drugs and supplies.}

26 _{Although this figure does not include some of the donor financing off-budget, which the FHCI estimated costs did.}

27 _{Drug costs are financed by DFID through a grant to UNICEF, which handles the procurement, although ‘Funding Agencies’ reports} from MoHS in 2012 also suggest that GAVI and Global Fund have contributed to drug procurement for the FHCI.

salaries over five years on a gradually diminishing basis, complemented by roughly £6 million from the Global Fund28 _{from 2010 (Stevenson et al., 2012). This was paid out in two-monthly}

instalments after certification confirming that the government was remaining on track with its HR management performance targets (Simson, 2013). They did so on the condition that the payroll stayed clean and absenteeism was reduced.29

Donor drug financing was also increased although provided off-budget, with the majority being funded through a grant from DFID to UNICEF to procure and manage their distribution to district medical stores and facilities (see Section 4.4 for further details of this process).

5.1.1.2 Financing at the facility level

From a process perspective, it was relatively straightforward to replace cash for tertiary and most secondary hospitals as they had their own banking facilities and existing government systems for transferring resources. For PHUs, a SLL 1million transfer each quarter was provided in 2010 to replace the cost-recovery funding.30 _{This arrangement was more complicated, with facilities}

needing to set up bank accounts to access this central funding (i.e. it was not intended to pass through district councils but go straight to PHUs, through bank accounts that were accessed in the district town). However, even a week after the FHCI’s launch many of these had not been set up (MoHS, 2010c), and there were issues in accessing accounts given the limited outreach of banking facilities. There were plans to make future payments to facilities conditional on the proper

implementation of the FHCI policy, i.e. PBF, but this did not materialise until 2011, in part reflecting disagreements between development partners on whether PBF was appropriate and how quickly it could be introduced.

The faith-based organisations that were providing health care services to target groups throughout the country were not part of the government system for the FHCI, as no financing had been

identified for their sub-contracting.31