Health Sector-Financing in Malawi

                                    HEALTH FINANCING IN MALAWI

In literature there are seven forms of health sector funding mechanisms. They are through tax revenue in government budgets; social insurance; medical saving account (MSA); private-financing or out-of-pocket payments; private insurance; external (aid) assistance through bilateral or multilateral agreements; and philanthropy. However, in this article, Malawi health sector is financed through tax revenue in government budgets (approximately covering 60 percent in 2009), external aid assistance (about 35 percent in 2009), private insurance, out-of-pocket payments and philanthropy.

Private Insurance, at low scale, only practiced in cities and out-of-pocket payments, are major sources of financing the private health sector in Malawi with philanthropy exclusively reported in mission (private non-for-profit) hospitals through CHAM. Unlike in private health sector, tax revenue and external aid assistance are main sources of financing public health sector through joint health SWAp resource reallocation. The public health sector remains the single most important source of finance for health care in the country because of government subsidy through free health services for all Malawians regardless of level of health care.

Ellias Ngalande Banda and Henry Simukonda in 1994 reported that the Malawi MOH 1983 Report highlighted public health sector as the most important source of health-financing then, while CHAM was the major recipient of the direct out-of pocket payments because for-profit private health facilities were then insignificant.

Constitutionally, public health in the country is regarded as public goods as opposed to private goods in health economic concepts.

                                       Health as Public Goods in Malawi

In this article, public health in Malawi is conceptualized as public goods which are described as non-excludable and non-rivalry such that the marginal cost of providing the public health to another consumer is zero. The key principles in health care characteristics as economic goods or services in Malawi include;

  • Health care is considered a right by all Malawians as an analogue to “health for all” slogan by WHO.
  • Malawi Government shoulders both positive and negative externalities through internalizing externality costs of public health care probably through taxatation system or other means deemed possible and justifiable by the government of the day.
  • Need for public health care by Malawians is, theoretically, assumed predictable by the Malawi Government although in economic concepts it is unpredictable such that she is able to budget it accordingly.
  • In principle, the Malawi Government provides public health care to her population under economic guise of small price elasticities of demand without laissez-faire government.

Disadvantages of prescribing Health as public goods in Malawi’s Constitution

  1. Promotion of dependency by Malawians as regards to their health.
  2. Promotion of irresponsibilities by Malawians as regards to their indvidual roles, behaviours and responsibilities upon their own health or that of their neighbour etc.
  3. Promotion of favourable conditions by industrial firms and affluent minorities in Malawi to suppress “environmental justice” through locating industrial areas, waste product disposal etc to residential areas of marginalized, poor people and suburbs like Kanengo which is close to Area 25, Ndirande industrial  area and waste disposal drainage which is close to Ndirande Residential Area thereby increasing environmental health hazard to already disadvantaged, marginalized poor Malawians.
  4. Promotion of monopoly of national health services by government as opposed to free health market system at the other extreme which unfortunately results in low healthcare quality, low healthcare-financing, and promotion of politizing healthcare services and corruption.
  5. Suppression of private health sector growth.
  6. Suppression of laissez-faire management at health sector level.

My Proffessional Advice to the MOH as regards to Health Sector-Financing Policies

I recommend the government and MOH of the country to continue providing primary health care (PHC) and essential health package (EHP) as public goods. However, at tertiary level I happen to differ with the current public health sector financing policy. Therefore, this article expounds options in sustaining health care financing at tertiary health care in Malawi, where specialized health care is currntly regarded as “public goods” as defined above, using available evidences from best performing low-and middle-income countries (LMICs) like Ghana and Kenya in the continent.

The theoretical aspect of the article is based on two opposing background forces. On one side there are forces contributed by absolute poverty of the majority of the population; limited specialized/sub-specialized health care infrastructure and health care services; limited or no authority in critical decision making by the public central hospital management teams (CHMTs) under the guise of delegation where the central government returns the right to overturn critical CHMT management decisions; and political dispensation of multiparty democracy which is heavily challenged by immense over-flow effects of neo-patrimonialism and deeply personalized political power. On the other hand, there are unequal and opposing tangible forces contributed by escalating costs of specialized/sub-specialized health care services due to disproportional high-tech dynamic revolution in medical technology in diagnosis, pharmaceuticals, surgery and management. As such, the article is an analytical discourse of the current situation as regards to specialized/sub-specialized public health care in Malawi and it goes further to suggesting some imminent health policy options and their tangible strategies taking into account of all underlying opposing forces. The center of focus for each theoretical or practical argument is the health care service’s client (patient). The article is not articulating the debate of healthcare as public goods or private goods, but rather is elucidating the necessary role which can be played by health care clients or patients as regards to specialized/sub-specialized health care in Malawi.

Politically, LMICs  including Malawi are expected to subsidize specialized/sub-specialized health care charges only to those clients in absolute poverty through a closed referral health system which I totally agree as real responsibility of a governmnet. However, this arrangement is so rigid that it does not allow some potential Malawian citizen to contribute to sustainable health care financing at government central hospitals as a way of both owning and improving public central hospital health care system in the country. The so called paying departments at kamuzu Central Hospital (KCH) and Queen’s Elizabeth entral Hospital are far from utilizing fully the potential pull of health financing. On the other hand, the new built health facilities which are well equiped with “private wings” including Nkhotakota District Hospital are not even utilized due to such rigid policies of “paying departments“.

Since the post independence, cost is not a barrier to access healthcare at all public health facilities. While it is the constitutional responsibility of the Malawi Government to provide affordable and accessible high quality healthcare to all Malawians, however, I feel it has become highly politicized with the introduction of multiparty regime in 1994. For instance, Malawi politicians take advantage of the desperation of poor people as a mere bate for their political advancements at the expense of poor quality healthcare services. With the technical support from Malawi’s development partners under the Common Approach to Budgetary Support (CABS) mainstreamed by European Union (EU), African Development Bank (AfDB), Germany, Norway, the World Bank and the United Kingdom, it is hopeful that the government assumes a more hinging role in financing public services including health sector.

              The Transformation of CMS into an Independent Medical Trust.

The first acid test for the Malawi Government as regards to health delivery system institutional autonomy was in early 2000s when the donor community was collectively proposing for such a milestone to start with Kamuzu Central Hospital gradually in a step wise approach. However, the government stepped her foot down due to two main reasons, political fear by the then ruling government (UDF) and consideration of the near collapsing situation of the health delivery system in the country at that time (2002-2003). One Malawian public civil servant bemoaned fate of hospital autonomy in 2004 in front of the then cabinet minister of health: “Who would pay for healthcare services at the public hospitals when the services were very poor if not collapsing, when providers were only paramedicals without qualified medical doctors, without minimum EHP regimen of drugs in such dilapidating infrastructure?” However, with the current drastic improvements in all facets (human resources/providers, pharmaceuticals, infrastructure development, medical equipment and quality standards) the situation analysis of tertiary hospital autonomy in Malawi if revisited now, I strongly feel may provide otherwise results.

On the other hand, in a fresh wave, the Malawi Government succumbed to pressure from health pundits, civil society and donor community as regards to the second acid test for transformation of the Central Medical Stores (CMS) into a medical trust following a public outcry over its inefficiencies, in servicing the country’s public hospitals’ needs. The MOH Report of 2010 stressed that there was a tremendous progress in the process of turning the CMS institution into an independent medical trust and would be registered by the Ministry of Health through the Registrar of Companies, under the Companies and Corporate Act soon after appointment of the board of trustees who would run the operations of the Medical Trust.

However, the progress of the CMS Trust remains retrogressive if public health cost centres (hospitals) still receive unrealistic vote of funds for pharmaceuticals due erratic drug budget estimates.. http://www.nyasatimes.com/health/malawi-hit-by-medication-shortage.html

 http://www.mwnation.com/index.php?option=com_content&view=article&id=15561:shortage-of-drugs-hits-malawi-hospitals&catid=119:national-news&Itemid=125

Therefore, politically, Malawi rejected hospital autonomy in the disguise of putting rural and poor or vulnerable people at heart for personal political advancement.  The potential fear of posing a barrier to access the comprehensive healthcare by the poor people through central hospital autonomy in Malawi is rather theoretical than practical. With the current improved referral health system, central hospital autonomy will provide a better checkpoint of government subsidy for the poor at tertiary hospitals. No poor Malawi citizen could be denied of free tertiary healthcare in the public central hospitals but rather would be to be referred from satellite health facilities thereby being easily accountable in goverbance for the government to re-imburse the autonomous public hospital etc. Unlike what happens now, the central hospital autonomy would promote the importance of entering the healthcare delivery system through either primary or secondary level. Congestion at central hospitals is currently due to unnecessary petty ailments which could be successfully managed at the secondary healthcare level. Technically, district hospitals are now operating at a higher quality of healthcare than some central hospitals (SWAp Annual Report, 2010) in specific area of interest. If anything, it is imperative to encourage the MOH to continue instilling high quality of healthcare at district hospitals under local government leadership. I think most Malawians are now willing to pay for their health services for those who can manage.

Why Hospital Autonomy at Central Level is now important or imminent  in Malawi?

  1. Healthcare services is fast becoming extremely expensive globally demanding
    sustainable health-financing! For how long is Malawi Government still going to shoulder both re-imbursements and positive or negative externalities through internalizing externality costs of public health care even to those who are able to pay as it is now? Next is the obvious breakdown which was about to be witnessed in 2002-2003……..!!!!!
  2. Civilization demands patients or clients in developing countries to be given a new role 
    of responsibilities for their own both individual and community health maintenance.
  3. The current referral structure provides a feasible autonomy at central level
    as only “bonafide public patients or clients” referred by District Hospitals or Urban Health Centres (eg Kawale, Ndirande, Chilomoni or Area 18) will be allowed “free” re-imbursements by Malawi Government to the autonomized central hospital thereby still continuing with free tertiary healthcare services to poor or rural people as is done now. On the other extreme hand, only those Malawians with potential to pay (well to do) people will go direct to central hospital for primary and secondary care BUT FULLY CHARGEABLE as controlled by Ministry of Health and Finance through a revised Public Health Act etc! In that way there will be full equittable access both horizontally and vertically to all Malawians regardless of status or economic muscle etc. Again this will addmittedly improve quality of healthcare services at Central Level through self sustenance as reported in Kenya, Uganda and Ghana Hospital Autonomy Practices.
  4. In order to accomodate more than 100 Medical Specialists and Sub-Specialists currently studying within Malawi and abroad successfully, various positions will be created at Central Level Hospitals in all departments to avoid frustrating those newly accreditated medical specialists working within Malawian borders.
  5. Central Hospitals will be able to buy befitting medical equipment to improve quality and sustain them thereby satisfying medical and surgical specialists.
  6. Hospital Autonomy in Malawi will improve accreditation of central hospitals
    in the country to meet international standards.
  7. Hospital Autonomy in Malawi will necessitate an empire of donor confidence
    for sustainability just like Ghana and Kenya at African Level as it will be a momentous step in challenging private health sector in Malawi competitively.
  8. Hospital Autonomy in Malawi will instil a healthcare quality competition of
    hospitals with private hospitals through local and international accreditation board etc.
  9. Hospital Autonomy in Malawi will reduce significantly the forex the Government spent on refering abroad the current deserved patients.
  10. If Central Medical Stores (CMS) has finally taken its foot in public institutional autonomy in health sector, am sure this milestone will remain unmature unless  autonomy  culture is deliberately encouraged at all levels starting with central level hospitals.
  11. Hospital Autonomy in Malawi will definitely decongest unnecessary petty patients at Central Hospitals thereby easing public central hospitals of unnecessary bills on feeding and accomodating them etc.
  12. Hospital Autonomy at central level in Malawi will improve the teaching arena by training institution among others KCN, Health Sciences Colleges, Nursing Colleges and COM as reported in Ghana and Kenya’s Teaching Hospitals.

With these pertinent facts compelling health officials/planners/stakeholders/financiers for a
second thought about Hospital Autonomy in Malawi I think within next five years a policy to introduce hospital autonomy at KCH may be feasible in all facets. However, if it could be started in 2015 for instance, Malawi needs to start planning the ground work today (2011) by conducting:

  • Feasibility Assessment through doing research on how ready are people willing to pay
    for their services at tertiary level etc (many donors would come in, I guess).
  • Benchmarking with other successful African Countries like Ghana and Kenya etc to learn better practices and challenges in hospital autonomy.
  • Drawing Terms of References including board of trustees/board members compilation/responsibilities/who to be hired etc.
  • Conduction of wide consultations through general population, public and specific health pundits etc.

In conclusion, Malawi has a bright vision in health sector which needs to be supported through all other sectors and stakeholders in the country, in the region and world at large. Reasearch
and Planning is the way to start laying the foundation for the implimenatation.

11 responses to this post.

  1. Posted by Elvis Gama on May 4, 2011 at 2:03 AM

    Considering that almost 40% of the health care budget is supported by international donors, there is a question of sustainablity. This calls for the Malawi government to look at alternatives means of financing the health care system. I agree wit you that there is need for research to look into the different alternatives that can be tried in Malawi.

    Reply

  2. Posted by Elvis Gama on May 4, 2011 at 2:27 AM

    Central Hospital Autonomy is the right way to go, but there is need for political will to implement this. A study that we carried out in January this year provides some evidence on the potential of Autonomous haspitals in raising finances. The informant provided information on incomes that has come from rich private clients and the potential of increasing such incomes if the hospitals were autonomous.

    Reply

    • Elvis Gama, thanks for your intriguing input for Malawi Health Sector Financing. Oooh yes, political will is the biggest challenge both in embracing the health reform as well as during implementation because some countries who are already implementing it in Africa, their DEGREE of autonomus is hampered by their politcal will of their respective governments. Some are mere theories under guise of hospital autonomy on paper while others are indeed permitted full autonomous second to corporatization. I am ready to read such results of researches if given details of how to buy the paper etc.

      Reply

  3. Posted by Ana Tafengi on June 23, 2011 at 5:04 AM

    Interesting blog…

    Reply

  4. Posted by viva on March 22, 2012 at 1:10 AM

    HI DR RABSON KACHALA

    I FIND YOUR BLOG VERY INFORMATIVE, THANK YOU! I JUST HAVE A QUICK QUESTION, HAVE YOU DONE ANY RESEARCH ON THE LOCUM SCHEME, DO YOU HAVE ANY REFERENCES OR UNPUBLISHED REPORTS YOU COULD SHARE WITH ME? THANK YOU IN ADVANCE! VIVA

    Reply

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  6. Posted by Prisca kwaule on April 9, 2012 at 9:54 PM

    am so much interested in this

    Reply

  7. Posted by Prisca kwaule on April 9, 2012 at 9:58 PM

    This is a big challenge to our country and how i wish i could do a research in finding altenative means of financing health care systems in Malawi.

    Reply

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