13/02/2018

Financial Sustainability
of Reforms
Hiddo Huitzing, PhD

Consultative Workshop
Towards Quality Health Care Services in Khyber Pakhtunkhwa
February 13−14, 2018
PC Hotel, Peshawar

Agenda
1. Overall Goal and Specific Objectives
2. Budget for Health in Khyber Pakhtunkhwa
1. Introduction SHPI
2. Move towards UHC
3. Methodology Cost Analysis
4. Projections, Sensitivity Analysis
5. Key Messages

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Objectives of Financial Analysis

• Overall Goal is twofold:
1. To make projections of healthcare costs in KP
2. A gap analysis between current health financing and
required funding

• Specific objectives w.r.t. the required funding are:

1. Cost analysis of the existing Social Health Protection
Initiative benefits package if extended for the whole
population of KP
2. Cost analysis if Universal Health Coverage were provided
for the whole population of KP

Government of KP Revenues

65%

77%

4%
4%

Source: Medium Term Budget Estimates for Service Delivery, An Output

Based Budget, Department of Finance, GoKP, 2017

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Government of KP Expenditures

45%

Source: Medium Term Budget Estimates for Service Delivery, An Output

Based Budget, Department of Finance, GoKP, 2017

Health Budget in KP
Consolidated Budgets FY 2016-17 FY 2017-18
PKR (billion) % PKR (billion) %
Current 36.4 66 49.2 74
Development 18.5 34 17.2 26
Total 54.9 100 66.4 100

As part of GoKP budget 10.78% 11.02%

Health budget per capita ≈ PKR 1,816 ≈ PKR 2,139

(author’s estimate) USD 16.44 USD 19.37
Source: Budget Brief 2017-2018, DoH, 2017

• In real terms budget for Health has increased 22%

• Relative to total KP budget the Health budget part is stable

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Health Budget Increases Trend

Analysis
Real Terms
30%

25%

20%

15%

10%

5%

0%
2012-13 2013-14 2014-15 2015-16 2016-17 2017-18

Source: Budget Brief 2017-2018, DoH, 2017

Health Budget in KP (2)

Major line items FY 2016-17 FY 2017-18

PKR (billion) % PKR (billion) %
Employee related expenses 27.65 50 36.07 55
Operating expenses 19.51 36 20.15 31
Grants 1.52 3 1.85 3
Transfers 1.45 3 3.04 5
Physical assets 0.07 0 2.00 3
Civil works 4.68 9 2.85 4
Repairs and maintenance 0.06 0 0.06 1
Total 54.94 100 66.02 100
Source: Budget Brief 2017-2018, DoH, 2017

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Social Health Protection Initiative

• Launch of SHPI in 2015 a major step towards
UHC
• SHPI: cover for for inpatient secondary and tertiary
healthcare services
• UHC: “(…) ensuring that all people have access to
needed promotive, preventive, curative and
rehabilitative health services, of sufficient quality to
be effective, while also ensuring that people do not
suffer financial hardship when paying for these
services”

Social Health Protection Initiative

• SHPI Targets
• 69 % of the population of the Province is enjoying free Health
Insurance
• Out of pocket expenditure of the enrolled population for
inpatient care is reduced by at least 50%
• Insured population utilization rate of hospital care is 3-4%
• Beneficiary households
• households whose PMT Score is 32.49 or below are targeted
as identified by the Benazir Income Support Programme
(Poverty Score Card)
• Premium: PKR 1,499 per household (up to 8) per year
paid by GoKP to State Life
• Annual programme cost is PKR 3.8 billion including
premium and administrative cost

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Moving Towards Universal Health

Coverage:
Breadth, Scope, and Depth of Coverage

• WHO recommends
that to achieve UHC,
countries must
advance in 3
dimensions:
1. Which services to
expand first;
2. Whom to include
first; and
3. How to shift from
out-of-pocket
payment toward
prepayment?

Source: WHO WHR 2010

Fiscal Space Can Be Visualized as

“Spider Plot”
• Fiscal space commonly refers
to the budgetary room in
which a government can
provide resources for public
purposes without
undermining fiscal
sustainability (WHO)
• KP has limited options to
increase revenues for health

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Methodology of Cost Analysis

• An actuarial model is developed, based on
assumptions with regard to demographic,
macroeconomic, fiscal and health utilisation trends
• Limiting factor is the paucity and quality of the
available data

• The cost of healthcare provision is estimated based

on what the cost would have been if minimum
levels of health care (primary, referral) were
attained

Methodology of Cost Analysis (2)

• Minimum Health Services Delivery Package for Primary
Health Care Facilities in Khyber Pakhtunkhwa (MHSDP)
• Minimum Health Services Delivery Package for Primary Health Care
Facilities, Khyber Pakhtunkhwa. Technical Resource Facility (TRF),
Government of Khyber Pakhtunkhwa, Dr. Arjumand Faisel
• Secondary Level Minimum Health Services Delivery Package
or Secondary Care Hospitals (MHSDP-SC)
• Secondary Level Minimum Health Services Delivery Package or
Secondary Care Hospitals (MHSDP), Government of Khyber
Pakhtunkhwa, Dr. Inayat Thaver and Dr. Muhammad Khalid

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Baseline Scenario
Variable Assumption
GDP growth See slide
General inflation 5.5%
Population growth Other paper
MHSDP – Primary Health Care included Yes
MHSDP – Secondary Health Care included Yes
Tertiary care services in programme 0.0%
Private Sector as a % of PHC Outpatient visits 75.0%
Private Sector as a % of Required Number of Beds at Referral Level 7.3%
Surcharge Private Sector Outpatient visits (PHC Level) 20.0%
Surcharge Private Sector Inpatient care (Referral Level) 20.0%
Percentage Poor (for whom premium is paid by GoKP) 69.0%
Percentage of % population enrolled as paying members 0%
PHC growth in terms of # of visits Other paper
Referral growth in terms of # of necessary beds Other paper
Premium (USD) 3.07
Premium adjusted for inflation Start 2019

Baseline Scenario Cost Projections

• Baseline Scenario
starts in 2017,
projected until 2035
• Includes PHC &
Secondary level, not
tertiary
• By 2035 the costs of
the scheme have
increased to USD 3.8
billion.

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Baseline Scenario Cost Projections(2)

• Cost for staff is the

largest component
and its relative
share increases
• This is mostly due
to the fact that the
required number
of medical and
paramedical will
increase

Gap Analysis

• In 2017, the
estimated costs for
the Baseline
Scenario amount to
USD 740 million,
while for PHC it is
estimated at USD
553 million
• For the financial year
FY 2017-18 the
budget for the DoH
was PKR 66.4 billion
≈ USD 602 million

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Fiscal Space Needs for KP

• If PHC were
included in a UHC
as per Baseline
Scenario, then the
current premium
would be
insufficient (deficit
of USD 674 million
in FY2017-2018,
increasing to a
deficit of USD 3.57
billion in 2035)

Take-away Key Messages

• Budget for Health in KP should be sufficient to
provide SHPI cover for secondary care under
assumption that primary health care is fully paid by
patients (out-of-pocket)
• The Budget for Health in KP is insufficient to
provide also ‘free’ primary health care to the 69%
of the population entitled to SHPI cover
• Fiscal space (i.e. increasing Budget for Health in a
sustainable manner) is difficult in KP with many
external uncontrollable factors
• Other options to increase the Budget for Health in KP
must be explored, e.g. mandatory enrolment
(discussion topic for Workshop)

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Discussion

Hiddo Huitzing, PhD

hiddo@arcbv.com

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