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  • 1. HEALTH SECTOR REFORM AND PUBLIC-PRIVATEPARTNERSHIPS IN NEPAL Adrian Blair Harvard Business School Social Enterprise Summer Fellow August 2004 1
  • 2. AbbreviationsADRA Adventist Development and Relief AgencyAIDS Acquired Immune Deficiency SyndromeAPHIN Association of Private Health Institutions of Nepal,BCC Behaviour Change CommunicationBCI Behaviour Change InterventionsCTEVT Council for Technical Education and Vocational TrainingDDC District Development CommitteeDHO District Health OfficeDHS Department of Health ServicesEC European CommissionEU European UnionEDP External Development PartnerFCHV Female Community Health VolunteerFNCCI Federation of Nepalese Chambers of CommerceFP Family PlanningFPAN Family Planning Association of NepalJHU John Hopkins UniversityJICA Japan International Cooperation AgencyHMG His Majestys GovernmentHMIS Health Management Information SystemsHSR Health Sector ReformICPD International Conference on Population and DevelopmentIMF International Monetary FundMDG Millennium Development GoalMoF Ministry of FinanceMoH Ministry of HealthNCASC National Centre for AIDs and STD ControlNDHS Nepal Demographic Health SurveyPFP Private For ProfitPHCC Primary Health Care CentrePNFP Private Not For ProfitPPP Public Private PartnershipPSI Population Services InternationalRH Reproductive HealthUNFPA United Nations Population FundVCT Voluntary Counselling and TestingVDC Village Development CommitteeWB World BankWHO World Health Organisation 2
  • 3. Executive SummaryBillions of Rupees are spent every year on improving health in Nepal. Yet not enoughhas been achieved.1 The hypothesis underlying this paper is that better outcomes couldflow from the same limited pool of resources if the government, Private Not for Profit(PNFP), and Private For Profit (PFP) sectors worked together differently.The paper examines the status quo, and HMGs strategy and progress so far, and makesrecommendations for the future roles of each sector in the future, particularly with respectto Reproductive Health (RH).Part One analyses the current situation: the existing split of provision and financingbetween public, PNFP (including Social Marketing), and PFP organisations in the healthsector, and strengths and weaknesses of each. It finds that financing is dominated by theprivate sector; provision of pharmaceutical supplies is dominated by the PFP sector; andprimary care is dominated by the public sector.Part Two turns to the future, and Public Private Partnerships (PPPs). It opens with alook at why PPPs are, and ought to be, such a high priority in Nepal. It then examinesHMGs Health Sector Reform (HSR) strategy, outlining how in theory the governmentwould like to work with the private sector (meaning, collectively, PFP and PNFPorganisations). It finds that HMGs plans for private sector involvement have becomeless ambitious since they were originally articulated in 2002.The following high-level recommendations are given for HMGs future interaction withthe private sector:1) Develop a clear, public view of which functions are best carried out by which sectors;2) Contract out management of sub-health posts to private hospitals on a trial basis;3) Use power over contracting partners to rigorously enforce free provision for the poor. But do not set prices;4) Hire management from the PFP sector with experience of managing contractors;5) Partner with private medical colleges to provide incentives to encourage work in rural areas.Part Three applies the principles of HSR to the area of Reproductive Health (RH). Itexamines the status quo, and finds that it diverges significantly from the governmentsHSR strategy. The system is over-centralised and dominated by government provision.The following recommendations are made for RH:1 For example, according to NDHS (2001), 28,000 children per year die of diarrheal diseases. HIV/AIDShad claimed 213 lives cumulatively to July 2004 3
  • 4. 1) HMG should specify precisely which parts of its budget for RH it intends to contract out to Social Marketing and other private sector organisations;2) HMG should use resources saved via contracting out of RH services to develop its capacity in mystery client monitoring, and publish an annual report;3) PNFP social marketing organisations should lead the way in contracting out to the PFP sector, partnering with PFP companies for distribution of contraceptive supplies, and PFP pharmacies for provision to clients, via "social franchising";4) EDPs assisting HMG in procurement of contraceptive supplies should increase pressure to contract out RH services;5) HMG and PNFP organisations should focus subsidised contraceptive supplies on rural areas, allowing the PFP sector to serve urban communities. 4
  • 5. TerminologyLanguage in this area is often confusing. In particular, the term "private sector" isambiguous, sometimes meaning exclusively "for-profit companies", but often meaning"anything not run by the government."This document follows the terminology used by Dr. Ram Neupane in his three recentpapers on PPPs in Nepal (as well as much other academic literature on PPPs):PNFP - Private not-for-profit. Includes local NGOs, INGOs, and Social Marketingorganisations. Does NOT include bilateral or multilateral donors such as USAID and theUN system, which are considered part of the public sector.PFP - Private for-profit. For-profit businesses both inside and outside the health sector.Includes pharmacies, for-profit hospitals, individual health practitioners running a privatepractice for profit (who may be government employees at certain times of day), and for-profit companies of all kinds.Private sector - a collective term, referring to all PNFP and PFP organisations - ie.includes non-profit as well as for-profit organisations.Public sector - All services operated by government employees during regular workinghours. Note that in the health sector these are generally not free services; the same staffmay run PFP facilities at different times of day; and the funding may come fromExternal Development Partners (EDPs) rather than HMG itself. The EDPs themselves -both bilateral and multilateral - are also governmental organisations, and therefore arealso classified as public sector. 5
  • 6. PART ONE: THE STATUS QUOPart One gives an overview of the existing division of roles and resources between thepublic, PNFP, and PFP sectors, before discussing the current strengths and weaknesses ofpublic and private sector provision. For each sector, access to and quality of services arethe key dimensions of performance considered.1. Current public / private splitThe critical distinction here is between financing and provision of care. In general, theavailable data in Nepal is abundant with respect to the former, but vague and unreliableregarding the latter.a) FinancingHealth financing in Nepal is overwhelmingly non-governmental. Chart 1 shows howprivate funding (from individuals and donors) is set to account for 78% of the total in2004/05.Chart 1: Funding sources for health in Nepal, 2004/052 MoH from HMG MoH from foreign donors Other public sector Direct assistance from foreign donors Other private spending (mostly out-of-pocket)The most recent MoH figures estimate that total health expenditure in Nepal remains lowby international standards, at $16.80 per capita.3 However, this estimate assumed2 Sources as per table below3 MoH (2004), p.31. There seems to be widespread uncertainty about this figure. One government official,assuming the current figure was $10.50 as per MoH (2002)a, p.2, claimed the target was $12 annually percapita by 2009. 6
  • 7. spending by the MoH of $2.35 per capita. In fact, MoH spending in 2004/05 is projectedto be $3.35 per capita (42% of which comes from foreign grants or loans).4 The total percapita estimate has therefore been revised up to $17.80. Table 1 summarises theseestimates.Table 1: Health expenditure in Nepal, 2004/055 Per capita Expenditure source Total ($m) ($) %MoH from HMG 52 1.95 11%MoH from foreign donors 37 1.40 8%Other public sector (MoD, MoF, MOESC) 14 0.53 3%Public sector total 103 3.88 22%Direct assistance from foreign donors 61 2.31 13%Other private spending (mostly out-of-pocket) 307 11.61 65%Private sector total 368 13.92 78%Total 471 17.80 100%The public sector figures in the table above have three components: Funds domesticallygenerated by HMG, allocated to the MoH directly through the MoF "Red Book"; fundscontributed to HMGs "Red Book" by foreign donors; and money spent on health byministries other than the MoH (for example, money spent by the Ministry of Defence onhealthcare for troops).Direct assistance from foreign donors has been classified as private sector finance, as itdoes not pass through the government financial system, and is not controlled by HMG.6Much of this is channelled to local PNFP organisations, although the exact proportion isunclear. The vast majority of private spending, however, comprises out-of-pocketcontributions by people buying medicines and treatment.b) ProvisionData on public sector provision in Nepal is comprehensive, but the for the PNFP and inparticular the PFP sectors it is scarce. This is not unusual - according to a survey ofprivate provision in 35 developing countries, "a striking indicator [of the lack of attention4 MoF (2004)a, Report 16, page 6-59. Assumes population of 26,469,569, as per BUCEN (2002).5 MoH (2004), p.30; MoF (2004)a, Report 16, page 6-59; BUCEN (2002); Authors estimates. Theestimate that most private spending is out-of-pocket comes from MoH (2002)a, p.26 This is classified as public sector spending in MoH (2004), p.32. The figure of $61m for 2004/05assumes the most recent MoH estimate of $58m for 2002/03 given in MoH (2004), p.37 increased in linewith overall health spending. 7
  • 8. given to PFP services] is the paucity of basic data available on private healthcareprovision."7One might expect provision of health services in Nepal to mirror financing, and therefore(given the above) to be dominated by the private sector. But in practice this is notnecessarily true. Although it is normal in developing countries for private provision todominate (particularly in ambulatory treatments, which account for the majority of healthspending in low-income countries), there is no statistical link between the proportion ofhealthcare services privately financed and the proportion privately provided.8Two things complicate the picture further. First, around 75% of public sector doctors and40-50% of nurses in Nepal engage in "dual practice", meaning that outside regular hoursthey undertake PFP work.9 (according to one government official interviewed, "all of thedoctors do private practice"). Second - as in all countries - clients flow easily betweenpublic and private sectors, for example picking up a prescription from a governmenthospital and taking it to a PFP pharmacy.One way of looking at provision is simply the number of physical facilities operated byeach sector. Drawing on a variety of estimates, Table 2 below gives this information.Table 2: Health facility numbers in Nepal by sector10 Faclitiy type NumberPublic sectorSub Health Post 3,132Health Post 705Primary Health Care Centre 178Hospital 79PFP sectorRetail pharmacies 12,339Wholesale pharmacies 2,038Private hospitals 106Technical schools 38Medical colleges 9PNFP sectorClinics / hospitals 291Technical schools 137 Hanson & Berman (1997), p.28 Hanson & Berman (1997), p.179 MacDonagh & Neupane (2003), p.1310 Public sector figures from DHS (2003); PFP and PNFP estimates derived from Company Register,APHIN, CTEVT, and Nepal Medical Council, all quoted in MacDonagh & Neupane (2003) p.11, combinedwith figures on private sector services in DHS (2003) 8
  • 9. If accurate, these figures have four important implications: • The PFP sector is significantly larger overall than the PNFP; • The PFP sector dominates in services provided by pharmacies, namely provision of drugs, and advice and treatment of minor conditions; • The public sector (followed by the PNFP sector) dominates in-patient care; • The PFP sector plays a major role in medical training.However, on their own these numbers reveal nothing about the actual amount of activitytaking place in each sector. DHS Health Management Information System (HMIS) datatracks the public sector in detail, but many private sector institutions do not participate,and those that do provide less information.11 So the estimate from HMIS data that 92% ofpatients are treated in public sector facilities is likely to be an overestimate (or at least anupper bound of what is plausible). This and various other estimates for each sector aregiven in Table 3 below.Table 3: Provision of health services in Nepal by sector12 Estimate SourcePublic sector:80% of provision is public sector Unofficial (verbal) MoH estimate56% of rural population use public health facilities MoH (2004), p.3092% of patients are treated in public facilities DHS (2003), using HMIS reports63% of hospital beds are in the public sector MoH (2002)b"The public sector is currently the lesser partner both in the MoH (2002)a, p.17financing and provision of health services."PFP sector:60% of hospital beds are in the PFP sector Unofficial (verbal) APHIN estimate10,000 private sector health professionals in Nepal, out of 33,000 Himalayan Times, 22 July 2004total"Most curative care visits, even in rural areas, occur in drug shops MoH (2004), p.15and private provider offices""Even in remote areas, medicine shops are among the most JHU (1999)common of commercial establishments"PNFP sector:14.5% of OPD visits in 2003 were in PNFP facilities Neupane (2004)b, p.25"An insignificant proportion of hospital beds" Unofficial APHIN estimate"Eye care services are entirely provided by NGOs" Unofficial MoH estimate11 For example - according to DHS (2003) - in 2001-02 the average Health Post provided 11.6 reports permonth; the average I/NGO provided 8.6.12 Unofficial APHIN estimates from Interview 17. Unofficial MoH estimates from Interview 3. 9
  • 10. The disparity between many of the estimates probably stems from complications alreadymentioned: since the same patient and the same provider will often move betweensectors in the course of a single afternoon, the potential for confusion and double-counting is immense. Despite the internal contradictions, what conclusions can be drawnfrom these numbers? Three things seem clear.First, the PFP sector (in the form of APHIN) and MoH agree on the importance of PFPdrug stores, in both urban and rural areas.Second, there is a real difference of opinion (which cannot be explained away by double-counting) regarding the number of PFP hospital beds. APHIN claims the PFP proportionis 60% and rising, having increased from just 20% in the early 1990s. The MoH believesthe majority are public. This may be because MoH information systems have yet to catchup with the increase referred to by APHIN; or APHINs figure may underestimate thetrue extent of government coverage.Third, although the PNFP sector does not form a significant portion of overall healthprovision, it dominates certain specialist areas. Eye care in particular was mentioned bymany of the people interviewed. Figures from the MoF support this - the eight INGOslisted in table 4 will spend nearly $2m on eye care in 2004/05.Table 4: INGO provision of eye care, 2004/0513 Annual expenditure Organisation ($ 000)Christoffel Blinden Mission (NNJS) 1,307Foundation Eye Care Himalaya Netherlands 189Association for the Opthalmic Cooperation Asia 105Seva Foundation 78Himalayan Cataract Project 59Nepal Eye Programme 58Nepal Eye Programme 58Swiss Red Cross 51Total 1,906The MoF listing of INGOs is not comprehensive, but the fact that more of theorganisations listed in it were involved in eye care than in any other area suggests thatPNFP services are particularly widespread in this field.2. Difficulties With the Status Quo: The Public SectorThe numbers above on provision and financing reveal little about the quality of and easeof access to services. Information on this is more limited, diffuse and unstructured,13 MoF (2004)c 10
  • 11. deriving from academic surveys rather than the government itself. Piecing together theevidence available suggests that in the public sector access is more of a problem thanquality (at least for the 88% of Nepals population living in rural areas14). Poor suppliesof drugs and trained manpower, combined with inadequate incentives and monitoring,mean that adequate services are often not available at the right time.• StaffingA study of rural womens access to care from government health posts in five districtsrevealed the following:15 − In Sindhupalchowk, women reported poor attendance by doctors, rude staff, and lack of medicines; − In Rupandehi, women were satisfied with care for minor illnesses, but not for severe conditions. In addition, they were often treated impolitely; − In Kailali, women felt discriminated against on grounds of caste and wealth. Personnel would apparently sell good medicines to the rich and give inappropriate or out of date leftovers to the poor; − In Dadeldhura, "all groups of women expressed their total dissatisfaction with their health post services." Trained personnel were rarely present, and staff were impolite to women.A John Hopkins University study in Mustang district found that village governments inMustang had banned private medicine shops to prevent resale of free government medicalsupplies. This had the unintended effect of making access to medicine more difficult, as"very few of the governmental health posts are adequately staffed".16• SuppliesIn addition, the JHU team found that "in rural areas, many ... health posts and sub-healthposts are out of medicines most of the time".17 According to the WHO, in remote areasonly 40% of government facilities have essential drugs.18 This problem may be linked tothe incentive dual practitioners have to sell drugs through their profitable private practiceinstead of giving them away at their public facility.14 UNDP (2003)15 Samanata (2001)16 JHU (1999)17 JHU (1999)18 WHO website - - accessed 5 August, 2004. 11
  • 12. • CoverageThe JHU study identified a link between the retention rate of FCHVs and the quality oflocal health posts - "towns with many dropouts seemed to have health posts that wereessentially non-functional with almost no staff". In Lower Mustang, for example, all butone of an original group of ten FCHVs trained had given up their duties. Chart 2 below,plotting the number of FCHVs per thousand people against the corresponding number ofsub-health posts for each district in Nepal, bears out the JHU findings.Chart 2: Number of Sub-Health Posts and FCHVs per thousand inhabitants, 75 districts19 7 6 5 4 FCHVs 3 2 1 0 0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 0.40 Sub Health PostsThe chart shows how, because of lack of support from local sub-health posts and VDCs,areas with most need for FCHVs (those with underperforming health posts) tend to bethose where FCHVs are least numerous.Mis-allocation of resources appears to characterise public sector services in general.While shortages of manpower are experienced in remote areas, a recent World Bankstudy estimated at least 30% under-utilised human resource capacity at the MoH itself.20Although 56% of the rural population uses district hospitals, PHCCs and health posts,these facilities receive just 3% of public funding to health facilities. The majority offunds instead go to secondary and tertiary hospitals.21 Rural areas account for 85% of thepopulation, but only 51% of total public expenditure on health services.2219 DHS (2003)20 WB (2004), quoted in MoH (2004), p.3621 MoH (2004), p.3022 MoH (2004), p.44 12
  • 13. • Opening hoursPublic sector facilities open for shorter hours than their private sector counterparts, andanecdotal evidence suggests staff engaging in dual practice may leave facilitiesoccasionally during the day to tend their for-profit facility.One senior DHS official was confident that sub-health posts are open during their officialhours (9am-2pm), but not necessarily with a trained paramedic on duty. Monitoringopening hours is the responsibility of the local District Health Office (DHO), which eachsub-health post in a district reports to. So if a particular DHO is relatively inactive (assome are, according to interviews with government officials), there is little incentive for asub-health post to open at the correct times.• IncentivesPublic health staff have a fixed pay scale, increasing according to seniority, with nobonuses for exceptional performance. Hardship allowances exist in certain rural areas.One government official compared salaries in Nepal unfavourably with Bhutan (where heclaimed paramedics received the equivalent of Rs.16,000/mth, compared to just 4,000 inNepal).There may be a link between this and the problem of short opening hours and longwaiting times. Poor public sector pay combined with dual practice creates an incentivefor public sector staff to increase waiting times at their public facility in order toencourage more people to use their for-profit facility.3. Difficulties With the Status Quo: The Private SectorPrivate medical facilities (mostly PFP, as per Part One above) face a different set ofissues to their public sector counterparts. Problems with staffing, supplies, openinghours, and incentives are generally minimal, due to the profitable nature of the business.The main problems they face are with issues of quality rather than access to care.QualitySome government officials expressed the view that in reality care in the private sector isno better than the public sector - clients just think it is, because service is friendlier andwaiting times shorter. Little widespread evidence exists to put this claim to the test.Both the Association of Private Health Institutions of Nepal (APHIN) and theGovernment agree that some private practitioners are more concerned with money thanproviding quality care. They are poorly qualified, and exploit patients, either through 13
  • 14. overcharging or "overmedicalisation" (whereby patients are given - and charged for -more treatment than is necessary).However, their estimates of the prevalence of this vary greatly. APHIN suspect 15-20%of private providers fall into this category; several government personnel interviewedsuspected it was the majority. There is insufficient evidence to adjudicate.Regulation / monitoringDHOs are charged with monitoring PFP and PNFP as well as government facilities,though little is known about their efficacy at doing this. HMG sets minimum standards,but has insufficient legal authority to enforce them, and few resources with which tomonitor activities of private providers.For example, in HIV/AIDS prevention, the National Centre for Aids and STD Control(NCASC) recommends a standard 10 days training before a practitioner can carry outVoluntary Counselling and Testing (VCT). But the only mechanism for enforcing this isa series of talks with the private (mainly PNFP) sector. 14
  • 15. PART TWO - PUBLIC PRIVATE PARTNERSHIPS IN HEALTHPart Two outlines reasons for the necessity of PPPs in Nepal, before analysing HMGsHealth Sector Reform (HSR) strategy and making recommendations for future interactionbetween public and private sectors.1. Why are PPPs necessary?PPPs are necessary in Nepal for two principal reasons: money, and equity. EffectivePPPs would help resolve the governments "funding gap", and correct the inequality indistribution of healthcare (often caused by duplication of services between public andprivate sectors).a) The Funding GapHMGs problem is summarised in Table 5 below.Table 5: HMG funding gap, 2004/05 - 2008/0923 Amount 5-year Estimate ($m)Available resources... - High case 856 - Base case 663 - Low case 535Estimated health sector costs 1,049Funding gap... - Best case 193 - Base case 386 - Worst case 514The three different cases assume varying levels of GDP growth, foreign assistance, andshare of MoF budget. Together they imply a need for around $200-500m of additionalfunding over the next 5 years (or $40-$100m annually), if the government is to meet itsMillennium Development Goal (MDG) commitments.What can HMG do? The shortfall is unlikely to be met via extra Red Book funding,given the commitment to the IMF to maintain domestic borrowing below 2% of GDP by2006/07.24 The "Health Sector Programme Support Project" (HSPSP) - a probable new23 MoH (2004), ps. 38 and 4024 MoH (2004), p.42 15
  • 16. grant of $86m (in instalments over the next 5 years) from the World Bank and DFID -will only cover around 22% of the base case funding gap. The government is piloting aVDC-level Community Insurance Scheme in 2 areas, but if successful this will generate arelatively low amount over the next 5 years.25So one of the most promising routes available to the government is in effect to delegatesome of the actions necessary to achieve the MDGs to the PFP and PNFP sectors, andhence enable it to achieve more with less.c) EquityNepals health system (both public and private) displays 3 types of inequity: practitionersare concentrated in high-income areas; private and public sectors do not complement oneanother geographically; and cheap services intended for the poor end up going to the rich.This section briefly explores each in turn.• Practitioners are concentrated in high-income areasChart 3 below illustrates the correlation between the number of doctors per thousandpeople in each district and monthly per capita income.Chart 3: Number of doctors per thousand people and per capita monthly income by district26 0.30 0.25 0.20 Doctors per 000 people 0.15 0.10 0.05 0.00 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 Monthly per capita income (Rs.)25 According to interviews with MoH personnel26 No. of doctors from MacDonagh & Neupane (2003), Annex 3; population from DHS (2003); unofficialper capita income estimates by district provided by Nepal Lever Ltd. (Interview 12.) 16
  • 17. On average, the richest 50% of districts have over four times as many doctors per head asthe poorest 50%.27 The reality is likely to be more unequal than these crude district-levelfigures suggest, as within each district practitioners are concentrated in (richer) urbancentres.• Private and public sectors do not complement each other geographically;Instead of the private sector filling in gaps in public provision (or vice-versa), the DHSdata in Chart 4 below suggests the activity of one has a very slight positive correlationwith the activity of the other.Chart 4: Number of private and public sector treatments per capita, by district28 0.25 0.20 Private treatments per capita 0.15 0.10 0.05 0.00 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20 Public treatments per capitaThis may occur because of the phenomenon of dual practice: if 75% of public sectordoctors also practice privately, more public treatments imply more private ones.Whatever the explanation, the result is that some districts receive little of either public orprivate sector care, whilst others get lots of both.• Free or subsidised services go to people who can pay27 The 38 richest districts have 0.19 doctors per 000. The 37 poorest have 0.04.28 DHS (2003) 17
  • 18. The third type of inequity occurs when free or heavily subsidised services needed by thevery poor go to people who are able to pay. This occurs in both public, PNFP, andprivate sectors.In the public sector, the same (subsidised) fees are generally charged to all regardless ofincome. Similarly, the PNFP sector distributes medical supplies at subsidised pricespayable by the poor, but much of it ends up being bought by people who could pay more.In public hospitals, where different charges are typically levied for different levels ofservice (a private cabin, for instance, will cost more than the paying ward, which in turnwill cost more, and have shorter queues than, a free ward), anecdotal evidence suggeststhat family, friends, or friends-of-friends of hospital staff may end up getting access to apaying ward free, or getting into a free ward without a wait (meaning the less well-connected poor have to wait longer for a bed).A JHU study found that "only a fraction of the population uses the government systemeach year." The poor often use traditional practitioners or family remedies, or if theproblem is severe go into debt to obtain care from the PFP sector. The poorest "justdie".29 (Or, in the words of one public sector official interviewed, "if you cant buy youhave to die.")A similar problem occurs in PFP hospitals. The government encourages private hospitalsto give 10% of their care to the poor, free-of-charge (though definitions of this vary, andit does not appear to be enforced). In fact, private medical staff interviewed estimatedthat considerably more than 10% is provided either free or at reduced rates, again topatients with personal connections to hospital staff. This is in effect a form of passivediscrimination against the poor (assuming friends and family of PFP hospital doctors -some of the best paid people in Nepal - are on the whole richer than average).2. HMGs Health Sector Reform strategy and its implications for PPPsThis section briefly outlines key elements of the HSR strategy, before discussing itsimplementation. The two relevant documents here are the 5-year HSR Strategy, whichruns from 2002/03 - 2006/07, and the 5-year Nepal Health Sector Programme -Implementation Plan, which runs from July 2004 - July 2009.a) The HSR Strategy30HMGs HSR strategy represents a fundamental change in its approach to healthcare. Itproposes replacing the traditional regime of top-down, centralised management and ahealth budget not sufficiently allocated to the most essential services with29 JHU (1999)30 Based on MoH (2002)a 18
  • 19. decentralisation and a focus on essential services for those most in need . The strategyhas three key programme outputs:• Essential Health Care Services (EHCS) A package of 20 EHCS was approved by the Cabinet in September 1999. However, initially focus is on 4 areas: safe motherhood and FP; child health; control of communicable diseases; and strengthened out patient care.31 Full coverage of these services will be aimed at in 15 districts initially over the first 3 years of the programme (2002/03 - 2004/05), before being extended across all 75 districts in years 4 and 5 (current coverage is estimated at around 70%). This will be supported by a national BCC programme. A "sector-wide approach" is promised, meaning that EDP-supported programmes of PNFP organisations will be an integral part of achieving these objectives. In addition, "where appropriate, NGOs and private providers will be contracted to provide the services".• Decentralisation Local bodies will be encouraged to manage health facilities in their areas, at VDC and DDC levels. Again, a phased approach will be taken, with all districts covered by the end of 2005/06. The HSR strategy also suggests willingness in certain areas to hand over management of government facilities entirely to the PNFP or PFP sectors: "in remote districts, the NGO / private sector will be invited to submit proposals".32• Enhanced role of private sectorThe role of PFP and PNFP organisations will be "recognised and developed withparticipative representation at all levels." This has four parts: - Sustainable finance (an increased proportion from the private sector and alternative financing mechanisms, such as social insurance); - Avoidance of duplication in provision of EHCS (with contracting out where appropriate); - Ensuring common standards for both private and public sectors; - Working with the private sector on supplies of pharmaceuticals and new technology.31 MoH (2002)a, p. 1532 MoH (2002)a, p.17. This is in part motivated by the political situation. MoH (2004) p.19: "Conflict insome parts of the country could adversely affect service delivery...[district authorities should]...ensureservice continuity through the most appropriate means, eg. local NGOs and the private sector." 19
  • 20. b) Implementation of HSR33The 2002 strategy document is in general more ambitious than the 2004 ImplementationPlan (although this may change - only a June 2004 draft copy was available at the time ofwriting). This section sets out a selection of actions the government plans to take toachieve each of the strategic objectives above, and discusses how effective these arelikely to be.• Implementation of Essential Health Care Services (EHCS)Access: The MoH plans to improve access to the poor by introducing "poverty criteria"(yet to be specified) to identify poor clients. They will introduce an "equity basedformula" to improve resource allocation to underserved districts. A "safety net" will alsobe tested for the poor to access services.Drug supplies: The "Community Drug Programme" will be expanded, enabling publicfacilities to charge for essential drugs (in order to help replenish supplies) except for thevery poor.BCC: "Adequate funding" will be given for BCC, using multiple communicationchannels. "Integration of BCC across all EHCS package" will be achieved.Each of proposal looks effective in theory, but without more detail it is difficult toevaluate the plans. Specifying "poverty criteria", for example, is relativelystraightforward. But getting local staff to implement them fairly requires an extensivemonitoring system, the need for which is not acknowledged in the Implementation Plan.MoH staff interviewed were not prepared to go into this level of detail, beyond the broadprinciples set out in the Implementation Plan.It is clear, however, that the 2004 Implementation Plan is less ambitious than the 2002strategy. Whereas the strategy explicitly committed to contracting out to the privatesector to deliver EHCS, in the EHCS section of the Implementation Plan (where onewould expect to find more detail on how this is to be done) it is not mentioned.34 Thestrategy aimed for "full coverage of the essential services at all levels" across all districtswithin 5 years. The implementation plan target is for "60% of health facilities to provideminimum level of acceptable standards of quality EHCS." (No target for % coverage ofthe population was provided in the June 2004 draft.)• Implementation of DecentralisationThe governments full "Strategy of Decentralisation", promised by July 2004, was notavailable at the time of writing. However, 2 actions have been identified in MoH (2004):33 Based on MoH (2004)34 MoH(2004), pages 9-12 20
  • 21. Local management of sub-health posts: So far, 1,200 VDC-level committees (called"Village Development Health Management Committees", each comprising 8-10 unpaidvolunteers) have been appointed in 26 districts to manage sub-health posts.35 Expansionto all districts is planned.Hospital autonomy: Hospital Development Boards have already been set up for allhospitals above district level, as well as for 12 district hospitals. The aim is to expandautonomy further in the future. Autonomy also incorporates encouraging hospitals tocharge, and use the income to improve services.Again, it is difficult to evaluate these plans without the next level of detail beingavailable. Autonomy only works in practice where certain conditions are in place. Inparticular, the people authority is devolved to must have the requisite skills andincentives to carry out their new duties effectively; and the MoH must have the ability tomonitor what they are doing.In the case of local VDC management committees, more information is required,including: - What was the basis of selection? - How will a group of 8 local volunteers acquire the skills needed to oversee procurement of supplies, monitor staff performance, ensure the rich pay charges and the poor do not, etc.? - What sticks and carrots exist to ensure that the (unpaid and unelected) management committees perform well?The soon-to-be-released "Strategy of Decentralisation" may answer these and otherquestions. In the meantime, the only description research for this paper uncoveredrelating to the performance to date of local VDC management committees describes"absence of local government at the VDC level, lack of management skills, and problemsrelated to drug supply".36• Implementation of Contracting outAs with EHCS and decentralisation, the 2004 Implementation Plan gives few details oncontracting out. This detail is effectively to be determined by a consultation exercise inYear 1 (2004/05), during which "a strategy for partnership with NGOs and the privatesector will be developed".Years 2 and 3 will be spent "building capacity in MoH", "enabling the private sector andNGOs to prepare for potential opportunities", and "developing specific modalities of35 According to interviews with MoH management.36 Neupane (2004)a, p.17 21
  • 22. partnership at central and district level".37 In 2007/08 and 2008/09 contracting out willbegin to take place, with new public-private service provider agreements. This is a morerelaxed timetable than the 2002 HSR strategy specified, when it set a target of full EHCSin 15 districts by 2004/05, involving contracting out to the private sector whereappropriate.Attitudes to contracting out amongst government staff interviewed varied. One seniorDoHS official said that HMG gives little money to the PNFP sector (except smallamounts each year to specialist areas like eye care), and nothing except supplies of drugs/ vaccines to the PFP sector, and are not intending to increase this in the future. The onlypossible additional funding to the private sector would be indirect transfers, for examplevia tax reductions on medical equipment.An FHD official, by contrast, was happy with the idea of the government paying theprivate sector - even PFP organisations - to serve rural areas. Simply getting the job donewas his main priority.A third official discussed approvingly several examples of the MoH funding the PNFPsector. He said the government provides Rs. 5m per year to Patan hospital (managed byan NGO). A similar arrangement exists with Lamjung hospital. The government payssalaries, but does not manage the staff. In addition, ancillary services for hospitals likecleaning and food services are starting to be contracted out.c) Why is implementation difficult for HMG?Table 6 below summarises selected differences between the 2002 Strategy and the 2004Implementation Plan, showing how the implementation of the innovative theoretical casefor PPPs presented by HMG in its 2002 HSR has been slower than originally intended.Table 6: Summary of differences between HSR Strategy and Implementation Plan3837 MoH (2004), p.1638 MoH (2004) and MoH (2002)a 22
  • 23. Strategy (2002) Implementation Plan (2004)EHCS1. Full coverage by 2006/07, supported through contracting 60% of facilities providing EHCS ofout acceptable quality by 2009 No mention of contracting outDecentralisation Sub-health posts being delegated to local1. All sub-health posts in local hands by 2006-07. VDC committees2. Some services in remote areas contracted to private sector No mention of contracting outRole of Private Sector1. Greater share of financing from the private sector 2004/05: Consultation2. No public-private duplication in provision of EHCS by 2005-2007: Capacity building2006/07, with contracting out where appropriate3. Co-operation on medical supplies 2007-2009: Service agreementsWhy might this be? As discussed above, one of the main reasons for the attraction ofPPPs was that they looked like part of a solution to the "funding gap" - a way ofachieving the MDGs within HMGs overall "resource envelope". Yet if done properly,the three key outputs of HSR - provision of EHCS through the private sector,decentralisation to local bodies, and contracting out - each involve HMG giving moneyaway to the private sector or local management bodies. This has led to reluctance topursue reform this far - hence the delay of widespread contracting out until 2007 (at theearliest).This apparent paradox - of giving money away in order to save money - is resolved whenthe other, more difficult component of contracting out services is fully recognised.Contracting out only saves money when the government stops doing whatever has beencontracted out. This invariably involves some organisational upheaval, including layingoff (not reassigning) staff. Only then (assuming the contracting organisation is moreefficient than the government was) is more output achieved with the same input. This issomething not described in the Implementation Plan, but needs to be fully worked out infuture government thinking. For every Rupee given to outsourcing partners in exchangefor their services, at least one Rupee must be cut from existing government services.The government could also support the private sector indirectly, and expand access toprivate sector healthcare, via full tax relief for medical equipment and supplies, oncondition that a share of the benefits are passed on to consumers in the form of lowerprices . This is relatively common in low-income countries. A survey of 22 developingcountries revealed that 15 (or 68%) provided some kind of tax relief for health supplies. 23
  • 24. Of these 15 countries, 13 (87%) did so for public providers, 10 (67%) for PNFPproviders, and 8 (53%) for PFP providers.393. Recommendations for future PPPsThis section makes five specific recommendations to the MoH for the part PPPs couldplay in the management of Nepals health facilities.An underlying principle behind most of these recommendations is the need for clearincentives. Ultimately, no amount of consultation sessions or moral encouragement willdo much to mobilise the private sector. Both PFP and PNFP actors cannot be expected todo anything that is not very clearly in their best interests.In addition to these actions by HMG, EDPs could lead the way by contracting out workto the PFP sector, either directly or via their traditional PNFP partners.Recommendation 1: Develop a clear, public view of which functions are best carriedout by which sectorsIn the long-term, HMG should specialise in activities where, by virtue of its scale,political power, or other characteristics, it can operate more efficiently than the privatesector. These may include: - Training of staff; - Procurement of land and buildings; - Procurement of medical equipment and supplies; - Standard setting and monitoring.The PNFP sector might specialise in: - BCC activities (via Social Marketing organisations); - Specialist clinics for particular conditions (expanding the current eye care model to other conditions)Areas where the PFP sector might have a comparative advantage include: - Management of field staff; - Maintenance of buildings and equipment; - Ancillary services; - Distribution of supplies.A detailed list along the lines of the above needs to be developed by HMG, viaconsultation with the private sector. It would specify areas of service which the39 Leighton (1999), p.13. The 22 countries surveyed were: Bolivia, Brazil, Cambodia, Djibouti,Dominican Republic, Eritrea, Ghana, Guatemala, Indonesia, Jordan, Kenya, Madagascar, Malawi,Morocco, Mozambique, Nicaragua, Philippines, Senegal, Tanzania, Uganda, Zambia, and Zimbabwe. 24
  • 25. government plans specialise in, and areas it will get out of entirely over the next 5 years.The National Health Accounts (due to be published for the first time in September 2004)provide an excellent opportunity to set and monitor high-level targets for the PFP / PNFP/ Public sector split within each activity type.This would yield two important benefits. First, it would send a strong market signal toPFP entrepreneurs to develop capabilities in services the government will need. Second,it would focus and channel the governments general desire to collaborate with the privatesector into specific areas, showing staff exactly where PPPs should and should not beattempted.Recommendation 2: Contract out management of Sub-Health Posts in 1 or 2 districts toprivate hospitals on a trial basisSub-health posts are the backbone of the primary healthcare system in Nepal, and theonly health facilities many people in poor rural areas have access to. The localmanagement committees currently being implemented by the government may be thebest way to manage them - but other methods may work as well or better. Through trialand error - using different methods in different areas - the government could learn whatworks best.Representatives of the private medical sector interviewed expressed a strong interest inrunning this type of service. The government could transfer the existing budget of sub-health posts to a PFP hospital, and monitor services via mystery client testing. It couldthen reduce the budget by an agreed percentage each year, encouraging the managementteam to produce efficiency gains.Currently, PHCCs, health posts, and sub-health posts report to the local District HealthOffice (DHO). Each DHO reports to one of 5 regional directorates, who in turn report tominister of health. The local DHO could therefore be tasked with monitoring the serviceof the private hospital in charge.Recommendation 3: Partner with private medical colleges to encourage work in ruralareasAs discussed above, lack of qualified staff is one of the most common complaints amongusers of rural public sector health services. Yet private hospitals report a surplus ofpotential recruits, with an increasing number of graduates from private medicalcolleges.40The main reason for this is different salary levels. But there is still potential for thegovernment to partner with private medical colleges to provide incentives to work in40 One manager at Om hospital said they had a waiting list of at least 50 doctors wanting to sign on. Arepresentative of APHIN confirmed that this is the case in most other private hospitals. 25
  • 26. rural areas. For example, the government could provide a subsidy to partially covertuition fees for advanced medical training for any newly-graduated junior doctorsprepared to spend 6 months or a year working in a rural sub-health post. Without strongperformance in this position, they would not receive the subsidy.Recommendation 4: Rigorously enforce access for the poor. But do not set prices.The ability to charge market rates for services is critical to PFP sector involvement. Thegovernment should not attempt to interfere with this process. The only way to make thisconsistent with provision of free services to the very poor is to make it in the contractingpartners interests to do so. This means, once the governments "poverty criteria"mentioned above are agreed, any contractor found (via mystery client monitoring) to beviolating them could have its contract terminated immediately.If the government has successfully fostered competition between private providers to runsub-health posts, the threat of termination would be entirely credible. Governments inother parts of the world have used mechanisms like this, paradoxically, to give themgreater ability to enforce regulations with the contractors staff than they ever had withtheir own. Switching contractors can be easier for a government than summary dismissalof a unionised public sector worker found violating a regulation - meaning workers forprivate contractors have a stronger incentive to comply.Recommendation 5: Hire people from PFP organisations experienced in managingcontractorsHMG is right to recognise that significant capacity building is required within the publicsector before contracting out of services to the private sector can work properly.However, this might be possible in less than the 2 years specified in the ImplementationPlan if employees were hired from the PFP sector with extensive experience of managingcontractors. 26
  • 27. PART THREE: APPLICATIONS TO REPRODUCTIVE HEALTHPart Three applies the principles of the 2002 HSR strategy to the area of ReproductiveHealth (RH). First, it examines the current provision of Family Planning (FP) andHIV/AIDS prevention services by public, PFP and PNFP organisations. Next, itidentifies gaps between this and the HSR principles. Finally, it recommends actions torectify these gaps.1. Current provision of RH services by sectorAs with health services overall, data sources for reproductive health in Nepal are notinternally consistent. This section sets out data from three sources, and attempts totriangulate between them to identify areas of agreement.The most recent data available on overall provision of FP and HIV/AIDS services come sfrom an unpublished June 2004 report by Dr. Ram Neupane. Figures from this are givenbelow.Table 7: Total public and private beneficiaries of FP and HIV/AIDS services in 200341 Service Public Sector Private SectorFamily Planning 1,807,124 1,568,581 54% 46%STD / HIV / AIDS 39,185 248,307 14% 86%The most recent data on public and private provision of particular method types comesfrom an April 2004 EngenderHealth Nepal study. Results of this are shown in table 8.Table 8: Public and private provision by method type - EngenderHealth figures4241 Neupane (2004)b, p.26. The author informed me verbally that the columns in this draft documentlabelled "I/NGOs" include PFP provision.42 EngenderHealth (2004), p.4 27
  • 28. Government % Private Sector Method type of provision % of provisionNorplant 63% 37%IUCD 68% 33%Pill 85% 15%Depo Provera 83% 17%The 2001 NDHS gives data on more method types, and separates private sector provisioninto PNFP and PFP. Relevant figures from this are given in Table 9 below:Table 9: Public and private provision by method type, NDHS figures43 Government % PNFP Sector % PFP Sector % of Method type of provision of provision provisionFemale VSC 86% 7% 1%Male VSC 81% 11% 1%Condom 46% 4% 46%Norplant 52% 42% 6%IUCD 64% 11% 19%Pill 55% 8% 33%Depo Provera 86% 5% 8%All Methods 79% 8% 8%ConclusionsIn showing an almost equal split between government and private sector FP services, Dr.Neupanes (draft) 2004 study is out of line with previous data (all other sources suggest asystem heavily dominated by government provision). It is not possible to say withcertainty at this point whether Dr. Neupanes study has indeed picked up on a recent43 NDHS (2001), p.86. "Other source" includes shops, and is assumed to be PFP. So PFP provision is thesum of "private medical sector" and "other source". 28
  • 29. expansion of the private sector, or has been distorted by flaws in HMIS data (on which itis partially based).The other two data sources above give an approximate idea of which sectors dominateprovision of each method. Chart 5 below gives an overview of this information.Chart 5: Summary of provision of each method by sector44 Provider VSC Condoms Norplant IUCD Pill Depo Public PNFP PFP = Major provider = Minor provider = Minimal providerThe government is a major provider of all methods - it fact it seems to dominateprovision of contraceptive methods to a greater degree than it does medical servicesoverall. The PFP sector specialises in methods requiring the least trained medical care.(IUCD is the exception to this. It has the lowest level of overall use, and a higherproportion of urban acceptors than any other method45. Many wealthier womenapparently have IUCDs inserted in private urban clinics.) PNFP provision tends to belong-term methods requiring a trained practitioner.Family Health Division (FHD) officials interviewed all agreed that the government wascurrently the dominant provider of all methods, though they expected private provision toexpand fast. One said he would not be surprised if private provision expanded to 50% ormore in future. However, the FHD has no official target for this.2. Divergence between the status quo and HSR principlesThis section examines how the current provision of RH services diverges from the twokey principles set out in the 2002 HSR strategy: decentralisation, and an increased rolefor the private sector. It then takes a more detailed look at HMGs HIV/AIDS strategy,and its consistency with HSR.a) Decentralisation44 Estimates based on tables above45 EngenderHealth (2004), p.4 29
  • 30. Decentralisation is of critical importance in RH. Method mix and reasons for non-usediffer widely at district level.46 Programmes therefore need to be designed from the"bottom up", taking into account local conditions.This is not yet occurring with government services. The central level MoH budget for FPand HIV/AIDS in 2004/05 is $3.8m.47 No budget has been specifically allocated to theseareas at district level. District level funds should instead come from the "IntegratedDistrict Health Program", though the amount allocated to FP and HIV/AIDS via this isnot clear. Overall, 93% of the MoH 2004/05 budget is allocated to the central level.For example, pricing of government contraceptive products at the moment is determinedcentrally. Most government products are free, with a nominal fee being paid forregistration at the facility. Public sector VSC providers give a (centrally determined)financial incentive to all clients. This leads to a system which does not maximise eitherwelfare or revenue. Welfare is not maximised because there are often insufficient freesupplies left - particularly at rural sub-health posts - for the people who can least affordthem.Revenue is not maximised because many segments of the market are willing to pay forcontraceptives. When asked to pick a price that "most people can afford", 52% of 20-24year olds surveyed in a study for PSI picked a price of Rs.5 or above for a 3-pack ofcondoms.48 A 1999 study for FPAN found average willingness to pay of Rs. 25 per shotof injectable contraceptive, and Rs. 79 for STD care.49 FPAN is imposing a "servicecharge" for condoms on a trial basis in 12 districts from January 2005 in response towidespread misuse of free products. The government is apparently considering chargingthrough vending machines.50 Officials I spoke to said public sector charges would beintroduced eventually, but were unlikely within the next 12 months.b) Increased role of private sectorHMG is committed to increasing the role of the private sector in RH through both HSRand the 1994 International Conference on Population and Development (IPCD) in Cairo,to which it is a signatory.The Declaration agreed in Cairo states that "provision of reproductive health-careservices should not be confined to the public sector but should involve the private sectorand non-governmental organisations ... and include, where appropriate, effectivestrategies for cost recovery."51 The objectives include:5246 See PSI (2003)a47 MoF (2004)a, Report 16, page 6-6248 PSI (2003)b, p.849 Prasai (1999)50 "Condoms no longer to be doled out as freebies", Kathmandu Post, 10 July 2004, p.151 ICPD (1994), clause 7.2652 ICPD (1994), clauses 15.16, 15.17, 15.18, 15.19, and 15.20 30
  • 31. • Mechanisms to exchange ideas between NGOs and governments; • Governments removing barriers to private sector involvement; • Financial and other assistance from PFP sector to NGOs; • Employers ensuring employees needs for RH services are met.Yet Nepals current RH system is characterised by lack of co-operation between publicand private sectors, and few functioning PPPs.Lack of co-operationPart of HMGs role in RH is to set guidelines and ensure they are adhered to by bothpublic and private sectors. For public sector facilities, the Quality of Care ManagementUnit within the FHD (supported by USAID) is trained to provide technical support atfacility level. It employs 5 people to prepare guidelines and make supervisory fieldvisits. The Unit focuses on 27 USAID-supported districts.However, monitoring of private sector facilities is a problem, as PSSN - the body taskedwith monitoring private sector services - is apparently no longer functioning. The resultcan be lack of knowledge among private providers regarding what the government rulesare. For example, government programme guidelines (according to FHD staff) state thatoral contraceptives are only allowed to be sold by trained practitioners in drug stores, notby general stores ("paan shops") lacking medically trained staff. Yet many private sectorproviders are not aware of this particular restriction.More frequent communication between different sectors could resolve issues such as this.Lack of communication is particularly serious between the government and PFP sectors.One example is the consultation exercise conducted in preparation of the NationalHIV/AIDS Strategy (2002-2006). Of 283 organisations listed, only a handful were fromthe PFP sector (mainly media organisations).53Few functioning PPPsPPPs do exist in RH in Nepal. The FHD claims to be offering a full range of FP servicesvia co-operation at district level with MSI. These currently operate in 25 locations, and30 more are planned. The EU and UNFPA have formed partnerships with local VDCsand community-based organisations to deliver RH services (including 20,295 outreachclinics between 1999 and 2002).54However, there is still some uncertainty surrounding them at central government level.One official interviewed said "specifically for FP, the government is not supporting theprivate sector [and has no plans to expand its role]." Officials were particularly sceptical53 NCASC (2003)a54 UNFPA (2003) 31
  • 32. about the willingness of both PFP and PNFP organisations to provide services in remoterural areas.An official interviewed at the NCASC had a more limited conception of PPPs. Examplesquoted to date included using private companies to make t-shirts for the December 1World AIDS Day, partnering with companies to make branded key-rings for condompromotion, and food provided by the PFP sector at condom promotion events (asChaudhary Group recently did). Plans for the future role of the PFP sector includedprivate companies donating food for truck drivers at educational events, and encouragingcompanies to put stickers on trucks with safe-sex messages.There is a divergence between the limited practice and conception of PPPs to date in RHservices, and the HSR vision of actual services (not ancillary functions like food orcleaning) being contracted out to PFP and PNFP organisations.c) Consistency between HIV/AIDS Strategy and HSRHMGs core statement of current HIV/AIDS prevention strategy is given by the NationalCentre for AIDs and STD Control (NCASC) in its National Strategy for HIV/AIDSControl (2002-06)55. The means for translating this into action are specified in theNational Operational Plan for HIV/AIDS Control (2003-07).56 Although "multi-sectoralengagement" was the first of 8 "Guidelines and Principles" underlying the NationalStrategy, none of the 12 consultation sessions held in early 2003 to develop the OperationPlan involved either the PFP or PNFP sectors.57The Strategy sets a clear high-level objective: to have reversed the spread of HIV by2015. The Operational Plan groups the means of achieving this into six areas. Indescending order of cost, these are:58 • Targeted prevention (primarily BCI aimed at high risk groups) - 66% of proposed 2003-07 budget; • Care and support - 22%; • Management - 6%; • Nationwide mass-communication - 3%; • Surveillance and Research - 2%; • Policy, legislation and advocacy - 0.5%.For each high-level activity area, detailed sub-activity and cost breakdowns are given,together with a list of potential partners.5955 NCASC (2003)a56 NCASC (2003)b57 NCASC (2003)b, ps.4-558 NCASC (2003)b, p. 1859 The activities incorporate interventions proposed by the Global Fund to Fight AIDS, TB and Malaria 32
  • 33. The extensive list of potential partners in the Operational Plan illustrates the limitedapplication to date of the governments high-level HSR objectives. The majority of thespecific organisations identified are different branches of the government itself.60Potential PNFP partners are referred to frequently, but in general terms (as NGOs,INGOs, or Social Marketing). Few specific organisations are mentioned. PFPorganisations are mentioned once (using the ambiguous term "private sector").61The impression given is that little is known about the precise capabilities of PNFP andPFP organisations. The Implementation Plan referred to in the Operational Plan -urgently needed to specify precisely which of HMGs partner organisations will beresponsible for each activity - has yet to be agreed.The need effectively to mobilise additional resources from PFP and PNFP organisationsis so urgent because funding for the Plan is behind schedule. Table 10 below illustratesthe shortfall between the HIV/AIDS funding requirements for fiscal year 2004/05 (which"can be viewed as a minimum estimate of the resources required to meet the programmeobjectives"62) and actual funds committed from HMG and foreign donors (in this case theWHO and the Global Fund). The gap between these is the amount required from theprivate sector.Table 10: HIV/AIDs funding required from partnerships, 2004-0563 2004-05 Funding requirements and sources ($m)NCASC requirement 16.6 MoH HIV/AIDS funding from HMG 0.1 MoH funding from WHO 0.3 MoH funding from Global Fund 1.9 Total MoH HIV/AIDS Funding 2.2Shortfall (required from PPPs) 14.7So some 86% of spending over the current fiscal year will have to come from outside the"Red Book" through PNFP and PFP organisations. It is not clear how much of this$14.7m shortfall will actually be forthcoming. This illustrates the importance of givingthe private sector sufficient incentives to increase its involvement, if Nepals HIV/AIDSobjectives are to be met.60 NCASC (2003)b, ps. 19-25. Government organisations mentioned include MoHA; MoH; MoD; MoLD;MoPE; MoLT; MoICS; MoES; MoWCSW; VDCs; and Municipalities.61 NCASC (2003)b, p. 21.62 NCASC (2003)b, p.163 MoF (2004)a, Report 16, pages 6-60 and 6-62; MoF (2004)b, Report 72, p.49; NCASC (2003)b, p.18.An average of the NCASCs 2004 and 2005 estimates has been taken for comparison with the MoFs "fiscalyear 04/05" figures. 33
  • 34. 3. RecommendationsFive recommendations are provided below which together will help bridge the gapbetween the status quo and the HSR vision. This is intended as a starting point, and byno means an exhaustive list.Recommendation 1: HMG should specify precisely which parts of its budget for RH itintends to contract out to Social Marketing and other private sector organisationsFor example, the National Health Education, Information and Communication Serviceand the National Health Education, Information and Communication Centre collectivelyhave a budget of $0.9m in 2004/05.64 The MoH should, on a trial basis, see if moreoutput can be achieved with this money by channelling it through organisations in theSocial Marketing sector, which specialise in precisely this type of intervention.Recommendation 2: HMG should use resources saved via contracting out of RHservices to develop its capacity in mystery client monitoringHaving specified what it will do less of, HMG will free up resources to expand itscapacity in areas it chooses to specialise in. One of these areas is enforcing minimumstandards in the private sector. "Mystery client" monitoring is one of the most effectiveways of doing this. This needs to become a core competence of HMG as private sectorRH services expand. An annual nationwide report providing the results of these surveyswould foster healthy competition among providers.Recommendation 3: PNFP social marketing organisations should lead the way incontracting out to the PFP sectorPNFP social marketing organisations can prove to HMG that contracting out works inpractice by partnering with the PFP sector to distribute supplies, and with PFPpharmacies to serve clients (via "social franchising"). Specific contractual mechanismsdeveloped in doing this (eg. fixed-price rather than cost-reimbursible contracts, to givePFP partners a clear financial incentive to minimise costs and over-deliver) could then bereplicated by HMG when contracting out itself. Personnel involved in the contracting outprocess for PNFPs could be seconded to HMG to speed up the public sector capacitybuilding process.Recommendation 4: EDPs assisting HMG in procurement of contraceptive suppliesshould increase pressure to contract out RH services64 MoF (2004)a, Report 16, pages 6-63 and 6-65 34
  • 35. EDPs could insist on contracting out of distribution to the PFP or PNFP social marketingsectors as a condition of funding commodity supplies. This would initially be done on anexperimental basis, to compare the efficiency of different sectors.Recommendation 5: HMG and PNFP organisations should focus resources forcontraceptive distribution on rural areas, allowing the PFP sector to serve urbancommunitiesUnmet need for contraception is significantly higher in rural than in urban areas.65 Therevenue sacrificed in providing subsidised product to urban areas is also greater, as abilityto pay is higher. HMG and PNFP organisations should therefore focus distribution ofsubsidised products on rural areas.65 See PSI (2003)a 35
  • 36. Printed SourcesBUCEN-IDB (2002) - International Database; United States Census Bureau (BUCEN),International Programs Center, December 2002.DHS (2003) - Annual Report 2001/2002; HMG Nepal, 2003EC/UNFPA (2002) - Reproductive Health Atlas: A Presentation of Selected RHIndicators 1998-2002; EC/UNFPA Reproductive Health Initiative, 2002EngenderHealth (2004) - Contraceptive Use Patterns in Nepal: Norplant, IUCD, OralPill, and Injectables; EngenderHealth, Nepal, prepared by Dr. Ann Blanc, April 2004.Hanson & Berman (1997) - Private Health Care Provision in Developing Countries: Apreliminary analysis of levels and composition; Kara Hanson and Peter Berman, Data forDecision Making Project, Harvard School of Public Health, Boston, assumed fromfootnote references to be 1997ICPD (1994) - Programme of Action; Adopted at the International Conference onPopulation and Development, Cairo, 5-13 September 1994.JHU (1999) - Health Equity in Nepal: A Half-Century of Health Development in the KaliGandaki Valley, Western Region; John Hopkins University School of Hygene and PublicHealth, 1999Leighton (1999) - Health Sector Reform and Priority Health Services; CharlotteLeighton, ed., Partnerships for Health Reform Project, Abt Associates Inc., Bethesda,Maryland. Summer/Fall 1999.MacDonagh & Neupane (2003) - Private For Profit Maternity Services, Nepal CaseStudy; Sponsored by Options, DFID, Kings College London, DHS, and FHD. 12December 2003.MoF (2004)a - Estimates of Expenditure for Fiscal Year 2004/05; HMG Ministry ofFinance, 2004MoF (2004)b - Source Book for Projects Financed With Foreign Assistance, Fiscal Year2004/05; HMG Ministry of Finance, July 2004MoF (2004)c - Information on INGOs Working in Nepal, Fiscal Year 2004/05; HMGMinistry of Finance, 2004MoH (2002)a - Health Sector Strategy: An Agenda for Reform; His MajestysGovernment, Ministry of Health, August 2002 36
  • 37. MoH (2002)b - Health Information in Brief; His Majestys Government, Ministry ofHealth, 2002MoH (2004) - Nepal Health Sector Programme - Implementation Plan, 2004-2009; HisMajestys Government, Ministry of Health, June 2004 (draft copy, apparently "95%final").NCASC (2003)a - National Strategy for HIV/AIDS Control, 2002-2006; Ministry ofHealth, National Centre for AIDS and STD Control, January 2003.NCASC (2003)b - National Operation Plan for HIV/AIDS Control, 2003-2007; Ministryof Health, National Centre for AIDS and STD Control, July 2003.NDHS (2001) - Nepal Demographic & Health Survey; Prepared by FHD, New ERA, andORC Macro, April 2002Neupane (2004)a - Public Private Partnership in Health: Concepts and StrategicFramework; Prepared by Ram K. Neupane, Centre for Development and ManagementStudies, Kathmandu. Submitted to JICA and MoH, March 2004Neupane (2004)b - Nepal: INGOs and NGOs in Health; unpublished working paper,submitted to MoH, June 2004.Prasai (1999) - Willingness and Ability to Pay for Selected Reproductive Health CareServices; By D.P. Prasai, FPAN Journal of Reproductive Health Vol. 1, No. 2:43-48,December 1999PSI (2003)a - The Market for Family Planning in Nepal; Prepared for PSI by AdrianBlair, July 2003PSI (2003)b - Price Range Preference Testing of Male Condom; Prepared for PSI bySolutions Consultant Pvt. Ltd., February 2003Samanata (2001) - Study on Understanding the Access, Demand and Utilization of HealthService by Rural Women in Nepal and their Constraints; Submitted to the World Bankby Samanata, Institute for Social and Gender Equality, 16 June, 2001.UNDP (2003) - Human Development Report; United Nations Development Programme,2003UNFPA (2003) - Learning from RHI Partnerships, 1998-2002; Edited by Caroline JaneKentWB (2004) - Costing of the Nepal Health Sector Program Implementation Plan with UnitCost of Essential Health Care Services; World Bank, February 2004. 37
  • 38. InterviewsHis Majestys Government1. Dr. Mishra, Director of National Centre for Aids and STD Control. 19 July, 20042. Mr. Tek B. Dangi - Senior Public Health Administrator, Family Health Division, Department of Health Services. 21 July, 20043. Dr. Babu Ram Marasini, Coordinator of Health Sector Reform, Ministry of Health. 23 July, 20044. Dr. Chataut - Director General, Department of Health Services. 28 July, 20045. Dr. Chand - Director, Family Health Division - 28 July 2004Bilateral Donors6. Jesse Brandt, Technical Advisor, Population Leadership Programme, USAID (and others). 26 July, 20047. Susan Clapham - Health Services Specialist, DFID. 3 August, 2004PNFP Sector8. Rajeeb Lal Satyal, Managing Director, Social Marketing and Distribution. 19 July, 20049. Deepak Pyakvryal - Programme Director, Social Marketing and Distribution. 19 July, 200410. Shanker Pandey, Managing Director, Contraceptive Retail Sales Company. 20 July, 2004PFP Companies with Extensive Rural Distribution11. Rabindra M. Shrestha - CEO, Himalayan Snax & Noodles Pvt. Ltd. 21 July, 200412. R. Venkatesh Babu - National Sales Manager, Nepal Lever Ltd. 21 July, 2004.13. Manoj Mishra - Head of Marketing, Pepsi Nepal. 27 July, 2004 38
  • 39. 14. Dinesh Singh - Head of Marketing, Bottlers Nepal (Nepal subsidiary of The Coca Cola Company). 28 July, 2004PFP Health Sector15. Dr. Ram Neupane - Consultant to HMG and others on PFP sector, Centre for Development and Management Studies. 3 August, 200416. Dr. Hari Kishor Shrestha - Managing Director, Om Hospital & Research Centre (P.) Ltd. 9 August, 200417. Bishnu Subedi - Hon. Secretary General, Association of Private Heatlh Institutions (APHIN). 9 August, 200418. Krishna Pradhan - Director (Administration), Om Hospital & Research Centre (P.) Ltd. 9 August, 2004 39