Reforming the health sector in America

San Gabriel Valley and Metropolitan Service Planning Area Health Office (SPA 3 & 4)
REFORMING THE HEALTH SECTOR IN AMERICA
Current Issues and Lessons Learned from a
Global Health Systems Perspective
Los Angeles County Department of Public Health
September 2009
SPA 3 & 4 VIEWPOINT
San Gabriel Valley and Metropolitan Service Planning Area Health Office (SPA 3 & 4)
SPA 3 & 4 BEST PRACTICE COLLECTIONRELIABLE INFORMATION FOR EFFECTIVE COMMUNITY HEALTH PLANS, PROGRAMS AND POLICIES
M. RICARDO CALDERÓN, SERIES EDITOR

Reforming the Health Sector in America September 2009
1
The SPA 3 & 4 Area Health Office Best Practice Collection fulfills the Los
Angeles County Department of Health Services (DHS) local level goal to
restructure and improve health services by“establishing and effectively
disseminating to all concerned stakeholders comprehensive data and
information on the health status, health risks, and health care utilization
of Angelinos and definable subpopulations”.1
Since September 2006,
when the Los Angeles County Department of Public Health (DPH)
became a seperate department from DHS, the SPA 3 & 4 Best Practice
Collection continues to provide reliable infromation for the effective
development and implementation of community plans, programs
and policies. It is a program activity of the SPA 3 & 4 Information
Dissemination Initiative created with the following goals in mind:
To highlight lessons learned regarding the design, implementation,
management and evaluation of public health programs
To serve as a brief theoretical and practical reference for program
planners and managers, community leaders, government officials,
community based organizations, health care providers, policy
makers and funding agencies regarding health promotion and
disease prevention and control
To share information and lessons learned in SPA 3 & 4 for
community health planning purposes including adaptation or
replication in other SPA’s, counties or states
To advocate a holistic and multidimensional approach to effectively
address gaps and disparities in order to improve the health and
well-being of populations
The SPA 3 & 4 Information Dissemination Initiative is an adaptation of
the Joint United Nations Program on HIV/AIDS (UNAIDS) Best Practice
Collection concept. Topics will normally include the following:
1. SPA 3 4 Viewpoint: An advocacy document aimed primarily at
policy and decision-makers that outlines challenges and problems
and proposes options and solutions.
2. SPA 3 4 Profile: A technical overview of a topic that provides
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care providers for program development, implementation, and/or
evaluation.
3. SPA 3 4 Case Study: A detailed real-life example of policies,
strategies or projects that provide important lessons learned in
restructuring health care delivery systems and/or improving the
health and well being of populations.
At a Glance
SAN GABRIEL VALLEY SERVICE PLANNING AREA (SPA 3)
METROPOLITAN SERVICE PLANNING AREA (SPA 4)
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LOS ANGELES COUNTY
BOARD OF SUPERVISORS
Gloria Molina,First District
Mark Ridley-Thomas,Second District
Zev Yaroslavsky, Third District
Don Knabe, Fourth District
Michael D. Antonovich, Fifth District
DEPARTMENT OF PUBLIC HEALTH
Jonathan E. Fielding, MD, MPH, MBA.
Director of Public Health and County Health Officer
Jonathan E. Freedman
Chief Deputy Director
Deborah Davenport, RN, PHN, MS.
Director, Community Health Services
BEST PRACTICE COLLECTION TEAM
M. Ricardo Calderón, Series Editor
Manuscript Author SPA 3 4 Area Health Officer
Carina Lopez, MPH.
Project Manager, Information Dissemination Initiative
2

INTRODUCTION HEALTH SYSTEM ISSUES
3
I. INTRODUCTION
“Building the Foundation for a
Healthy America”was the theme
of the National Public Health Week
celebrated in the United States
during April 6 – 12, 2009. According
to the American Public Health
Association (APHA) marketing
campaign, the startling reality is
that“there is a nation where 7 out
of 1000 children will not make it
to their first birthday; 13 million
children who do will live in poverty
and 8 million won’t have access to
health care; of those who make it,
every 30 minutes one person under
the age of 29 will contract HIV; and
this is not a developing nation; this is
not a country in civil war, famine or
drought; this is the United States of
America”.!!!
Despite the best efforts, the best
minds, the best research, the best
science, the best funded programs
and the fact that the U.S. spends
more on health care than any other
country in the world, Americans
are not as healthy as people from
other countries and their health
system is failing and falling behind
other health systems in both the
developed and developing world.
In fact, the“U.S. life expectancy has
reached a record high of 78.1 years,
but still ranks 46th behind Japan,
most of Europe, South Korea and
Jordan; a baby born in the U.S. is
more likely to die before its first
birthday than a child born in almost
any other developed country; the
U.S. is among the top 10 countries
that have the most people with HIV/
AIDS and one in 20 residents in the
Washington, D.C. is HIV-positive;
and disparities persist with ethnic
minority populations having nearly
eight times the death rate for key
health conditions, such as diabetes,
than that of non-minority populations”
(APHA 4/2009). In addition, the U.S.
health system performance as a whole
ranks 36th (World Health Organization
[WHO] 2002); 33% of children born in
the U.S. are expected to develop type 2
diabetes; and for Blacks and Hispanics
this number jumps to 50% (Centers for
Disease Prevention and Control [CDC]
2000).
The need for health reform in America
should not be questioned…..should
not be doubted….and should not be
opposed. Health reform is a long-over
due issue that must be addressed
with determination and urgency.
Americans deserve better healthcare
access and quality, more fairness in the
distribution of services, and enhanced
effectiveness and sustainability of
essential services. The critical issue,
therefore, is not whether health reform
is needed but how do we reform the
health sector in America? Is there a
blue print or a right approach to health
sector reform? Is there a model from a
country that we could follow? Is there
evidence-based information that can
provide us with insight and guidance
during the process? Can we avoid
known pitfalls, dangers and failures
of health sector reforms from other
settings? A review of current issues
and lessons learned utilizing a global
health systems perspective can be
useful to better inform, alert and guide
American health decision and policy
makers on health sector reform.
II. HEALTH SYSTEM ISSUES
Some health systems around the world
perform well and others perform
poorly. The difference in performance
is not due just to differences in income
or expenditure since performance
varies markedly even among systems
with the same income or expenditures.
The critical difference lies in the way
systems are“designed, managed
and financed”resulting in higher
or lower rates of death, disability,
impoverishment, humiliation and
despair among populations served
(WHO 2000).
Currently, systems around the world
face multiple demands from a variety
of stakeholders and population
groups. Some of these demands
include, but are not limited to, the
following: How can systems ensure
access to health care while operating
with limited resources and cost
constraints? How can systems balance
the need for personal and public
health, or more specifically between
prevention and curative services? To
what extent should new technologies
be adopted versus resources allocated
for primary care? How can healthcare
services reach vulnerable, underserved
and difficult to reach populations?
What should the appropriate balance
be between public and private health
care? How can systems maintain and
enhance a well-trained healthcare
Definition of a Health Care
System:
“A health care system is one
that includes all the activities
whose principal purpose
is to promote,restore or
maintain health.Health care
systems should be analyzed
and compared in their
performance with relation to
four functions:management,
resource creation,service
delivery and financing”.
World Health Organization 2000.

LESSONS FROM HEALTH SECTOR REFORMS
4
performance, countries have focused
on major elements of health sector
reform such as decentralization,
public/private mix and changes in
finances, priority-setting, integration
of services, regulation and sector
wide approaches (WHO 2003).
However, the distinguishing feature
between health systems is the degree
to which they rely on government or
private mechanisms to finance and
provide care. Based on this feature,
there are three predominant models
of health care systems around the
world; that is, tax-based, social
insurance-based, and voluntary
private insurance-based systems
(Bruce J. Fried and Laura M. Gaydos,
2002).
In predominantly tax-based
systems, such as Canada, Italy, New
Zealand, United Kingdom, Sweden
and Spain, funds are generated
from payroll taxes, collected by
government, and transferred to
regional authorities that act as third-
according to the risk characteristics
of individuals and groups and
poor people with expected high
healthcare costs cannot afford
coverage resulting in over 40 million
people without health insurance
coverage (Bruce J. Fried and Laura M.
Gaydos, 2002).
III. LESSONS FROM HEALTH
SECTOR REFORMS
All systems in the world have, are,
and will undergo efforts to reform
aiming to contain cost increases,
increase efficiency, maintain equity
and improve quality (Klein 1995).
However, healthcare reform is
an ongoing, dynamic process. In
Germany, the centenarian system
has undergone more than a dozen
reforms in the last 20 years to
combat cost control. The common
worldwide pressures fueling health
sector reforms include rising health
care costs, aging populations, and
allocation and payment mechanisms
for unlimited advanced technological
procedures. Country responses
to these challenges range from a
big bang approach in the United
Kingdom (UK) seeking to remake
a centrally run, tightly budgeted
National Health Service by embracing
market concepts to deal with
healthcare purchases and providers,
to more gradual and incremental
reforms in Germany. The United
States is somewhere in between the
UK and Germany with market driven
shifts from traditional unmanaged
fee-for-service to various forms of
managed care (Bruce J. Fried and
Laura M. Gaydos, 2002).
Nevertheless, the crucial issue in
health sector reform is the“no
one size fits all model”. There is no
blueprint or set of right approaches
to health sector development.
Reforms vary according important
country differences rooted in cultural,
social and political factors. Reforms
vary according country responses
to the national health situation, the
resources available and the capacity
and motivation of people and health
workers to adapt to change (WHO
2003). The position of the Canadian
economist Robert Evans in 1986
holds still true today; that is“…
nations do not borrow other nations
institutions. The Canadian system
may be“better”than the American.
Even if it is better, I am not trying
to sell it to you.You cannot have
it. It would not fit because you do
not see the world, or the individual,
or the state as we do. The point is
that by examining other people’s
Definition of Health Sector
Reform:
“Health sector reform is a
significant and intentional
effort to improve the
performance of the health care
system.A health care system
is defined by its performance
results (efficiency,quality,
and access) and performance
goals (health status of
the population,citizen’s
satisfaction,protection
against financial risk)”.
Roberts et al 2004.
Definition of Health Sector
Reform:
“Health sector reform is
a “sustained,purposeful
and fundamental change”
–“sustained”in the sense
that it is not a“one shot”
effort that will not have
enduring impacts;“purpose
ful”in the sense of emerging
from a rational,planned
and evidence-based process;
“fundamental”in the sense
of addressing significant,
strategic dimensions of health
systems”.
Peter A.Berman,Ph.D.
A Decade of Health Sector
Reform in Developing Countries.
Washington,D.C.,2000.

5
HEALTH CARE PARADIGMS
experience you can extend your
range of perceptions of what is
possible”. At the same time, William
Hsiao’s recommendation back in
1992 deserves serious attention
and consideration:“rather than
trying to duplicate another nation’s
health care system, health care
policy makers must look to specific
features of other systems that could
be shaped and refined for use in
their own systems”. In this manner,
we could view the health system
of the United States through the
wide-angle lens of an international
perspective and better understand
the critical factors affecting the
system.
IV. HEALTH CARE PARADIGMS
It is important to recognize that
no pure version of any system
exists in any country in the world.
Most healthcare systems feature
a mix of elements. The United
States is a predominantly private
system with about 50% of public
finances (Medicare for the elderly
and disabled and Medicaid for
lower income people). This private
insurance model comprises
employment-based or individual
purchase of private health
insurance in a market place mainly
characterized by private ownership
of the factors of production.
Germany, The Netherlands, Japan
and Canada follow a social insurance
(Bismarck) Model with compulsory
universal coverage within a Social
Security System, employer and
individual contributions through
non-profit insurance funds, and
public or private ownership of
production factors. In Germany and
Netherlands the social insurance
model is complemented by private
insurance for a portion of the
population, and in Japan employers
play a large role in financing the
compulsory national health system.
In terms of the UK, the National
Health Service (Beveridge) Model
providing universal coverage, general
tax-based financing, and national
ownership or control of healthcare
production, private insurance exists
side by side with the National Health
Service. Consequently, the Healthcare
Services Continuum proposed
in 1972 and again in 1989 by the
health policy scholar Odin Anderson
is still valid. The boundaries of the
continuum are set by the level of
centralization of decision making,
particularly over funding, and the
degree to which a nation centralizes
financing and planning. In addition,
the relative size of the public sector
determines its position in the
continuum as well as the extent to
which it intervenes in the operations
of the economy itself.
On the other hand, health reforms
are gradually evolving along
converging tracks in which the best
elements of a system are preserved
and other strategies are selectively
adapted. This is happening in the
UK National Health System with the
introduction of market concepts; in
Germany and The Netherlands Social
Insurance Systems with the infusion
of competition within government
regulations; and in the U.S. with the
increase in government regulations
to counterweight competitive free
market principles. This common
ground of convergence reflects a
blend between free market and
government regulations advocated
as“managed, quasi, internal market,
or a hybrid approach”that is
consistently emerging in countries
around the world (Saltman Figueras
1997). In this hybrid approach, the
introduction of market-style reform
elements co-exist within regulated
systems and the market is no longer
seen as good or bad but rather as
a policy tool to enhance system
performance. In addition, the
market is becoming or is seen as less
antagonistic and more as an integral
part and driving force in social policy
(Scheil-Adjung 1998). The market
does not replace government.
Instead, the market is managed by
government, and government allows
market forces a much larger role than
before. This is considered the Third
Wave of healthcare reforms between
fully competitive markets and
complete government control, alike
political developments pioneered by
centrist leaders like Bill Clinton in the
U.S., Tony Blair in the UK, and Gerhard
Schroder in Germany.
There are, however, limits to this
convergence trend and the existing
difference between healthcare
Thematic Components of
Health Sector Reform in Latin
America and the Caribbean
(LAC):
• Health Care Financing
• Organization and
Management of Health
Care and Health Services
• The Human Component
(The Forgotten Area of
Health Reform:Human
Resources for Health)
LAC Health Sector Reform Initiative
United States Agency for International
Development (USAID).

6
DISCUSSION AND CONCERNS
systems probably will not disappear.
We must keep in mind the striking
philosophical roots between countries.
In the U.S., more emphasis is placed
on individual responsibility, free
choice and pluralism. In other nations,
preserving equitable access to health
care for the entire population is
emphasized more. This brings us to
the heart of the matter; that is, the
question whether“health is a right
or not”. The response from each
country to this question determines
the healthcare model that it follows.
Even reformed systems keep their
own trademarks since systems are
reflections of the“society”in which
they evolve and, in the final analysis,
like politics, all health care is local.
The truth of the matter is that there
is no best system or right or wrong
system. There is no gold standard. The
convergence trend is shrinking and
there are limits to such convergence.
Ideally, healthcare reform should
involve gradual rather than radical
change, and the goal should be to
identify and design politically feasible
incremental changes that have a
reasonably good change of making
things better (Enthoven 1990).
V. DISCUSSION AND CONCERNS
A broad range of approaches to
health care reform has taken place all
over the world in search of the ideal
health system. In an effort to control
escalating health care costs, the U.S.
shifted from traditional indemnity fee-
for-service system into managed care
plans, Germany and Canada tightened
supply-side cost control mechanisms
through expenditure caps, and
Japan implemented demand-side
measures such as increased patient
co-payments. The common course of
action for these and other countries
has been a“blend of free-market
competition and government
regulation”in the form of managed
markets or regulated competition that
still has be evaluated. In any event,
the fact of the matter is that the ideal
health system does not exist and each
system has its advantages as well as
its shortcomings, i.e., waiting lists in
UK and Canada, over-prescription in
Japan, and over 40 million uninsured in
the U.S. Paradoxically, the U.S. spends
more money in healthcare than any
other country but does not fare better
in terms of outcome measures. Life
expectancy is lower, infant mortality
is higher, and proxy indicators of the
quality of healthcare is lower in the U.S.
than in many other countries.
The U.S. argues that the comparison
of infant mortality and life expectancy
rates does not reflect adequately
the quality of the U.S. healthcare
since the U.S. population is more
heterogeneous, poverty rates among
children are higher than Japan
and Western Europe, and the drug,
drinking and smoking habits and other
lifestyles contributes to higher infant
mortality and lower life expectancy.
From a strictly financial, resource
allocation or return on investment
standpoint, the fact is that the level
of healthcare expenditures and
health outcomes does not appear to
be strongly related. Demographic
and lifestyle factors must be taken
into consideration; however, such
differences should not be used to
dismiss the lessons learned and best
practice solutions regarding how other
nations design, manage and finance
their healthcare systems and how that
contributes to better health outcomes
(Bruce J. Fried and Laura M. Gaydos,
2002).
There is no doubt that the U.S.
healthcare system is unique. The
quality of U.S. healthcare is considered
to be among the best in the world.
Major Elements in Health
Sector Reform Process:
• Decentralization
• Public-Private Mix and
Changes in Financing
• Priority-Setting in Health
Services
• Integration of Services
• Regulation
• Sector Wide Approaches
(SWAPs)
World Health Organization 2003.
Characterization of Health
Sector Reform Policies in
Latin America and the
Caribbean 1995 – 2005:
• Expansion of medical
insurance
• Contracting Out to
Private Providers
• Decentralization
• Devolution
• Granting autonomy to
health care facilities
• Basic Packages of Services
International Society for Equity in
Health,2006.

7
DISCUSSIONS AND CONCERNS
Health care coverage is neither
universal no comprehensive. Over 40
million people lack health insurance
coverage and millions more have
no adequate coverage. In contrast,
nations with universal coverage
have combined“compulsion and
subsidization”; individuals are required
to have health insurance; insurers
are required to cover everyone;
and cross-subsidization across
risk allows for entire populations
to have health insurance (Fuchs
1991). The U.S. regards “compulsion
and subsidization”as the two
basic premises of social insurance.
Ironically, national health insurance
is denounced as a form of socialism
although it was introduced in Germany
and Japan as an antidote to the
spread of socialism (Ikegami 1991
Starr 1992). Other healthcare systems,
therefore, rely on public financing to a
greater extent that the U.S. The share
of U.S. public health expenditures
increased from 42% in 1990 to
approximately 46% today while the
average for other nations is 75%. In
1997, the public/private financing as a
share of total health expenditures was
82/18 in the UK, 79/21 in Japan, 78/22
in Germany, 76/24 in Netherlands,
75/25 in Canada, and 44/56 in the U.S.
Around the world, governments
are much more active participants
in healthcare than in the U.S. They
finance healthcare, set overall funding
levels, establish uniform fee schedules
for physicians and annual budgets
for hospitals, guarantee universal
coverage, implement uniform
benefits levels, and exert a powerful
influence on cost-control measures.
Why is then so much opposition to
an enhanced government role in the
U.S. health system? Powerful interest
groups support the trillion-dollar
U.S. health care industry. There is a
diffusion of power among different
U.S. government bodies and among
different levels of government.
Americans have an inherent mistrust
in an expanded government. In
fact, these were at least three of the
failure factors that contributed to the
rejection of the Clinton Reform Plan
in the 1990s in which the U.S. turned
away from dramatic health system
change including a broader role for
government.
Again, the“perfect”system does not
exist nor does a“pure”system. No
health care system is either completely
free-market, competitive system
or a whole regulatory system. A
combination of both features exists in
most of the systems. A combination
influenced and determined
ideologically by each country
according to its position whether
health care is or is not a right. Where
health care is considered a public
good, universal access and larger
government role are expected. Where
health care is not“fully”considered a
public good, a significant share of the
population without health insurance
is tolerated. The U.S., unlike other
nations, has a marked ambivalence
about whether health care is a right
to which Americans are entitled. The
problem in America is not related to
the performance, or lack thereof, of
the managed care system but rather
the failure of the society to reach the
consensus that other countries have
achieved. Americans continue to feel
uncomfortable embracing a“health
care consensus”; that is, a clearly
articulated social ethic that health care
is a social good that should be made
available to all (Uwe Reinhardt 1997).
Finally, lessons from around the world
demonstrate that in nations with
universal and comprehensive health
insurance, the existence of national
health insurance does not necessary
mean that the government controls
the practice of medicine, nor does
it necessary involve limits on the
patient’s choice of provider, or that
the government-mandated health
insurance system has to be run by
the government. Health systems
can be designed, managed and
financed according the simple rule
that all individuals must contribute
according to their ability to pay. The
principle guiding such systems and
guaranteeing universal access is that
of cross-subsidization of the sick by
the healthy and the lower income by
the higher income earners. Achieving
better health outcomes in any country
Pitfalls of Health Sector
Reforms:
• “Not all health system
changes are health sector
reform.
• The most serious critique
of health sector reform is that
it has actually harmed public
health,basic services provision
and equity.
Health sector reforms must be
designed to achieve improved
equity of access and coverage,
better efficiency in the use
of health sector resources,
improved quality of health
services,and sustained
financial soundness”.
Peter A.Berman,Ph.D.Thomas J.
Bossert,Ph.D.,2000

CONCLUSIONS AND RECOMMENDATIONS
8
or population appears to be more
related to ideological, moral and
ethical issues (the right to health
care by every member of any society,
agreed upon levels of government
role and compulsion for the good of
all, subsidization from the healthy and
wealthy to the sick and poor) than
to the amount of expenditures and
available resources.
VI. CONCLUSIONS AND
RECOMMENDATIONS
This paper has reviewed global
health system issues, lessons from
health sector reforms and health
care paradigms in an effort to inform
and discuss“THE NEED FOR HEALTH
SECTOR REFORM IN AMERICA”.
Although a“Discussion and Concerns”
section is included with information
and conclusions specific to the
U.S. health system, it would not be
complete unless guidance is provided
to improve the performance of
health systems resulting in better
population health outcomes; that is, an
improvement in the health status and
wellbeing of individuals, families and
communities around the world. The
following statements, contributions
and recommendations (taken, adapted
and/or quoted directly from the
World Health Organization Report
2000: Health Systems: Improving
Performance) are presented to the
reader to stimulate discussion and
reflection, propel continued dialogue,
further develop strategies and policies,
and encourage the pioneering of
new combinations of innovative
approaches to develop and reform
health systems around the world.
A. THE CHALLENGES THAT
HEALTH SYSTEMS FACE TODAY
1. Many countries are falling far
short of their potential, and most
are making inadequate efforts to
achieve responsiveness and fairness
in financing. There are serious
shortcomings in the performance of
one or more functions in virtually all
countries.
2. Health systems failures result in
very large numbers of preventable
deaths and disabilities in each country,
unnecessary suffering, injustice,
inequality and denial of the basic
rights of individuals. The impact is
most severe on the poor, who are
driven deeper into poverty by lack of
financial protection against ill-health.
3. There are countless highly skilled,
dedicate people in all systems working
at all levels to improve the health of
their communities.
4. Health systems have already
contributed enormously to better
health for most of the global
population during the 20th century. In
the 21st century, they have the power
and the potential to achieve further
extraordinary improvements.
5. Health systems can misuse
their power and squander their
potential. Poorly structured, badly
led, inefficiently organized and
inadequately funded health systems
may do more harm than good.
6. The ultimate responsibility for the
overall performance of a country’s
health system lies with government,
which in turn should involve all sectors
of society in its stewardship. The
careful and responsible management
of the well-being of the population
–stewardship—is the very essence of
good government.
7. The health of the people is always
a national priority. The government
responsibility for it is continuous and
permanent.
8. Stricter oversight and regulation of
private sector provider and insurers
must be placed high on national
policy agendas. Good policy needs to
differentiate between providers (public
or private) who are contributing to
health goals, and those who are doing
damage or having no effect, and
encourage sanction appropriately.
9. Policies to change the balance
between provider’s autonomy and
accountability need to be monitored
closely in terms of their effect on
health, responsiveness and the
distribution of the financial burden.
10. Consumers need to be better
informed about what is good and bad
for their health, why not all of their
expectations can be met, but that
they still have rights that all providers
should respect.
11. Consumer interests in health are
weakly protected in countries at all
levels of development. The notion of
“patient rights”should be promoted
and machinery established to
investigate violations quickly and fairly.
12. The most obvious route to
increased prepayment is by raising the
level of public finance for health. This
is difficult if not impossible for poor
nations.
Governments could encourage
different forms of prepayment –job-
based, community-based, provider-
based—as part of a preparatory
process of consolidating small pools
into larger ones.

9
HOW TO IMPROVE HEALTH SYSTEM PERFORMANCE
13. Governments need to promote
community rating, a common benefit
package and portability of benefits
among schemes, and to use public
funds to pay for the inclusion of poor
people into such schemes.
14. Insurance schemes designed
to expand membership among
the poor are an attractive way to
channel external assistance in health,
alongside government revenue. Alert
stewardship is needed to prevent the
capture of such schemes by lower-risk,
better-off groups.
15. Mechanisms are needed in most
low and middle-income countries
to separate revenue collection from
payment at the time of service
utilization, thus allowing the great
majority of financing for health to
come through prepayment.
16. More pooling of finance allows
cross-subsidies from rich to poor and
from healthy to sick. Risk pooling in
each country needs to be designed to
increase such cross-subsidies.
17. Payment to service providers
of all types needs to be redesigned
to encourage providers to focus
on achieving health system goals
through the provision of cost-effective
interventions to people with common
conditions amenable to prevention or
care.
18. On an international level, the
largely private pharmaceutical and
vaccine research and development
industry must be encouraged to
address global health priorities,
rather than concentrating on
“lifestyle”products for more affluent
populations.
19. Serious simultaneous imbalances
exist in many countries in terms
of human and physical resources,
technology and pharmaceuticals.
Many countries have too few qualified
health personnel, others have too
many.
20. Health system staff in many low
income nations is inadequately
trained, poorly paid, and work in
crumbling, obsolete facilities with
chronic shortages of equipment. One
result is a“brain drain”of talented
but demoralized professionals who
either go abroad or move into private
practice.
21. Overall, governments have too little
of the necessary information to draw
up effective strategies. National Health
Accounts (NHA) offer an unbiased and
comprehensive framework from which
overall situation analyses can be made,
and trends monitored. They should be
more widely created and used.
B. HOW TO IMPROVE HEALTH
SYSTEM PERFORMANCE
B.1. STEWARDSHIP: oversight; acting
as the overall stewards of entrusted
resources, powers and expectations,
setting and enforcing the rules of the
game and providing strategic direction
for all the different actors involved.
22. Sound stewardship is needed
to achieve better health system
performance
23. Stewardship of the health system
is a government responsibility. To
discharge it requires an inclusive,
thought out policy vision that
recognizes all principal players and
assigns them roles.
24. Stewardship uses realistic resource
scenario and focuses on key functions
and goal achievement, broken down
into important population categories,
such as income level, age, sex and
ethnicity.
25. Stewardship calls for the ability to
identify the principal policy challenges
at any time, and to assess the options
for dealing with them.
26. Influence requires regulatory and
advocacy strategies consistent with
health system goals, and the capacity
to implement them cost-effectively.
B.2. SERVICE PROVISION: delivering
public, personal and private health
services.
27. Private provision of health
services tends to be larger where
country income levels are lower. Poor
countries need to develop clear lines
of policy towards the private sector.
28. In order to move towards higher
quality care, a better information
base on existing provision is required.
Local and national risk factors need
to be understood. Information on
numbers and types of providers is a
basic –an often incompletely fulfilled--
requirement.
29. An understanding of provider
market structure and utilization
patterns is needed so that policy-
makers know why this array of
provision exists, as well as where
it is growing. Information on the
interventions offered and on major
constraints on service implementation
is also relevant to overall quality
improvement.
30. An explicit, public process of
priority setting should be undertaken

10
to identify the contents of a benefits
package which should be available
to all, including those in private
schemes, and which should reflect
the local disease priorities and cost-
effectiveness, among other criteria.
31. Rationing should take the form of
excluding certain interventions from
the benefit package, not leaving out
any people.
32. A regulatory strategy that
distinguishes between the
components of the private sector,
and includes the promotion of self-
regulation, needs to be developed.
Aligning organizational structures and
incentives with the overall objectives
of policy is a task for stewardship,
rather than one left only to service
providers.
33. Monitoring is needed to assess
behavioral change associated with
decentralizing authority over resources
and services.
B.3. RESOURCE GENERATION: creating
resources through investment and
training including investing in people,
buildings and equipment, and
generating the human and physical
resources that make service delivery
possible.
34. Stewardship has to monitor several
strategic balances and steer them in
the right direction when they are out
of equilibrium.
35. A system of national health
accounts (NHAs) provides the essential
information base for monitoring
the ratio of capital to recurrent
expenditure, or of any one input to the
total, and for observing trends.
36. NHAs capture foreign as well as
domestic, public as well as private
inputs and usefully assemble data on
physical quantities (numbers of nurses,
CT scanners, district hospitals) as well
as their costs. NHAs in some form now
exist for most countries, but they are
still often rudimentary and are not yet
widely used as tools of stewardship.
37. NHA data allow the ministry of
health to think critically about input
purchasers by all fund-holders in
the health system. The concept of
strategic purchasing does not apply to
the purchase of health care services.
It applies equally to the purchase
of health system inputs –trained
personnel, diagnostic equipment,
vehicles, etc.
38. Where health system inputs are
purchased by other agencies (private
insurers, providers, households or
other public agencies) the ministry’s
stewardship role consists of using its
regulatory and persuasive influence to
ensure that these purchases improve,
rather than worsen, the efficiency of
the input mix.
39. Ensuring a healthy balance
between capital and recurrent
spending in the health system requires
analysis of both public and private
spending trends and a consideration
of both domestic and foreign funds.
40. A clear policy framework,
incentives, regulation and public
information need to be brought to
bear on important capital decisions in
the entire system to counter ad hoc
decisions and political influence.
41. At an international level,
stewardship of pharmaceuticals and
vaccine inputs consists of influencing
the largely private research and
development industry to address
global health priorities. At national
level, the key tasks are to ensure
cost-effective purchasing and quality
control, rational prescribing, and
consumers being well informed.
42. Health financing strategies need to
ensure that poor people, in particular,
get the drugs they need without
financial barriers at the time they are
sick.
43. Major equipment purchases are
an easy way for the health system
to waste resources, when they are
underused, yield little health gain, and
use up staff time and recurrent budget.
B.4. HEALTH SYSTEM FINANCING:
revenue collection, pooling of
resources and strategic purchasing of
interventions and services.
44. In all settings, very high levels
of fairly distributed prepayment,
and strategic purchasing of health
interventions, are desirable.
Implementation strategies, however,
are much more specific to each
country’s situation.
45. Poor countries face the greatest
challenge. Most payment for health
care is made at the time people are
sick and using the health system.
Out-of-pocket payment for care,
particularly by the poor, should not
be relied on as a long-term source of
health system finance.
46. The most obvious route to
increased prepayment is by raising the
level of public finance for health, but
two immediate obstacles appear.

• The poorest countries as a group
manage to raise less, in public revenue,
as a percentage of national income
than middle and upper income
countries.
HOW TO IMPROVE HEALTH SYSTEM PERFORMANCE

• Ministries of finance in poor
countries, often aware that the existing
health system is performing poorly,
are skeptical of its claims on public
revenues.
47. Although most industrialized
countries already have very high
levels of prepayment, some of these
strategies are also relevant to them.
For its income level, the United States
has an unusually high proportion of its
population without health insurance
protection.
48. To ensure that prepaid finance
obtains the best possible value for
money, strategic purchasing needs
to replace much of the traditional
machinery linking budget holders to
service providers.
49. Strategic purchasing means
ensuring a coherent set of incentives
for providers, whether public or
private, to encourage them to offer
priority interventions efficiently.
50. Selective contracting and the use
of several payment mechanisms are
needed to set incentives for better
responsiveness and improved health
outcomes.
51. The fundamental goals of a
health system are good health,
responsiveness to people’s
expectations (where both level and
distribution matter for each of these
goals) and fairness of contribution to
financing the health system.
52. Achieving these goals depends
on the effectiveness of four main
functions of a health system: service
provision, resource generation,
financing and stewardship.
VII. BIBLIOGRAHY
1. World Health Organization.
World Health Organization Report
2000: Health Systems: Improving
Performance. Geneva, Switzerland.
2. Matcha, Duane A. Health Care
Systems of the Developed World.
Praeger Publishers. USA 2003.
3. Roemer, Milton I. National Health
Systems of the World. Volume I: The
Countries. Oxford University Press.
NewYork, USA 1991.
4. Graig, Laurene A. Health of the
Nations. Third Edition. Congressional
Quarterly, Inc., Washington, D.C., 1999.
5. Fried, Bruce J. and Laura M Gaydos.
World Health Systems: Challenges and
Perspectives. Health Administration
Press. Chicago, Illinois, USA 2002.
6. Hurrelmann, Klaus and Ulrich, Laaser.
International Handbood of Public
Health. Greenwood Press. West Port,
Connecticut, 1996.
7. World Health Organization. Vaccines
and Biologicals. Health Sector Reform
(HSR): The Impact of Health Sector
Development on Immunization
Services. Fact Sheet 1, Expanded
Programme on Immunizacion, WHO,
Geneva, Switzerland, December 2003.
8. www.nphw.org. National Public
Health Week. American Public Health
Association (APHA). April 6 – 12, 2009.
9. Berman, Peter A. and Thomas J
Bossert. A Decade of Health Sector
Reform in Developing Countries: What
have We Learned?. USAID Data for
Decision Making Project, International
Health Systems Group, Harvard School
of Public Health. Washignton, D.C.,
2000.
10. International Society for Equity in
Health, Chapter of the Americas. Equity
and health Sector Reform in Latin
America and the Caribbean from 1995
to 2005: Approaches and Limitations.
April 2006.
VIII. ACKNOWLEDGEMENTS
This paper is based primarily and
almost entirely on the work and
publication of Bruce J. Fried and Laura
M. Gaydos (World Health Systems)
and the WHO 2002 Report: Health
Systems: Improving Performance. Their
outstanding, pioneering and thought
leading work and contributions to
global health are hereby referenced,
acknowledged and commended.
11
BIBLIOGRAPHY AND ACKNOWLEDGEMENTS

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