Direct Facility Financing

1. Direct Facility Financing (DFF)
Introduction and Potential in the Global Fund
OCTOBER 12, 2020

2. Outline:
0. Executive Summary
1. What is DFF and how does it work?
2. The evidence on DFF
3. Effects of DFF on health systems, mitigation of COVID-19, and on
HIV, TB, and Malaria Services
4. Possible next steps
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3. Executive Summary
• Direct Facility Financing (DFF) is the direct provision of government and/or external funds to a
health facility (HF) to meet operating costs. The HF has substantial autonomy in how funds are
used.
• DFF works best when accompanied by strengthened supervision and community engagement
• The evidence supporting DFF is very strong, including 3 large randomized trials in Africa
• DFF increases use of curative services & immunization coverage. It improves drug availability,
outreach, waste management, quality of care, etc. This can be accomplished for $1-1.50 per capita
per year. With little additional effort it can improve performance around the 3 diseases.
• DFF can help to maintain access to care during COVID-19 by providing funds to buy PPE,
conduct outreach, do behaviour change, reduce user fees, and fund things we don’t even know yet
will be important.
• The GF is well positioned to implement DFF during COVID-19, by using existing LFAs,
community engagement, and ongoing work on improving supervision.
• To scale up DFF need to determine: a) how it will be funded? b) financial management protocols;
and; c) which countries should be prioritized
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4. Direct Facility Financing (DFF) provides funds to the health workers
delivering the services at the front lines
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Definition
Structure
• Direct Facility Financing (DFF) is the direct provision of government or
external funds to a health facility to meet operating costs
• Funds are sent electronically to the bank account of the PHC or through
“mobile money”. The use of cash is eliminated
• Management has autonomy over the use of funds to: (i) buy drugs, test kits,
reagents, PPE, from accredited wholesalers; (ii) conduct outreach; (iii) make
repairs or capital improvements, etc.;
• Facility has to follow guidelines set by the Government for fund management
and how funds can be used.
Support
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• DFF works best when it is accompanied by strengthened supervision and
community engagement in health facility management
• DFF can provide good results at an investment of roughly $1 to $1.50 per capita
per year

5. The example of Tanzania demonstrates the difference between
centralized and decentralized financing, and the potential impact
1
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• DFF in Tanzania started with Development partners through
basket funding then extended to public funds
• Shift from providing physical inputs to direct provision of
operating budget and increased facility autonomy and
accountability
• Locus of control of financing shifted from local government to
health facility
• All health facilities are now independent and able to manage
day-to-day activities
• Health clinics now have bank accounts and codes in PFM
system
• Supported by systems to allow managerial autonomy
o Facility Accounting System (FFARS) and Epicor
o PlanRep for planning and budgeting
o Many other systems made interoperable at facility level
including DHIS, HR etc.
• Accountability enhanced through new Health Councils which
include community oversight over PHC

6. Advantages of DFF:
• Provides flexible funding to health workers so they can alleviate constraints
they’re facing,
• Increases the availability of PPE and other effective interventions (like soap and
water, disinfectant, and fans to improve ventilation);
• Engage in communications efforts and outreach activities to increase the
demand for services;
• Improves the availability of essential drugs;
• Reduces user charges;
• Ensures availability of water, electricity, and connectivity;
• Improves health care waste management;
• Simpler to implement than performance-based financing (PBF)
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7. 3 RCTS across Africa have shown positive impact of DFF
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Cameroon
4 Arm
RCT
Zambia
3 Arm
RCT
• 5 year project, covering a population of over 3 million and
implemented in 26 districts
• Over 400 health facilities - ; household and facility surveys.
• 4 arm design: 1) PBF: Additional funding linked to
performance using balanced scorecard and external
verification: 2) DFF: Additional funding with management
autonomy; 3) Supervision: Additional monitoring and
supervision from district level; 4) Control: The control group
where nothing changed
• 4 year project involving 4.5 million population across
33 districts across 9 provinces, more than 500 health
facilities
• Districts were randomized to 3 arms: 1) PBF; 2) DFF;
3) control
Nigeria
3 arm
RCT
• 3 year study period in 52 districts, 1,389 health facilities,
covering 9.5 million people
• Districts were randomized to 2 arms: 1) PBF; 2) DFF; (control
districts non-randomized
• DFF facilities received half (about $1.50 per capita per year)
of what PBF facilities earned
• PBF and DFF perform significantly better than
Supervision and Control
• There is little difference between DFF and PBF in terms
of performance
• Both are very cost-effective interventions, but DFF is
considerably less complex and expensive,
• PBF and DFF performed significantly better than
Control
• Little difference between DFF and PBF
• Evidence showed increased management autonomy in
both DFF and PBF
• Significant improvement in key indicators for DFF which
performs as well as PBF and better than control
• Improved supervision and community engagement were
key.
• In Nigeria where there has been limited progress PBF and
DFF were effective on a large scale.
Findings
Description
Source: Looking into the Performance-based Financing Blackbox: Evidence from an impact evaluation in the health sector in Cameroon: Damien de Walque et al, World Bank, Policy Research Working paper 8162; The effect of direct
facility financing, autonomy, community engagement, supervision, and performance based payment in strengthening PHC: a large-scale quasi-experimental trial in Nigeria, E. Kandpal et al., WB 2018

8. In Nigeria, DFF was more effective in increasing use of
services than the control group
0 10 20 30 40 50 60 70 80
Control
DFF
Under 5 consultations per month
Baseline Change from Baseline
-5 5 15 25 35 45 55
Control
DFF
Penta3 Vaccination Coverage
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9. In Nigeria DFF improved quality of care & drug availability much more
than the control group
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3.9
41.7
0 10 20 30 40 50 60 70 80 90
Control
DFF
% of essential drugs in stock
Baseline Change from Baseline
-5.8
19.1
-10 0 10 20 30 40 50 60 70 80
Control
DFF
% of HFs conducting outreach
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35.4
0 10 20 30 40 50 60 70 80 90 100
Control
DFF
% of HFs with proper waste disposal system
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10. Effects of DFF (vs. Control) on Post-natal Care (PNC) and
Skilled Birth Attendance (SBA) in Zambia
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19.6
1.6
19.6
6.1
0 10 20 30 40 50 60 70 80 90
DFF
Control
DFF
Control
SBA
PNC
baseline Endline-Baseline
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11. Effect of PBF/DFF on Infection Control and Waste Management
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12. DFF can help to transform supply chains by taking advantage of
existing private sector capacity
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• Some element of competition between CMS and private wholesales creates healthier
market and improves the availability of essential drugs.
• DFF would allow PHC facilities to order commodities from other suppliers on pre-
qualified list. TA provided to these private providers and to CMS to enhance their capacity
• Kenya and Tanzania showed decentralized financing leads to improved performance
of central medical stores; counties in Kenya and health centers in Tanzania could now
go elsewhere.
• RCTs in Cameroon, Nigeria, and Zambia shows improved availability of essential
commodities in DFF and PBF arm leading to increased usage of health facilities

13. DFF can address the 3 challenges to health worker morale - helps to
maintain essential health services during COVID-19
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Unpaid / reduced
salaries
Lack of “Agency”
and Autonomy
Limited access to
PPE and other
commodities
Threat from COVID-19 DFF Solution
• If governments face fiscal
challenges, salaries may be paid
late or in reduced amounts
• Health workers often feel they lack
authority to make decisions that
affect their working conditions
• Health workers do not have access
to PPE and other things required to
protect themselves and their
patients.
DFF was successfully used in Sierra Leone during Ebola,
enabling PHC facilities to buy handwashing equipment and motivating staff to work
• DFF funds can be used to tide health workers over
until normal salary payments resume. Health facility
management can use the resources flexibly.
• DFF provides frontline health workers with the
resources and autonomy needed to make effective
decisions about their working environment
• PHCs can use DFF to buy PPE locally. They will know
how much they need and when.
• Immediately increases access to commodities,
including soap, towels, disinfectant etc. Allows PHCs to
improve water supply where needed.
• Strong evidence suggests DFF can decrease stock-
outs quickly
Threat to retention
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14. DFF can be used directly to improve delivery of HIV, TB, and Malaria
(HTM) Services in the following ways:
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Set Minimum
Conditions
Focus on
poorly
performing
areas
• DFF payments would only be made to HF’s that meet selected minimum
conditions for delivering HTM services, e.g. 1) regular and timely HMIS
reporting; 2) Abolish user fees for HTM services.
• Focus on areas where HTM performance is poor. Where there are other
sources of financing, GF DFF funds could be concentrated on areas where HTM
performance is low or has declined (possibly as a result of COVID-19).
Strengthen
Supervision
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• Supervision systems can be reinforced to increase the quality and quantity of
HTM services that the HF delivers. (The RSSH Team is deeply involved in
improving supervision, including through the SDI SI).
Community
Oversight
• Increase community involvement in the management of the health facility by
having community representatives sit of the “management committee” and being
co-signatories of the facility’s bank account.

15. Addressing Public Financial Management (PFM) Challenges in
Deploying DFF
1. Experience thus far is that DFF funds are used more transparently than centralized funding.
2. Ernst & Young audit in Nigeria showed that PBF and DFF funds at health facility level were used
appropriately
3. Policies that would support strong PFM:
1. No use of cash by health facilities (electronic transfer or cheques)
2. Proper book-keeping and clear guidance on what can and can NOT be funded
4. GF is well positioned to monitor DFF through existing structures, including:
1. Local Fund Agents - random audit of facilities receiving funds
2. Community monitoring - assures greater accountability in how funds are used
3. Supervision System - Use strengthened supervision system to ensure procedures
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16. Use of Mobile Money & Electronic Transfer
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 Africa is fastest growing region
for mobile money
 > 400 million registered mobile
money accounts
 > 60% of adult population have
mobile money accounts
 > 130 mobile money providers
“Mobile money for cash transfers is common practice.
Yet, it remains vastly underused to deliver funds to
frontline service providers in health”

17. • ACT-A health system
connector financing
stream
• Reprogramming GF and
GAVI funds
• C19RM funds
• WB phase II COVID
loans: supply side
conditional cash transfer
• Reprogramming COVID-
19 WB loans
First step is to identify funding for DFF and support for PFM
technical assistance, for which COVID-19 is a catalyst
Potential sources of funding Technical assistance on expanding PFM linked to DFF
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• World Bank PFM Global practice focus on health
• Health expanded activities/funding
• USAID
• PFM workstream new HF project
• Gates
• PFM workstream
• P4H/GIZ/KfW
• PFM/DFF workstream
• GFA fiscal intermediary in Laos for KfW, WB,
Gavi, and GF

18. • Tanzania: USAID/Norad/GF
• PNG: WB and ADB
• Cameroon: GFF HRITF
• Zambia: GFF HRITF pilot
• CIV: SFHA, GFF HRITF pilot
• Laos: (SFHA, Hansa project)
• Nigeria: Selected states
• Togo
Implement DFF in “quick win” countries, and then expand
Suggested DFF quick win 1st wave
Opportunity for rapidly expanding
DFF
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• Many countries have prior
experience with DFF e.g.
Indonesia, Malaysia, India, and
OECD countries
• All WB/GFF/DFID/Norad HRITF
PBF projects should already have
DFF like structure (around 35
projects in est. 30 countries)
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