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KENYA MEDICAL TRAINING
COLLEGE HSM II:
FINANCIAL RESOURCE
MANAGEMENT
BY
AGGREY MAKOKHA
HEALTH SYSTEMS SPECIALIST
HEALTH FINANCING
DEFINITION
What is health financing?
Health financing refers to the “function of a
health system concer...
Course objectives
3
We will look at the following:
Sources of health financing
Financial accounting systems and mechanis...
HEALTH FINANCING IN
DETAIL
4
It encompasses resource mobilization allocation and
distribution at all levels/ national to ...
UNIVERSAL HEALTH COVERAGE
Is defined as ensuring that all people have access to
needed promotive, preventive, curative an...
Changing government role in
health care
Health is considered a public good
Government needs to actively participate
to a...
Role of parliament in Kenya in
managing financial resources
7
Section (99) through to Section (103) of the Constitution
g...
Contd…
iii.) The expenditure programs are sound
iv.) The budget is implemented as it was approved in
parliament
v.) the...
ROLE OF PARLIAMENT,
AUDITOR GENERAL AND THE
CONTROLER
The Controller and Auditor General is a corollary
to the Public Acc...
Contd….
Accounts/Investment Committees and the presence
of the Auditor-General during its deliberations on
the audited ac...
EXTRA PARLIAMENTARY
OVERSIGHT INSTITUTIONS
The auditor General and the controller are offices of the
public and they are ...
Contd…At least once in every year to audit and report on the
public accounts of the .Government of Kenya, the accounts
of...
TREASURY DUTIES
 establish procedures and systems for proper and
effective management of government money and
property;
...
SOURCES OF HEALTH CARE
FINANCING
 Through private expenditure or public
expenditure or external aid
Public expenditure i...
1) TAX-BASED SYSTEMS
Tax-based systems is a form of risk pooling in which
the risk pool is the entire population of taxpa...
2) PAY AS YOU USE :USER-FEES
Also known as ‘User-charges’.
This is the normal way that we pay for most
goods and service...
3) RISK BASED (PRIVATE) INSURANCE
Entitlement to healthcare is guaranteed via making
contributions (insurance premiums) t...
5. Donor Funding
External donor funding is a significant source of
healthcare funds throughout the developing world.
Many...
4) SOCIAL HEALTH INSURANCE
Social health insurance (SHI) systems raise funds via
broad based, often compulsory insurance....
FINANCIAL ACCOUNTING
SYSTEMS
We will look at the following:
Imprest
Vouchers
Perdiem
Facility improvement fund
Salar...
IMPREST
Is a form of financial accounting system.
The most common imprest system is the petty cash
system.
The most imp...
Contd…ADVANTAGES OF IMPREST
SYSTEM
The claimant can only spend what they have and is
only replenished with what they spen...
Voucher system
This is a system in which a receipt representing
monetary value is issued but can only be spent on
certain...
SALARY
Agreed upon and regular compensation for
employment that is common practice paid on a
monthly or bi weekly basis a...
Contd..
Therefore, salaried doctors in the public sector are
often associated with low motivation, low
productivity and l...
Advantages and disadvantages
Cost containment
Equitable provision
Easy administration
Disadvantages:
Low productivity
...
FACILITY IMPROVEMENT
FUND
Is revenue collected at public health facilities as user
fees paid to defray the costs of runni...
Challenges:
There is a lot of bureaucracies when the facility is
trying to get the money disbursed to them from the
count...
VOTE BOOK
Is an account book which is used to record and
monitor expenditure in the public sector. The
information on the...
Advantages of vote books
Ensure no extra budgeting spending.
Highlight unnecessary expenditure out of the
ordinary.
Sho...
Per diem
Daily payment gives hospitals a strong incentive to
increase the number of admissions and to extend the
length o...
Contd…
Unit of payment is per day for different hospital
departments. Financial risk for provider is low and
for payer it...
Different financing methods available
and organization of the financing systems
Financing Systems
External financing
“Aid”...
Provider payment
methods/mechanisms
Fee for service
Line item
Per diem
Per capita
Case based
Fee for service
Fee for service
Provider is reimbursed for each individual service
provided. It may be either input-base...
Per capita
Per capita
The provider is paid, in advance, a predetermined
fixed rate to provide a defined set of services ...
Contd…
Payment to a provider is not linked to the inputs that
the provider uses or the volume of services provided.
Some...
Case based
Case-based hospital payment systems create the
incentives to increase the number of cases and to
minimize the ...
BUDGETING AND BUDGET
TYPES
Budgets are expressions of expected future income
and expenses.
They are generally based on h...
The main sources of finances for the government
are:
 Ordinary revenue: which represents the
amount of money raised in a...
 Investment income: which represents income
derived from public commercial activities, e g.
dividends and interest on on...
principles of a good budget
A good budget should have the following
attributes:
 Comprehensiveness: which means that the...
contd...
 Transparency: which means that the budget
should be prepared and presented openly and
information should be av...
Stages in The Budget
Process
 Many Kenyans perceive the national budget process as a
one time event marked by the budget ...
Types of budgets
Annual Budgets
An annual budget is a budget that is developed for
a year long period of time. An annual
...
contd...
Operational Budget
An operational budget can also be called an
organisational budget. This type of budget
highli...
contd...
Program Budget
A program budget highlights the income and
expenditure that is incurred for the development and
i...
TAKE HOME ASSIGNMENTS
TYPES OF BUDGETS- READ MORE AND
MAKE SHORT NOTES
THE BUDGET PROCESS- READ MORE AND
MAKE SHORT NOTE...
QUESTIONS????
05/11/16
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Kenya medical training college hsm ii

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A short lecture on health care financing with reference to Kenya

Published in: Health & Medicine
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Kenya medical training college hsm ii

  1. 1. KENYA MEDICAL TRAINING COLLEGE HSM II: FINANCIAL RESOURCE MANAGEMENT BY AGGREY MAKOKHA HEALTH SYSTEMS SPECIALIST
  2. 2. HEALTH FINANCING DEFINITION What is health financing? Health financing refers to the “function of a health system concerned with the mobilization, accumulation and allocation of money to cover the health needs of the people, individually and collectively, in the health system… the purpose of health financing is to make funding available, as well as to set the right financial incentives to providers, to ensure that all individuals have access to effective public health and personal health care”
  3. 3. Course objectives 3 We will look at the following: Sources of health financing Financial accounting systems and mechanisms Accounting documents Types of budgets Facility improvement fund Payment mechanisms in health financing
  4. 4. HEALTH FINANCING IN DETAIL 4 It encompasses resource mobilization allocation and distribution at all levels/ national to local including how providers are paid. Refers to methods used to mobilize the resources that support basic public health programs, provide access to basic health services.
  5. 5. UNIVERSAL HEALTH COVERAGE Is defined as ensuring that all people have access to needed promotive, preventive, curative and rehabilitative health services of sufficient quality to be effective. Access to needed health services is crucial for the maintaining and improving health. People need to be protected from out of pocket spending that can lead to financial catastrophe.
  6. 6. Changing government role in health care Health is considered a public good Government needs to actively participate to avoid market failures The Parliament, treasury , the controller and auditor general play a major role in public financial management.
  7. 7. Role of parliament in Kenya in managing financial resources 7 Section (99) through to Section (103) of the Constitution gives parliament the authority to oversee the finances of the country including the budget. The key responsibility of Parliament is to ensure that: i.) The resource collection and mobilisation policies are sound and in tune with the laid down legislations
  8. 8. Contd… iii.) The expenditure programs are sound iv.) The budget is implemented as it was approved in parliament v.) the budgetary items are in line with the existing legislation ii.) The appropriations match the needs of the people
  9. 9. ROLE OF PARLIAMENT, AUDITOR GENERAL AND THE CONTROLER The Controller and Auditor General is a corollary to the Public Accounts and Public Investments Committees. The relationship between the Auditor-General and Parliament emanates from the Constitution.  The relationship between the two should be balanced so that their roles and independence remain clearly defined and separate. The provision of fair and impartial audit reports and information to Parliament through the Public .
  10. 10. Contd…. Accounts/Investment Committees and the presence of the Auditor-General during its deliberations on the audited accounts of the republic and any other bodies which received public funding are important measures of necessity to assure the taxpayer that there exists a body to investigate accountability on behalf of Parliament. In turn, a close working relationship between the Auditor-General and Parliament enhances public confidence that resources are used with due regard to the efficient and effective running of the economy
  11. 11. EXTRA PARLIAMENTARY OVERSIGHT INSTITUTIONS The auditor General and the controller are offices of the public and they are supposed to provide an oversight and accountability to the funds and how they are spent and managed. It shall be the duty of the Controller and Auditor General:- (a) To satisfy himself that any proposed withdrawal from the Consolidated Fund is authorized by law, and, if so satisfied, to approve the withdrawal; (b) To satisfy himself that all moneys that have been appropriated by parliament and disbursed have been applied to the purposes to which they were so appropriated and that the expenditure conforms to the authority that governs it; and
  12. 12. Contd…At least once in every year to audit and report on the public accounts of the .Government of Kenya, the accounts of all courts in Kenya (other than courts, no part of the expenses of which are defrayed directly out of moneys provided by parliament), the accounts of every commission established by this constitution and the accounts of the Clerk of the National Assembly. The Controller and Auditor-General and any officer authorized by him shall have access to all books, records, returns, reports and other documents which in his opinion relate to any of the accounts referred to in subsection (2). The Controller and Auditor General shall submit every report made by him in pursuance of subsection (2) to the Minister for the time being responsible for Finance who shall, not later than seven days after the National Assembly first meets after he has received the report, lay it before the assembly.
  13. 13. TREASURY DUTIES  establish procedures and systems for proper and effective management of government money and property;  establish accounting procedures and systems for the government to properly account for government money and property;  superintend the expenditure of government money to ensure that it can be properly accounted for; prepare and submit accounts for each financial year under the Public Audit Act, 2003' for audit by the Controller and Auditor-General; and‘ ensure- that the accounts prepared under paragraph. (d) comply with the provisions of this Act
  14. 14. SOURCES OF HEALTH CARE FINANCING  Through private expenditure or public expenditure or external aid Public expenditure includes all expenditure on health services by LOANS ,TAXES, FEES, DONOR GRANTS External sources refer to the external aid which comes through bilateral aid program or international non governmental organizations House hold out of pocket expenditure is an example of private financing. Give some more examples…….
  15. 15. 1) TAX-BASED SYSTEMS Tax-based systems is a form of risk pooling in which the risk pool is the entire population of taxpayers. It requires a competent government that are capable of collecting, managing and dispersing funds in a responsible and accountable manner.
  16. 16. 2) PAY AS YOU USE :USER-FEES Also known as ‘User-charges’. This is the normal way that we pay for most goods and services, and represents a market- based solution for healthcare financing. User Charges have a disproportionate effect on the utilization of services by the poor, thus raising equity concerns. In resource poor environments user-fees can be a significant barrier to accessing care and removal of fees can increase utilization of services.
  17. 17. 3) RISK BASED (PRIVATE) INSURANCE Entitlement to healthcare is guaranteed via making contributions (insurance premiums) that are related to the risk of such an event. It redistributes from the well to the sick, and from the lucky to the unlucky. As costs rise, insurance premiums rise, and the very poor and sick drop out of the system. Such systems do little to improve the access to healthcare for the poor, the elderly, and people with chronic illness.
  18. 18. 5. Donor Funding External donor funding is a significant source of healthcare funds throughout the developing world. Many of the least developed countries are heavily reliant on donor funding. Donor funding is normally dispersed via government-run health financing systems), however it can also be given to non-governmental, and other private organisations.
  19. 19. 4) SOCIAL HEALTH INSURANCE Social health insurance (SHI) systems raise funds via broad based, often compulsory insurance. No one is excluded from such schemes, in contrast with private risk-based systems.
  20. 20. FINANCIAL ACCOUNTING SYSTEMS We will look at the following: Imprest Vouchers Perdiem Facility improvement fund Salary Allowances Vote books
  21. 21. IMPREST Is a form of financial accounting system. The most common imprest system is the petty cash system. The most important characteristic of imprest system is that a fixed amount is reserved which after a certain period of time it will be replenished Petty cash imprest system allows only replenishment of the spend made.
  22. 22. Contd…ADVANTAGES OF IMPREST SYSTEM The claimant can only spend what they have and is only replenished with what they spend. The amount requested is documented. This documentation are the petty cash dockets and their associated receipts or invoices. Petty cash receipts are written for each amount issued.
  23. 23. Voucher system This is a system in which a receipt representing monetary value is issued but can only be spent on certain items. For example a charity organization can offer a health centre a voucher to provide assistance in paying the utility bills.
  24. 24. SALARY Agreed upon and regular compensation for employment that is common practice paid on a monthly or bi weekly basis and is not based on hourly , daily or weekly or piece work basis. Wage on the other hand is monetary remuneration computed on hourly, daily, weekly or piece work basis.
  25. 25. Contd.. Therefore, salaried doctors in the public sector are often associated with low motivation, low productivity and low quality of services.  Salaries are also being combined with capitation and performance based components to promote motivation as well as higher productivity and quality.
  26. 26. Advantages and disadvantages Cost containment Equitable provision Easy administration Disadvantages: Low productivity Low quality of care or service delivery Low morale of the providers
  27. 27. FACILITY IMPROVEMENT FUND Is revenue collected at public health facilities as user fees paid to defray the costs of running these facilities. The fund is usually vital in enabling facilities to manage their day to day expenses and manage situations where emergency supplies have to be acquired. However most health facilities in Kenya are facing challenges regarding this facility improvement fund:
  28. 28. Challenges: There is a lot of bureaucracies when the facility is trying to get the money disbursed to them from the county government(county treasury) Corruption and total misuse of the funds by the county treasury of the facility. Lack of financial management tools for managing and planning of the FIF funds.
  29. 29. VOTE BOOK Is an account book which is used to record and monitor expenditure in the public sector. The information on these books is subject to auditing to ensure that budgets are well controlled and coincide with financial regulations Public sector such as govt, health institutions and schools use vote books systems.
  30. 30. Advantages of vote books Ensure no extra budgeting spending. Highlight unnecessary expenditure out of the ordinary. Show the balance available so the organization can keep on top of their finances Ensure that sufficient funds are available for future payments.
  31. 31. Per diem Daily payment gives hospitals a strong incentive to increase the number of admissions and to extend the length of stay, thereby enhancing health expenditure. Quality and lengths of stay can be monitored by peer reviewers. It is administratively simple to implement and it can be used to begin collecting the data that are necessary to design a case-based system.
  32. 32. Contd… Unit of payment is per day for different hospital departments. Financial risk for provider is low and for payer it is high.
  33. 33. Different financing methods available and organization of the financing systems Financing Systems External financing “Aid” Internal financing Public systems of health services Social insurance systems (illness) Unified System Fragmented System User payments For-profit or Non-profit private insurance Medical savings voluntary or compulsory Social contributions employers employees Methods of public financing Methods of private financing
  34. 34. Provider payment methods/mechanisms Fee for service Line item Per diem Per capita Case based
  35. 35. Fee for service Fee for service Provider is reimbursed for each individual service provided. It may be either input-based or output- based. Input-based if there is no fixed-fee schedule and if services are not grouped.  Providers are permitted to bill purchasers for all costs incurred to provide each service retrospectively as is the case in countries
  36. 36. Per capita Per capita The provider is paid, in advance, a predetermined fixed rate to provide a defined set of services for each individual enrolled with the provider for a fixed period usually one year. Output-based, and the unit of output is the coverage of all predefined services for an individual for a fixed period.
  37. 37. Contd… Payment to a provider is not linked to the inputs that the provider uses or the volume of services provided. Some risk is shifted from the purchaser to the provider and if provider incurs costs that are greater than the per capita budget, the provider is liable for them
  38. 38. Case based Case-based hospital payment systems create the incentives to increase the number of cases and to minimize the inputs used for each case because providers have more control over resource use per case than over the total number of treated cases. Minimizing the inputs is typically stronger (in terms of availability of provider manipulation), and therefore case-based hospital payment systems have been used as a mechanism to control costs and reduce capacity in the hospital sector
  39. 39. BUDGETING AND BUDGET TYPES Budgets are expressions of expected future income and expenses. They are generally based on historical data, if available, and adjusted based on assumptions regarding inflation, increases or decreases in income or expenses, and expected expansion of programs and services.
  40. 40. The main sources of finances for the government are:  Ordinary revenue: which represents the amount of money raised in a given period through taxes such as income tax, corporation tax, stamp duties, Value Added Tax (VAT) and excise duties.  User charges: which are fees charged to consumers of goods and services produced by the government. These are only paid by those who use the services, such as birth certificates, driving licences, passports and registration of real estate properties.  Sale of assets: which includes the sale of bonded goods and other assets including shares in
  41. 41.  Investment income: which represents income derived from public commercial activities, e g. dividends and interest on on-lent funds, from Central Bank and state corporations.  Grants from foreign governments: which are non repayable funds provided by foreign governments for a specific purpose.  Borrowing: which are repayable funds loaned by foreign government, donors or domestic markets.
  42. 42. principles of a good budget A good budget should have the following attributes:  Comprehensiveness: which means that the budget includes all fiscal operations, on receipts and expenditure sides, within a sustainable macroeconomic framework.  Predictability: which means that the budget should be predictable within a medium term horizon. 05/11/16
  43. 43. contd...  Transparency: which means that the budget should be prepared and presented openly and information should be available on a timely basis.  Periodicity: which means that that the budget should cover a specific period of time.  Contestability: means that economic actors compete fairly for resources and can challenge or question the Government on any of the items in the budget, or on any of its priorities. 05/11/16
  44. 44. Stages in The Budget Process  Many Kenyans perceive the national budget process as a one time event marked by the budget speech, delivered by the Minister for Finance, in the month of June every year. The Kenyan budget cycle passes through the following four major phases:  Budget planning and preparation  Budget proposal, debate and approval  Budget execution (implementation, supervision and audit)  Budget monitoring and evaluation 05/11/16
  45. 45. Types of budgets Annual Budgets An annual budget is a budget that is developed for a year long period of time. An annual budget is often the organization's yearly budget that they would publish in summary form in their annual report or business statements. Depending on the organization, an annual budget could operate according to the financial year (e.g. 1 July 2000 - 30 June 2001) or the calendar year (e.g. 15 January 2000 - 31 December 2001). 05/11/16
  46. 46. contd... Operational Budget An operational budget can also be called an organisational budget. This type of budget highlights the income earned and expenditure that is incurred by an organisation. Operational budgets may be broken into areas/ departments so that these areas/departments have their own budget allocation to operate within. 05/11/16
  47. 47. contd... Program Budget A program budget highlights the income and expenditure that is incurred for the development and implementation of a specific program. 05/11/16
  48. 48. TAKE HOME ASSIGNMENTS TYPES OF BUDGETS- READ MORE AND MAKE SHORT NOTES THE BUDGET PROCESS- READ MORE AND MAKE SHORT NOTES. 05/11/16
  49. 49. QUESTIONS???? 05/11/16

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