The document discusses health systems and financing. It begins by defining a health system as all actors, institutions, and resources that undertake health actions, with the primary intent of improving health. Not all policies that influence health are part of the health system. The document then discusses the goals of health systems, including improving health and ensuring financial contribution. It outlines the key functions of health systems as stewardship, financing, resource generation, and service delivery. The document emphasizes the importance of aligning financing with national health plans to avoid fragmentation. It also discusses concepts of coverage, effectiveness, and factors that influence health outcomes.

1. Health System and Financing

2. WHO Definition of Health System
Health system: All actors, institutions and
resources that undertake health actions.
Health actions: all actions whose primary intent
is to improve health.

3. Primary Intent
Not all policies and actions that have an important influence
on health, such as educating young girls or poverty
reduction programs, are part of the health system
according to this definition.
A wide range of actions targeting individuals and
communities would meet this definition: from surgery to
campaigns to raise tobacco taxes to random breath testing
for drunk driving.

4. Social Goals to Which Health
Systems Contribute
Societies collectively have many goals such as raising
purchasing power, reducing poverty, raising educational
levels, ensuring democratic participation and improving
health.
Health systems can positively or negatively affect many
social goals. Likewise, many social systems such as
education can have a positive or negative impact on
health.

5. Harvard University Initiative for Global
Health
Stewardship
(oversight)
Financing
(collecting, pooling
and purchasing
FUNCTIONS THE SYSTEM PERFORMS GOALS / OUTCOMES OF
THE SYSTEM
Health
Fair financial
contribution
Responsiveness
(to people’s non-medical
expectations)
Creating resources
(investment and training)
Delivering
services
(provision)

6. Stewardship
• The careful and responsible management of
the well-being of the population.
• Responsibility of government working with a
wide range of partners.
• Stewardship does not necessarily mean direct
provision of services but influencing the
behaviour of health system actors, public and
private.

7. Harvard University Initiative for Global
Health
Relationship between Coverage
and Outcomes
Intersectoral
action
Other factors
Non-personal
health services
Personal
medical services
C
O
V
E
R
A
G
E
HEALTH

8. Stewardship
• The careful and responsible management of
the well-being of the population.
• Responsibility of government working with a
wide range of partners.
• Stewardship does not necessarily mean direct
provision of services but influencing the
behaviour of health system actors, public and
private.

9. Health System Effective Coverage
• Fraction of potential health gain that could be
delivered by the health system that is
delivered.

10. What determines effective
coverage?
Price of health care
Perceived need and knowledge
Travel time
Cultural and social acceptability of
intervention
Responsiveness of health systems
Availability of necessary
Technology and resources
Technical quality of providers
Choice of an intervention
Adherence
Demand on
health care
Quality of
Health care
Health
outcomes

11. Consideration of cross-
cutting issues:
How can funding from the Global
Fund contribute towards
strengthening health systems?

12. What happens if investments are not
based on a sound national health plan
• Extra burden on government to manage many
partners
• Creation of complexity in systems and
procedures
• Distortion of incentive systems and undermining
of government leadership
• Unbalanced investment

13. • Fragmented funding and/or funding
outside the national budget and plan
• Undermines government capacity
• too many proposals,
• too many meetings,
• too many monitoring demands
• Duplication of services and supplies
– or even competition between
projects and donors
• Waste of scarce
resources
• Inefficient use of
funds
• Lack of country
leadership and
ownership
Why we need health financing

14. Health systems strengthening (HSS) in
Global Fund Strategy 2012-2016
Maximizing effectiveness of Global Fund
investments in HSS with the following priorities:
•Strategic targeting of HSS investments towards
most-in-need countries and high-impact HSS
interventions
•Better alignment, harmonization, and tracking of
HSS outcomes and impact
•Explicit provision for community systems
strengthening

15. Concept of health financing
Three serious questions:
• Is a nation spending a reasonable amount for its health?
• Does a nation have the capacity to transform money in to
effective services for the rural poor population?
• Can out-of-pocket resources be mobilized and organized so they
will be used in a efficient and effective way?
Concept
One of our colleagues, a health workers like nurse, Public
health Officer talks about the area of healthcare finance as “a
method of getting money in and out of the business.” It is not a
bad description. As we shall see, rev-venues represent inflow
and expenses represent outflow. Thus, “getting money in”
represents the inflow (revenues), whereas “getting money out”
(expenses) represents the outflow.

16. Definition
Health care financing means the approaches to mobilize fund for
health care. According to this definition, health care financing is
a means to an end; an instruments chosen to achieve specific
societal goal. Financing means from where comes and where
money it goes. The approach to generate and mobilize funds for
health care.
What are the features of good health financing?
• Sufficient funding to provide for the health care need of the
community
• Process of redistribution ( rich contribute to poor)
• Each person makes a fair contribution.
• The community is able to prevent health care costs using up an
excessive proportion of the government budget.

17. Components for health care financing? The flow of funds for
health care system consists of three basic components
1.Financing function: It includes the collection and
pooling of revenues and their use by allocating
resources or purchasing services from providers.
2.Input generate function : it includes the production ,
import , export , distribution, retail of human resources,
knowledge , pharmaceuticals , medicals equipment ,
other consumables and capital
3.Service delivery function: It includes both population
based public health services and clinical services
through public and private facilities.

18. Why is health care financing an important subject?
Philosophical reasons:
• Egalitarian point of view:
• Fundamental necessity for human well-beings.
• Emphasis on equity
• Efficient approach to mobilize the necessary fund for every citizen’s health care.
Policy Reason:
• Determine resources flows, distribution of resources and incentive structures for
health providers.
• Control and manage health care cost inflation.
• Reduce financial burden of the government by covering through insurance and old age
pension to senior people.
• Increase the access of basis health care services.
• Assure quality of health care services.
Market failure reason:
• Motivate the consumers for insurance plan.
• Develop infrastructure for private insurance like as: uniform accounting procedures
for hospitals, accurate and uniform clinical record system, and computerized claim
auditing procedures

19. Contd
Macro –environmental reason:
• Debt burden through stabilization and structural adjustment policy
(devaluation, of currencies reduction in government spending and
implementation of measure to improve public sector efficiency.
Demographic reason:
• For population management to reduced fertility and growth rate
• To reduced the dependency ratio.
Epidemiological changes:
• Reduce morbidity, hospitalization ,accidents and mortality
Social and cultural change: to
• Managed the demand for health care
• Improved the access for health care and managed life style
• Bridge between traditional and modern network.

20. Importance of health care financing
• Health care financing has an important role to play in transforming the
health care system into one which provides efficient and effective health
care to poor and vulnerable people in Nepal.
• The functions of health care financing - the collection of revenue, risk
pooling and purchasing - are all critical to policy design.
• The function of revenue collection deals with how financial contributions
to the health system are collected from different sources.
• There are domestic sources and external (or international) sources of
financing for health.
• Domestic resources, including the collection of contributions and taxes,
finance the majority to health care services. Private spending on health
from households an companies complements these public domestic
resources.
• External resources, including official development aid as well as foreign
loans and grants, contribute a significant share of total funding for health
care in Nepal.

21. Sources: Adapted from Kutzin 2001 and WHO Regional Office for Europe 2006.
Function of health system

22. Method for health care financing: Two major methods
Tax /revenue. Deficit financing The use of inflation Earmarked taxes Lotteries and Betting
For –profit
or Non-
profit
private
insurance
Methods of financing System
Public system of Health
services
Social insurance
system (illness)
User
Payment
Public financing Private financing
External Financing
“AID”
Internal
Financing
Unified
System
Fragmented system
Medical
saving
voluntary or
compulsory
insurance
Social
contributions
employers’
employees
Commu
nity
financin
g
Targeting Tax funds Vertical program Ward services Poor Region Age group

23. Methods of Health care financing
1 Government financing / revenue
General tax, (targeting tax funds through the vertical program, and
by increasing facilities like as door to door services)
• By adjusting inflation rate (Persistence increases in the general level of
price)
• Embarked tax ( particular tax for health care e.g alcohol, tobacco, and
cares)
• Enhance the equity of health care system through insurance plan
• Insurance ( social and private)
2. Health Insurance ( Social and private insurance)
• Health insurance is stable source of health care financing.
• Health insurances serves two principle functions –for economics welfare
of nations
(a) Insurance pools together the financial risks facing a large group of
people.-(risk sharing)
(b) Insurance enables individuals to transfer their risks to an insurance plan.

24. 3.User fees : patients pay a fee to the provider at the point of service use
six ways to increase user fees:
• Make an effort to explain medical charge to patients,
• To motivate health facility staff to administrator and collect fees,
• To set up systematic collection procedures to improve hospital cost
–recovery rates,
• structures prices so that patients believes they are receiving value
their money ,
• Adjust user fees for inflation and invest revenue appropriately
• Permit alternative forms of payment for low income household)