1. Instituto CentroAmerica de la Salud
Can Demand Side Financing, e.g. vouchers, assist Governments to reach MDGs and reduce Maternal Mortality?
Anna C. Gorter, MD, PhD
Instituto CentroAmerica de la Salud
Voucher Baby
Video Conference WHO, Port Moresby, PNG, September 8, 2010

2. Outline of presentation
Demand-side versus supply-side financing
Examples of demand side financing
What are voucher schemes
Potential strengths of vouchers
Experiences from vouchers providing safe motherhood services
Lessons learnt and conclusion
In this presentation I first will go through the differences between demand side and supply side financing and give some examples of demand side financing. I will describe the strengths of vouchers and present the results of some voucher schemes providing safe motherhood services. I will conclude with lessons learnt and conclusions.

3. e.g. Tax revenue or donation
HEALTH FINANCING
e.g. Tax revenue or donation
PAYMENT ORGANISATION
e.g. Ministry of Health
PAYMENT ORGANISATION
e.g. Voucher Agency
INPUTS
e.g. salaries,
medicines,
equipment,
etc
RIGHT TO
SUBSIDY
e.g. Vouchers,
fee
subsidies
Payments
HEALTH FACILITIES
PATIENTS
The figure explains the difference between demand-side and supply-side financing.
At the left you see the flow of supply side financing, where the health facilities receive the subsidies and then provide the services to the patients. These subsidies cover the costs of the health facilities (salaries, medicines, etc), but provide little incentive to provide services of good quality, which may result in low use of these health facilities. This is not because people do not need the services, but they prefer other solutions, such as traditional healing practices or to buy medicines in the private pharmacies.
At the right you see the flow of demand side financing, where the funding is given to a payment organisation who acts on behalf of the patients and makes sure the subsidies reach the patients. The patient uses the health facility. The health facility is paid according to the number of patients treated. No services, no payment.
Invoice for
Subsidies on
Goods and /or
services
Redemption
of the right
for subsidy
Free or
subsidized
services
Co-payments
PATIENTS
HEALTH FACILITIES
SUPPLY SIDE FINANCING
DEMAND SIDE FINANCING

4. Supply Side Financing ADVANTAGES DISADVANTAGES Simple to introduce
Cheap to administer
Best when the health services are actually used by the patients who need the services
DISADVANTAGES
Difficult to target patients who need the services but currently do not use these
Low incentive to increase the number of patients
Low incentive to provide services according to the needs of the patients
Supply side financing has ADVANTAGES: relatively simple to introduce, and cheap to administer. They work best when the patients for which the services are intended have no particular barriers and actually use the services.
However there are also DISADVANTAGES, such as difficulties in targeting groups who need the services, but not use them.
There is little incentive to increase the number of patients.
Furthermore there is little incentive for staff to treat patients in a friendly manner; make sure there are medicines etc. This reduces the population’s trust in the services and as a consequence few patients make use of the services.

5. Demand Side Financing (DSF) Two forms
Patient gets subsidy
The subsidy is given directly to the patient
Health facility gets subsidy
The subsidy is given to the health facility based on a contractual arrangement
Now I come to demand side financing, their advantages and disadvantage will be explained later
There are two forms of demand side financing. One where the patients gets the subsidy and one where the subsidy is transferred to the provider.

6. Examples DSF where the health facility gets the subsidy
Fee-for-service subsidy claims
Referral vouchers
Others, e.g.
Cost-per-case contracts
Capitation payments
Target payments
I will give some examples where the health facility receives the subsidy, based on some form of contract.
Fee-for-service subsidy claims, for example the Government of Cambodia pays the midwife an incentive of around 10 US$ for each baby delivered in a health facility.
Referral vouchers. For example health centres giving out a voucher to patients for specialist care at a referral hospital.
There other examples, such as Cost-per-case contracts, Capitation payments and target payments.

7. Examples where the patient gets the subsidy
Given before the health service is used
Cash payment to patients
Contributions to family medical savings schemes
Vouchers
Competitive
Non-competitive
Given after the health service is used
Cash refunds
Conditional cash transfer (incentive based voucher)
Subsidies can also be given directly to the patients. This can be done before or after the patient has used the health service. An example of the first is payment of cash to the patient. But this is difficult to control and the money is often used for other things, such as food. Contributions to family medical savings schemes is also a good example.
The last example at the left are vouchers. Vouchers can be based on competition between providers, but this is not necessary.
At the right you see the list of examples, when subsidies are given after the patient has used the services. An example are cash refunds which are widely used by insurance companies.
Another interesting example are conditional cash transfers, also called incentive based vouchers: in this case a voucher is a kind of ‘prize’ or reward to encourage a person to use particular health services. They are now widely used in India to encourage women to deliver their baby in a health facility.

8. (as opposed to liquid cash)"
What is a voucher
A document which can be exchanged for defined goods or medical services as a token of payment OR
"Tied cash
(as opposed to liquid cash)"
A voucher is a document which can be exchanged for defined goods or medical services as a token of payment or “Tied cash”.
The document can be a simple piece of paper, health card or other type of proof that a person is entitled to receive the services.

9. Some examples of vouchers
Here you can see some examples of vouchers: both vouchers at the left are for safe motherhood services in India. The one at the top right is a discount voucher for bednets to prevent malaria in Kenya, at the bottom right a voucher for sex workers in Nicaragua.

10. Voucher scheme Step 1 Step 2 $ Step 4 Voucher $ Step 3
Voucher agency
Step 1
Step 2 $
M&E reports
Voucher
Step 4
Target population
Donor/ Government
The figure illustrates how vouchers work. Step 1: the voucher agency receives funding from either a donor or a government and contracts the health facilities. The contract defines the package of health services and the fees to be paid for each voucher. The voucher agency organises also the quality control and the training of the health facilities.
Step 2. The voucher agency organises the distribution of the vouchers to the target population, which can be done through community health workers or by contracting specific staff to visit the villages. Step 3: The beneficiaries, for example pregnant women take the voucher to the health facility and obtain the services, for safe motherhood services. Step 4: The health facility returns the voucher to the voucher agency and receives payment according to the number of voucher patients treated.
Voucher $
Health Facilities
Voucher
Step 3

11. Important to note
Voucher programmes can contract all health facilities capable and willing to provide the services (public, mission, NGO and private health facilities)
They can function hand in hand with supply side financing of the health facilities
They can be used as a temporary measure to quickly increase the use of a priority services, such as safe motherhood
Important to note is that voucher programmes can contract all health facilities capable and willing to provide the services as long as they produce the services according to the quality standards. This can be public health facilities run by the government, or mission health facilities or even NGO and private health facilities
Vouchers can function hand in hand with supply side financing
They can be used as a temporary measure to quickly increase the use of priority services, such as safe motherhood

12. Strengths of vouchers Targeting of population sub-groups
Encouraging use of particular services
Can improve quality
Can increase efficiency
Payment for services which are actually provided
Facilitates monitoring and evaluation
Strengths of vouchers:
* Vouchers are good at targeting population sub-groups in need of particular services
* Vouchers can encourage the use of particular services
* Vouchers can increase the quality of the health services provided
* Vouchers also increase efficiency,
* Only those services which are actually provided are paid for
* Vouchers make it is easier to monitor and evaluate how the health facility is performing.
Let’s look in more detail at the strengths of vouchers…

13. Targeting
Is a strength when beneficiaries can easily be identified, e.g.
Groups who fear stigmatization
people with TB, Leprosy, AIDS
Groups who need priority health services, but do not use them, e.g:
Adolescents, young people in need of Sexual and Reproductive Health
Poor pregnant women in need of safe motherhood services
Targeting is a strength when the patients can be easily identified and reached. For example:
Groups who fear stigmatization – such as patients with TB, leprosy or AIDS;
Groups who need the services and currently are not using these services, for example adolescents and young people who need reproductive health services and poor pregnant women who need safe motherhood services.

14. Vouchers encourage use of important health services
When use is limited by barriers to access (cost, lack of knowledge, cultural barriers..)
Remove cost barriers (incl. eg transport and food or other costs)
Vouchers inform about services and guide users to where services can be obtained
Encouraging use of services is a strength when current use of the health services is low, because of barriers to access, such as costs, lack of knowledge, or cultural barriers. For example ensuring no fees are paid and paying the voucher patient the costs of transport and food to reach the health facility. In Kenya I saw that health facilities repaired their ambulance and gave women a phone number, so they could pick her up when in labour. In addition the patient can receive an incentive, for example a certain amount of money or a baby package. Examples where this is done are voucher schemes in Bangladesh and Cambodia.
Another important feature is that vouchers inform the patient and the family about the health services: the voucher distributor explains why it is important to use a particular health service (such as antenatal care) and also explains when to seek care and where the services can best be obtained.

15. Vouchers can increase quality and efficiency
Quality of services is improved because vouchers incentivise the health facility to respond to the needs of the patients:
e.g. friendly services, ensuring medicines are available, equipment is working etc
Efficiency is increased because only services which have actually been provided, are paid for. This can increase the number of patients using the health facility
Quality of services is improved, because vouchers incentivise the health staff to provide friendly services, make sure there is female staff, ensuring medicines, that the ambulance is working etc. Only those health facilities which give good care can receive voucher patients. Those facilities, which do not meet the quality standards are encouraged to improve their quality so they can participate in the scheme.
Vouchers can increase efficiency because only those services which are provided are paid and gives an incentive to provide quality services, in order to attract more patients.

16. Some examples of impact of voucher schemes for safe motherhood
Kenya
India
Bangladesh
This are the schemes which I would like to discuss in more detail.
Kenya
India
Bangladesh

17. Kenya voucher scheme, started June 2006
Financed by the German Development Bank KfW
Poor in 3 rural districts, 2 urban slums Nairobi
To increase access to safe motherhood, family planning and gender based violence services
Public, mission, private, and NGO providers
Voucher agency is PriceWaterhouseCoopers
Vouchers are sold at highly subsidized prices
Over 100,000 vouchers used (especially safe motherhood vouchers)
The Kenyan scheme is financed by the German Development Bank KfW
The target groups are poor women in 3 rural districts and 2 urban slums of the capital Nairobi
The objective is to increase access to safe motherhood, family planning and gender based violence recovery services
The health facilities contracted are a mix from the public, mission, private, and NGO sector
The Voucher agency is PriceWaterhouseCoopers
Vouchers are sold at highly subsidized prices
Over 100,000 vouchers have been used; especially the safe motherhood vouchers

18. Increase in percentage of deliveries in a health facility in Kenya
This graph shows the impact of the voucher scheme on the percentage of poor women delivering their baby in a health facility. The green bar at the left shows the overall percentage of deliveries in a health facility at national level. The blue bar shows the percentage of women who cannot read, of them only 15% at national level deliver their baby in a health facility. This is the type of women who are targeted by the voucher scheme. The 4 bars: red, orange, yellow and again red shows the percentages of poor women who delivered their baby in a health facility in the voucher areas. As you can see this is much higher than the blue bar. This is especially the case for poor women from the slums in the capital city Nairobi (first red bar), women from the semi-urban Kiambu district (orange bar). In the rural areas Kisumu and Kitui the percentages increased as well. The yellow bar is for Kisumu, where the increase was up to 54%. The red bad at the right is for Kitui, where at few health facilities were contracted in the first 4 years. Now the number of facilities is higher and this will increase the number of women using safe motherhood vouchers.

19. Percentage of deliveries in a health facility with and without voucher schemes (India)
In India several schemes have been established under the rural health mission. Some of these schemes are like a voucher scheme, while others function as a conditional cash transfer. Often it is a combination of both. Under these schemes 8.4 million women have benefitted. The graph comes from an evaluation by UNFPA. The blue bar are the results of 2008 when the schemes were in place, while the red bar are the data from a Survey before the schemes started. The findings of the study indicate a huge increase in institutional deliveries in especially those states which used to have low percentages, such as Uttar Pradesh. The voucher and conditional cash transfer schemes have become very, very popular among poor women.

20. Evaluation voucher scheme in Bangladesh, some findings
An evaluation of the Bangladesh voucher scheme was done in 2009, comparing 21 intervention districts with 21 control districts. The voucher program started in mid The rate of at least 3 ANC increased from 34% to 55% in the voucher area. The percentage of women delivering their baby in a health facility is now twice as high, it increased from 19% to 38%. The rate of PNC is also much higher.

21. Lessons learnt What makes vouchers successful?
Appropriate design, committed stakeholders
Independent Voucher Management Agency, i.e. a third party which is able to defend the rights of the patients
Efficient management procedures
smooth payment of health facilities
Vouchers address priority health services
Vouchers address specific barriers to access health services (costs, lack of information etc)
What are the lessons learnt:
The design of the voucher scheme has to be appropriate: it is important to get all details right.
Furthermore, the development of a voucher scheme needs motivated stakeholders.
The Voucher Agency needs to be independent from the health facilities, in other words there should be a third party who is capable to defend the rights of the patients, makes sure the real needy receive a voucher; monitors the services; etc. It is essential that management procedures are not too bureaucratic : - smooth payment of the health facilities is essential, if they do get paid in time, they loose interest.
Success is also better when vouchers address priority health services and specific barriers to use these health services, such as costs, etc

22. Some potential drawbacks of vouchers
Design and set-up is complex (devil is in the detail), needs training of staff at the start
May be susceptible to abuse (black market of vouchers, collusion between health facilities and distributors..)
Program development may take time
However once established vouchers are easy to run and to scale-up, and costs go down
There are some potential drawbacks of vouchers. The design and set-up is complex : the ‘devil is in the detail’. And staff needs to be trained at the start. Another drawback is their susceptibility to abuse and fraud. Program development may take time, to get all the details right. However, once established, voucher programs are easy to run and to scale-up and costs go down over time

23. Conclusion I
Vouchers do not replace supply side financing, but strengthen the functioning of health facilities because they motivate staff to produce more and better services
Vouchers do not replace supply side financing, but can strengthen the functioning of health facilities, because they motivate staff to produce more and better services

24. Conclusion II
Vouchers are very good at increasing the use of safe motherhood services by women who currently do not use these services
Great potential in helping to reduce maternal morbidity and mortality
Vouchers are very good at increasing the use of safe motherhood services by women who currently do not use these services
Great potential in helping to reduce maternal morbidity and mortality.

25. CAMBODIA Example if time permits

26. Cambodia voucher schemes
Successful voucher scheme in MoH facilities in Kampong Cham province (Feb 2007):
Targeting poor pregnant women
Reduced financial barriers to deliver at facility
Made health facility more responsive to women
New voucher scheme financed by the German Development Bank (KfW):
Three provinces providing safe motherhood and safe abortion services as well as family planning services
Successful voucher scheme in Kampong Cham province with health facilities run by the Ministry of Health. It started in Feb 2007 in three districts and has now been expanded to all districts in the province.
The scheme targets poor pregnant women, and reduces the financial barrier to deliver at a facility, because through the voucher the women is paid her transport costs
A new voucher scheme will be financed by the German development bank KfW and will work in three provinces providing safe motherhood and abortion services as well as family planning services

27. Results from Cambodia
A study in Cambodia investigated the impact of the voucher scheme, but it looked also at the impact of other interventions which were implemented in the same districts. One was performance based contracting, which is a supply side intervention. The others were demand side financing interventions such as the health equity funds and the national Delivery Incentive scheme where the Government pays an incentive to the midwife for each delivery in a health facility. This scheme initiated in 2008.
At the left you can see the districts where all four interventions were implemented. You see a huge increase in the year 2008 when all interventions were active. In the middle you see the results where 2 interventions were implemented: Performance Based contracting and Delivery Incentives. The results are less pronounced, but still good. At the right you see the results where only the scheme with Delivery Incentives was implemented. There was an increase, but overall the performance is still poor. The graph makes clear that sometimes it might be necessary to put several interventions in place.