1. Costing of the Health Sector NGPES I. Background to Health Care Financing in Lao PDR

2. Health NGPES Twelve strategic programmes None of them are perfectly implemented today All probably need more resource, both financial and human To understand future financing, you need to know the current situation

3. Health Financing in Laos Total health spending is about 120,000 kip per year per person –56% from households –9% from Lao government 80% of this goes to salaries –35% from donors and NGO’s

4. Household Expenditure 60% is completely private – private pharmacies and private services 40% is for paying fees in public institutions – cost sharing

5. Recurrent Budgets of Hospitals Depend on User Fees Central hospitals – 74-83% Provincial Hospitals – 48-75% District Hospitals – more variation – but if busy – 52-68%

6. Exemptions from fees are few compared to the poverty rates Central – 6.1-7.5% exempted Provincial – 0.1 – 11.9% exempted District - 0.5% - 67% exempted

7. Summary of Health Care Financing Total health spending is highly dependent on household expenditure Public expenditure is highly donor dependent Public institutions are highly dependent on user fees Exemptions from user fees are less than the prevailing poverty rates Result is Lao people use health care late and less than what is ideal

8. Costing of Health Sector NGPES II. Methods and Issues

9. Whose perspective or point of view? Government Donors Households

10. Suggest Government and Donor Together But Always evaluate what the effect will be on household expenditure also

11. What is the scope? National – entire health system, or 47 poorest districts, or 74 poor districts, or 10 highest priority districts? Separate services for poor not efficient or desirable Difficult to cost services only for the poor

12. Costing Methods Ground up - it is appealing, but a very large exercise to go to each district/province and do an individual costing International norms - Individual programme costs - usually from smaller areas than whole nation, but take these and multiply for national coverage

13. Programmes Data Sources I. Information Education and Communication Many programmes have a small IEC budget, no single comprehensive programme

14. Programmes Data Sources II. Expansion of the service network and health promotion in remote areas Costing studies on health centres and hospitals - MOH/WHO and SSO, costs of new and renovated health centres and hospitals from ADB/WB projects

15. Programmes Data Sources III. Upgrade skills of health staff and increase the number of staff from ethnic minorities WB study on medical (doctor) education Nursing school projects - JICA PHC Worker Project - ADB/PHC project VHV training costs Refresher course costs - MOH/JICA database

16. Programmes Data Sources IV. Promotion of maternal and child health RH projects - UNFPA/MOH (Is upgrading of facility included in Programme II?)

17. Programmes Data Sources V. Immunization for women and children Financial sustainability plan - GAVI

18. Programmes Data Sources VI. Water supply and environmental health Average costs per borehole, protected well, gravity scheme - Naam Saat (SIDA, UNICEF, WB)

19. Programmes Data Sources VII. Communicable disease control –Malaria –Dengue –ADD-Cholera –TB –Intestinal parasites –Surveillance - general Malaria projects - EU, Global Fund Dengue proposals - WHO TB - Global Fund Parasites - WHO proposal Surveillance - MBDS, WHO,

20. Programmes Data Sources VIII. HIV/AIDS/STD Control HIV/AIDS/STD Action Plan Global Fund proposals

21. Programmes Data Sources IX. Drug revolving fund expansion FDD of MOH - average start-up costs for DRF, also available from PHC/ADB project

22. Programmes Data Sources X. Improved food and drug safety –Drug safety –Food safety Drug - SIDA and WHO projects Food - FAO and WHO projects

23. Programmes Data Sources XI. Promotion of traditional medicine ?

24. Programmes Data Sources XII. Strengthened financing, management, quality assurance, and legal framework Cost of community insurance pilots, mgmt training costs from PHC/ADB and other projects

25. Costing of Health Sector NGPES III.Example – “National Immunization Programme Financial Sustainability Plan’ – Nov. 2002

26. Background Immunization – known to be efficacious and cost-effective Coverage rates in Lao PDR are not ideal – around 50% when 85% is desired Immunization is highly donor dependent GAVI – Global Alliance for Vaccines Initiative – new money, new vaccines, new methods – but how to sustain?

27. Summary of Costs (US$) Item Operational Costs Supplemental Activity Capital Costs Total Nat. Imm. Prog. 19992001 956,856 1,020,932 196,927 386,539 211,292 160,696 1,365,075 1,568,166

28. Availability of Cost Information Partly available, but difficult and time consuming to find Problems –Accounting systems vary depending on the source of the funds –Donor and in-kind contributions often not known to implementers

29. Financing of Immunization Source Government UNICEF WHO/AusAid JICA Other GAVI 1999 2001 5.5% 4.9% 42.1% 23.3% 7.7% 13.8% 43.0% 34.4% 1.8% 2.6% 0% 21.0%

30. Projections Done Assuming that the new and more vaccine is introduced nationwide Assuming that certain costs go up to increase coverage from 50% to required 85% (mainly per diems for outreach) Modest capital investment – new fridges Eventually supplemental activities stop

31. Projections of Requirements 2003 2004 2005 2006 2007 Total 3,157,462 3,604,082 4,310,624 3,593,540 3,772,383 18,438,091

32. Why are costs going up rapidly? New vaccine to prevent Hepatitis B (a major cause of liver cancer) has been introduced and it is expensive. It is cost effective, but the benefit comes in cancers prevented 20-30 years from now. Who pays? It is more expensive to reach remote populations than semi-urban pops.

33. Projection Assumptions Economic growth and government budget grows – 6-8% Major donors continue support at same level with growth for inflation In most optimistic projection – HIPC is assumed, which is not a safe assumption

34. Projections of Funding Gap 2003 2004 2005 2006 2007 Total 724,988 1,274,307 1,342,411 1,229,889 2,143,129 6,714,523

35. Summary – Secured funds and funding gap Million $NeedsSecuredGap 2003-07 Total$ 17.9$ 11.2$ 6.7 Ann. Ave.$ 3.6$ 2.2$ 1.3 2008-10 Total$ 11.8$ 0.9$ 10.9 Ann.Ave.$ 2.4$ 0.2$ 2.2

36. Funding and Gap- Optimistic on future donors MillionsProbableGapPossibleGap 2003-07 Total$ 13.9$ 4.0$ 14.0$ 3.9 Ann.Ave$ 2.8$ 0.8$ 2.8$ 0.6 2008-10 Total$ 5.2$ 6.5$ 7.5$ 4.3 Ann.Ave$ 1.0$ 1.3$1.5$0.7

37. Summary - EPI 2003-07, even with optimistic projections has a $600,000 gap per year in funding As time lengthens, there is more insecurity about EPI funding

38. Issues A projection done looking at EPI only – could efficiencies be made by reorganization? Is it sensible to fund vital programmes, one at a time, separately? Poorest districts – hardest to reach, most expensive to immunize – how much to concentrate effort there when easier to reach areas have not yet reached acceptable immunization rates?

39. Thank You