Mobilizing resources for health: Evidence from Ethiopia's health care financing reform

Cognizant of the enormous disparity between the country's health financing needs and the prevailing health spending (in 1996 the per capita health expenditure was roughly USD $1.20) the Government of Ethiopia formulated a health care financing strategy in 1998. Over the past 9 years, efforts have been made to develop the strategy into specific reform agendas with accompanying implementation plans. The larger regions in the country have endorsed health care financing reform legal frameworks, and are in various stages of implementation. While the per capita health expenditure has increased to roughly USD $7.14 (as of 2004/5), much is expected in mobilizing resources and improving its utilization for health. This is especially true for the implementation of the health facility revenue retention component of the Health Care Financing reform. Until recently, revenue collected by facilities has been remitted to the government treasury and represents a fraction of revenues collected by revenue authorities. However, with the implementation of the health facility revenue retention program, facilities are expected to be granted greater flexibility in the use of collected revenues, with revenues being kept at the facility level for reinvestment and use in improving the quantity and quality of health services offered. This decentralization of revenue collection is also expected to stimulate a greater sense of ownership in the revenue collection process at the facility level, and therefore increase the amount of revenue collected. Preliminary observations indicate that amount of revenue collected has increased and started filling up the financial needs of health facilities.

The Learning Objectives of the study are to:

(1) Demonstrate preliminary results in increasing absolute resources for health captured through collection at the facility level.

(2) Indicate the utilization and reinvestment of the collected revenues by some facilities.

(3) Assess the accountability and transparency of processes being used at the health facility level for revenue collection.

(4) Assess the potential implication of health facility revenue retention on the other reform components.

(5) Identify difficulties and challenges encountered to date in implementation of the revenue retention program, and propose possible solutions.

The study will employ the use of both primary and secondary data.