Feasibility of Devising an Equity Based Resource Allocation System in Bangladesh

Rufrana Huqu;' Muhammad Shah.d.t HGsain Siddiq;ae-

4bstraq!

,. r

The anicb idedifies t.b. &ry isnrs iavolved in ttr devcbpmm oI an eouit* focrsed resourcc albcrioa,sFreo for the public he:fth siaor io BamhLiThis paper argrs th* Izir allocaion of res6urces for heahb care shojd be in rehbn to rreds of-tbe popuhiou in differem par6 of B*'gt..tesL It 131,iev,s

tbe litenturc oo rhe resoure allocaion sptem in UJ( ;d Goada- The di(fl 'h,.s .nd limitarions of r-he needs-bascd nrdrodolosy arr discrssed" _tn light qp.b*. ,1" oppomrnities aod coastninr ;*"a*irg d" ;A: 1}Lis i "f based nrthodologr in B:"gb4str

1.

Inuoductioo:

The Ministry of
W'rde

ltahh ad

Appoach (S$fAp) as pan of the Iiatth Settoi tufinn fSR) process in 1998, c.lled the ltrEalth and Populnii:n Sector Pdgram4e (iIPSP). Un&r HPSP, rlleasuls \rere talcn ro resmrcture the entire heakh qaem to rnala ir more resporxive ro the heahh nee& of the populadou The goal of drc progruurDe $ias ro iryrove dre heahh and fami} welfare statrs aoorg drc oost vulnerabh worrcn, children and the poor throtih the gteff ceftrrd povisioa and clieot utilisation of heahh services. As e coriequence, tesources wete being allocated to those facilities aod services, r,hich vere used aod nnst needed.by wlnerable groups. The IIPSP came to an end on 30th June 2003, The follosr.up programnte !&ahh ltrtrition and ?opulatior Sr:ctor Program (HNPSp)
(2003-2010) also aims HNPS?

Famih Welfare (I\.{OIS'\X} adopted Sector

irrcrease the availabiliry and udlization

of user-cenm4 effective, effieieng equiuble, a{fonrlable and eccessible qulity services for a defined Essential'Sewices lraclqgd'l@Sp) plus odrer selected services, Ivtroreover, HNPSP argets 25 poorest di:trictsto emure equity in rcsource disuibution @nsor and Begurn, 200). tbvever, botlr pogrrmmes paid less aaemion to dr process of rcsou-rce allocation in the heah.h sccor. Despite iniriaring refoms, rhe MOHFW sdll follows

'

" Assistar Professor, Depa:tnrm

Assistam Professor, DepantrEnt of Econodics, Urriveaityof

Dhala

of Economics, utriversiryof Dha.kr

98

The Dhal*r LtriversityStudbs, December

2OO8

- June

This anicle airm to ideruify rle technical issues inrolved in the allocation and budgetary sisrems id the health seceor, payiag attention to the reform prccess of dre govemment. The obiectives ofthe article are:

rnechanism in Baoglailesh

Allocetion.nd budgeti.g,syp1g4',,.; Resource allocatioa lnplies tie dbtriburion. of fioarrcial resources fiom the ceoue to peripheral levels. fusource allocation is seen as a process by
2. Apptoeches to Resoutce
I

which available resources are disgibqted among competing uses (Zere et al, 2007, Pearsoq 2002). . Resources are.allogaterl tbrough a decisior making plocess whth iuyolycs differeqt.,irstiulbls, ach,.qob&ling discretr interess (Fozzard 2@l).
Resource allocation is closely related bdgedry;. Budgeting invohes precisely how these fttids ali to be the morc deuiled detemrirution of used (Green, 1999, p. 215), that is, the statemens of specilic expenditure plaas within the broad allocative ceilings (Green ex a|, 2000), Budges are

an imporanr basis for financial conuol (Coombs and Jenkirs,

1991),

planning, coordiruting, otganiziry alrd conuolling aaivities (Flenley et al, 1992; Covahski and Dirsmittu 1981) vhich can enharrce communicatioir in organizatiors (Coombs andJenkios, 1991). A budget is defined as tlre policy rnking iool of gorcrrEneds, which is used to tr.nslat! its strategic obiectives into programs and services to meet tie socioecoromic needs of is people (MOF, 2007; pp 2). There are basically four broad rnodeh of geograplic resouce Requieieffs, Incrementalist, Ileahll Fac Requirenrems, and Population -based (Greea cr rd. the populatio*based rmdel akes hto accoum dre

ity

Feasibiliry of

Devisiq

an EqrityBased Resource Allocatioo

ooouladon ard contrbrres to equity (GrEfl el at,' zC/|o)' Under this allocated oo drc b.sis of populatioo' *eighrcd by lpp-".h ,".o.rrc", "r. fxrors, such as (Greerl 1999):

. . o

. ;;;;;#;';
tlo*.)

The heakh needs of aspqcifp PqBuhtion The relative coss of difft'rem seivices Tlre rehtive coss xsociated wfuh differerr areas or whlt nonservice deliverg sqch as-terchi4 coss oi'i"i""., io "oor'her (cross'boundary

Amons these. assessiss health ueed is the most comPlex one' and cannor ct al (2001) atgues be minred direaly [-ude aod lvlap, 199aa)' Ettsor way usmg Proxres' that 'need' can only be quamified in an apProxirmte indirect social determinans of dernand for lndicaton o[ n."d 'Ihe t'urt o. ai."* rneasures of heahh satus (Carr-rfll et al, 1997)' followine oroxies are generally used for measuring health need (Pearsorl 2m7; Greer\ 2002, D;d;riclueq 2dc4; Emor er al' 200L Zere et d,

* L

reee):

. . .

Population size

a grcater ruober of peopb will ptesent

vith

gleater health needs;

Ase and ser profihs of populadons

hi," gt*.. h."t-h *;& +*

re general populuioq wonrn

re very young

urd very old

have differcm heafttr needs than meq

n"ra"o oi &""sel lvlo6idty/Ivloltalfuf uE*inggrore rnorbidity (or monaliryas prories of morbidir/ tequires tnore lesouces relarive/at'sotute poverry/deprivatioo poJerty/depr ztion caues ill health and vice "ena'

. Desree of ;;; ;;il;

aDd {ccurrte emPiricalt Sheldon a a/ (1993) argr.res tbar a coryrehersive the rottout" truv tror be achieved

itooltion

diffiorlw of nreaswing the true ..r" ,iti ,1,. li*it"d d"o

allocarion (Green rt al, 2000).

needs [or, and costs

ot' provtdrng hea[n

resource

-given

"*il"bl". 'nec&-based' Figure-l ptesens *re concePtuai arodel for

100

Th

Dt lat

nivusny S$di.s;.

Allocation

Figure-t Conceprual Framewotk of

Needs-

himff),level

Scco

ary levcl

ProE"aramq,s

,:rl.ti.:
,.

r' ,

'&,Lr
rrit-

Sou.ce:

crccn ct al (2000) pp

1026

Feesibility of Devisi4 aa EquiryBoed Rcrource Alloc*ion

101

In

UJt 1976, the Resorrc 'Allocation lffo*irrg Party EA$IP) las Thc obiecive developed a populaftrrba.sed fomnrla for tie rcgions. m oroide an equiBble partm of resource allocation that would lead ro eol[w of access ro hea]h carc in all paru of rhe country for those at party assured dnt oee& (or he*h care could be equal risk The vorking -and populatioa and the sex structure of *ith the agc "q,ored morbidiw tn 0taw, 1987). ttrowwer' as direct trcasures o[ oooularion ,ootbiditv did no. o;"t" drey used populatioo weighdngs L"j.d on ,l.nd"odisei monality ruios (SMRs) as a ptory of differences in

il

*r

- "ti

morbidity rhat existed berwcen differcnt rcgiors (Ivlays' 1987)'

The forrmrla

gbnerated cotsidenble &barc' Eyles et al (1990 sumrnarises fie nuin poinu of dcbate as a seri:s o{ quesrionsFirstlv. is monalirv a valid proxy for rnofiidiqD SecoJly, can monality be used as a v'alid prory for nee&'based service utilisatioo? Thirdly, wlut is the naute of the relaticrnship bet*een mortality

Iir.

m.

IV,

n. rifthly,'; th" "*ia"ait"a oonalty r*io a good nrasure of monalitvl Vl. firdV,'rlt, is rlrc relatbnship bctweeu rrcndiry and social
&privation?
The needs-based foirmrla of RA\WP has been criticised for using Sir4R T Lircrature shovs r'har at *re rcgional te'el' whih , f.i proxy for rno6idiry due ro chronic diseases' it f"irt" " (Forsrer' 19f4' loses iu accuracv in case o[ ac.,te illness or bed siclsress qras questioned ts lhe dre'imroduction of such a formrla ,*i.ity of'*.it U.dil, problens vere of actne Dature (Gika" 1994)'

and heaLh care needsl Founhly, are rtrere perverse iacentives in the formula?

"-*i iff i;Gt

-.*Uat

,..u*

ldoreover, socid economic and environnental conditidns

in soci'lV

i""t*.J

slin t *

U""" .tii.i"ed for not eking iruo accouff re ioPlicatioos for (Ivlap' 1987)' iealth serrices of social deprivatioo and other social facton rise to a higher need for care in clinical terms and ;f',*natitv o .rirultirv tr also inllu':nces dre cost o[

i** *irrt.e

extra burdeu on local health services The useof

S;d;;;;.t ** ;-f;;#;;" *re rneetire a eivetr health carc need u poor social conditiot$ may binder r-here Jy E.r.""tg. from hospital @yles * aL 1991)' rbwever, though

ffi

102

The Dhab Udversiry Sodi,es, December 2008 June

2@

is a, positive rchtiorship

betr*een morbidity and socio-economic. condLiors, sgme 9f rhis is already reflected byridcludiig standadised. mortaliry ratio (Shetdoo et a1,1993). Hence, albcaion for social deprivation naylead to double couming of healti needs. 1986, after 10 pan of RAVP, tlre Nadoml Marngetent Boalrl of UJ( rcviewed the r*ouir i& overcorne these-limiatiors. The RAVP revb;-n da sorhe'ahad;er.ioi Lhe original formula. The veighting of SMR h fie r,e* fonoula rras reduced while uilisarion o[ sewices measured by adrnission rates was used as rhe proryof needs: Severat rcgiom also in;lu&d deprii,atiori d6 a
ptoxy in fieir sub-regionat allocations (Sheldon et al 1993). 1995, the formula was tevised aCain based on an empirical study, carried out by the health economiiu d York Universfty. The York rnodel identified the determirants of.use of hospial services by collecting &ta on the following variabhs: I porentiat beahh.care needs iqdicators 0 supply of heahb seri,cer and iif the utilization lmde of inpatienr services: lhe need variables irch&d bo& health and socioeconomicfacton, An 'age' index (based oa estiqutes of .atiooal sp,eld per head,ia eight age. bands) :"d '"4616on 1.needs' iadex {<kirred lrom rtre eryiricql Yo* model) vere iacorporated in the oew forcula It also rccognised drat supply coDsi&rations should be acliuoq&fted in the fornrula for the perplexing influences of supply on geographic varinioos in use of heahi care (C-arr-Ftrll et al 1997). Iiovever, in 1995 tlre Yoft nrodel was not implemerned in lull ifl Brftiin'rrrar of tbr gtzmnenh nerwustetr nt?r lb, and dinaioa of the inplied tkfit ia n:otrn:, gtn ral, jon flbnban rytArdt

In

In

i4

Selecting appropriate prory of healfi care need is cnrcial in derelopiag a needs-based fornnrla- Iruppropriate selection of ptoxies of heahh care need caa lead to perverse incemive. For oornple, if 'nronaliry' is selected as a pro"yof need, disuicts drat fail to redtrce monrlity are iE\,?nded with more fueds. On tle other hand" those wlo achi":ve a reducdon in dre monality will receive a' lower aoouat of resource in the following fljcal ,ear (Grk4 1994). This, therefore, may not irriti!1ate sorn districJ to reduce the monality to mainrain tlre curem level of allocation. Similauly. if sorre districts can generate reveuue through user charges and hince go fewer allocatiorr from a central source, they may also be discouraied to generate resomes locally (Grcen, 1999).

Feasbility of Devising

aa

EquiiyBasedt so

Ee

Allocdior
lleahh

103

Some supponive corDPoretrs ala

tr..d

Strenettreniis CorrDooem o{ dre Second Family ttealfi Ptoject failed to l-oL"-"m Ul oee,Ci'b"sed rcsburce allocatiotr and bodgetary rEcharism unier rhe decentralisation process Jue to the followiry reasors (Green 'r

iornn

la. In

;ho EquitEd to irrylenrm

the- needsSysrems

Pakisun,

the

Balochistan

at,ztffi)l

. .

istinntes of the a*ilabilityof frmrre resources' Due to tlrcse coostraints, UJ( aad socle developing couotries' such as inniab inuodrced a rclatively sirrple formula ad U--a, rhe sophisticarion *ith the dwelopment of daabase #iratly""a and expenise (Ersor a at 2001). of MOHFIF 3. Existilg Resouce Allocation and Budgetary System

. . r-.kof infirtt-lon aborn utilisarion and cost ol services' Official ;r"hd;t figues c,ere not reliable' Ivloreover' tlere were no Z"*i" ln*.d

Tlre decision-nraking process was ceruralisedt,ack o{ appropriare budgeung skills ir r}re Ministry of heald and ltequenr tremfe. of professiorul suff' r.fo .U"" po[.v eoid"line in dnwing rp tbe budgeL

The MOHFV is one of the largest ministries in rems of budgaary fft4Offw' ZOOI). lt ;ns as a firurrcLl interardiary of the ^fL-,i* ad, ;-;;;"t frmds trom r-he Mnistry ot rinarrce (MoF) and *re p.*o, and dlocates fr'uds to heahh fac ities at diflerent

d*"top*.*
levels (see

Figite 2).

104

The Dhala UairersitystrJies, DceDber2OOS

Juie.2OO9

Figure 2, Flo* offrtnds irr rhe hea-lth sysrem

t)' t.\ i:!,\,

i:. , :;.

Ir ..r:: itri:r

I --i

Flow of frmd

-----.--->
11

Source Bangladesh National Heelth Accouars 1999/2fln

MOHFIV, 2003, pp

ln

of budgec a rwenue developnrmtudgei 'Ihe temrs Alou aod-&velopmem budges are comnrooly knovn as thc recurrcrn end capird bu&ets elsewhere (Green er a[ 2@o). The rcveoue budget is maoi to me*-the
budget and rcgular expendirurRs while the clevetopnrm budlct ilcludes rtre oroiect related allocation for dcvelopcrior spendiDg [\,tahmd, 2OO2).^ MOHF!(/, aJ with all other govemnrm ministries in BaoeladesL is also funded rhrough rhe dwelopnrnt bu&a in rhe form rhe ann al

Bangladesb, the goverDrrEm preFrcs t$ro rypes

ifu

if

Feasibility of Devising ar Equity Based Resource Alloc*ion

Developnrent Pogramne (ADP) and the non-development or rcvenue budger Both the developmem pruien and rhe GOB finance tlre development budg4 whil t}e rwenue budget is solety funded by the GOB (see Frgure 2).

jrnponafl to nore rlur fie two types of budges an' not dernarcated on the basis o[ qpe of expenditure; both budgets contaia capiul and recunent spending. Therefore, expendinre on GOB facilities can be broten dovn ino four cotrponents (Ihornas et al, 1995):

I!

is

G:C+Rp+Rf+Rv
Vhere,

G = Expedinle or GOB faciliti'es. C - gpi "l e4penditure on irems such as corlltruction and
Rp

equPrrnt. :Recurrent expenditure ircund in the operation of a Poject to iostall the equipnrem or set up rhe facilfuies which vill disappeat once the poject is over.

Rf - Fixed rccunnt expendicure

to operate, such
as, salaries.

rdich nnsr be paid [or *re

facilities

Rv :

Variabte recurrent eryenditure wbich is dependent upon the number and type of acrivities of the facilities, such as, &ugs prescribed

The devetopment'budget coosists of C and Rp rihile the twenue budget corsisu of Rf and Rv.

The two budges of MOHFW are prepared separatey by differenr institutes aad saff, and at diffeEm tirnes of the par (MAU, 2000). The MOHFW, developrnem paruErs and a separate Planning Commission un&r the t tidit v of Plaonins are invotved in preparing dre development budgei The office of the Dirctor Gencrel of f&ahh and -MOHFW prcpares *re rwemre bu.lget @mor et al Fanrily Planning, such diflereni budes, wih ti"t'hruirg 2oo1): Eviden; r,rgs".t different decision inrking aod accoumhg s)srens, can lead to inconsisteocies, conplerities h budgefug procedures and a danger of overemohasis on process rather th:n straregy (Gren e1 a!' 2000). Under such a oa.allel bu&etine srrteo, there is also a cndency to locus nrore on th"'d"u.lopt*ir b,ilgeL,ti.h ofun fais o u.ke imo accoum tlre ,"*.r..,t spetilittg o""dei to irylenrent the projects. This threaters rhe'

106

The Dhaka UniwrsirySmdi':s, Decenfier 2008 - June 2009

long-term sustairubiliry of the proiecs (Fozzad" 2001). Green (1999) wams that, for an effecdve planning sptenr, these distinctions must be eliminared and the process of setting recunenr budgets must be,firlly integrated into the overall ptanning process. It{oreover, as capial expendtures lead to funte recurrem budget requiremens, the two budgets must be consi&red together (Grcen et al 2000; Fozzad 2001).
UnJom-uutely, there is a common misperception lhar dre developrnent or capital budget relates to 'plarming' whereas recurrent budges are seen as related to 'managemenr . Preparing dre developmert budget under these circumstances is therefore seen as tlte resporsibility of a specialist planning agency and planniry depanmems, while the responsibility o[ prcparing Lhe recurrem budger lies wirhin an accounls drpartmetrt (Green er e| ls99; Fozzard. 2001). Banghdesh is no excelnion Though the

I-Iealth, Nutrition and Populadon Sector Programme (IINPSP) is prepared as the sector plan, t}re rwenue budga still lies completely ouside ttre HNPSP, and doqs not take into account the secor goals and priorities, but follovs an incenrntal approach for di*rrbrring resources across administrative areas, The changes carried out tluough tlre Sector \ffrde Approach (SWAp), as paft of the hedth sector rcforms, have
therelore. no effect on the revenue budget preparation process. 'Ihe rwo budges of MOHF\0 follow completely dilfereru aPProaches o[ b'rdgedng. The process of preparing the annrral developmem budger *.ni *rough a shih under the reforrn lt now lollows a Programme budeting ipproach. Flowever, tle revenue bu,Jget continues !o be pop.r"a-; tt" sarne process as prior to the refolm, and still follows a Lni item based iocremental approach of budgaing (Emor er al 2@1)' Under the revenue budget, the district and sub distlict allocations are deerrnined by no.-s that re]ate to the aumber of beds for food and drugs, and su{[ in post-for salary. Under t]ris alProach the previous yeais b.rdger (or expenditure) is used as a sraning poim for rhe new is nisei by a 'mark up' for ioflari<,nary irrcreases, salary 6rdgt, "rid ir,criases, a.td overall increase in resources availrble. For e"mPle, a healti centre receives a cenain allocarion *'hich is usually increued (or decreased) by a percentage each par in line with the overall inctease (or decrease) in the- health 6"deet (Pearson 2@2). Uo&r such a system' .esorrrces end ro be allocatet x rhey alwals have been in tlr Pasr rather than according to any conceP! of'oeed The incremental approach foc*.s on *Gt moniy brrys (inpus) rather than on the service dut is provided (outputs or outcomes).

-.t

Feasibilityof Devising an EquiryBased Resource Allocation

147

Increnrental budgedng is rehtively easy ro implemern and may provide a -faidy suble routine th;t is resisdnt to extenrrl .hock . and tillt adiosrs itsclt only gmdually to charrseJ in eovironmemal circumsances (i\iOF, 2007). This s;sum enables rhe bu&er irnolemenrine agencv ro ored;cl the approximite arnounr oI huds I reciive in r"he"n&r fi"ancii ro"r. bxed on the previous allocarion patrern- fu bargaining about ellocar.ional decisiors are resuicted to rlre distribution o[ Jdd;do; resources ra*rer than redisribudon o[ $e budger base. the increnrnral approach redrrces potenuial cooflio berwcen conrnders. This faciliures the working ol govemment, and reduces transaction cosr by stabilising expecatiom and limiting negotiations of resource allocations (Iifildawld 1986). Hovevr, lhere are no mechanisms h the approach ro inform specifically how decisions should be m;de or who should be involved in &cision-making. a sandardised format. with spending arranged according ro line-irem classificatiors, are used for preparing the budgeu on the basis of depanmental requests, tecbaical routines for the review of estimates, and the disbursement of funds (Andrw* aad 2003). There reoain a number of technical limitations to dris traditional approach to resourte allocation, such as:

it

}{lt

Under the increnrcntal sptenr, it becornes difficuh to Iind out the purpose of public expenditures or link the resources to activities, outpus and measures of performence. Since allocatiors are

determined historically. ofun only the ye-vly iocremenr is effectively reviewed and approved, vhich provides litde opponunty !o assess the continued relevarrce of the serrice provision and the expendirures in the budget base with sector goab (Fozzard,2o01). It is a traditional va1'of estiruting the projected expenditures that hard\, allovs new items to be hcluded in the budget MOF, 2004. uhimately political For or incrementalisrs, allocation decisions are uhimately argainiog. In the absence of clear criteria, resource allocation declisiots-".. often made arbitrarily or politically (\*'ildavsky,
1986).

Most importamh the iacremeotalist sptem fails to discriminate between population needs across areas (Neutold et al, 1998). For historical reasons, the existing infrastructure is often poorly distn'buted, so in practice this method of resource allocation peryetuates inequitable panems of distnbution (Rice and Smirh, 2001; PearsorL 2002). The historical incremenulist qpe of budgcting approach has led to major inequities in the distdbution

108

The Dhah t hiveniry Studi,:s, December

2OO8 - JuDe 2OO9

counGes including Namibia @ere el rL 2OO4' ,nd Mexico (Rocha et al, 2004). In these counuies, r-he regions witb more need for health care curremly get a lower share of.&e public sector resources, x4rile drose with relatively less need are allocated a gEater share of resources,

of public sector heahhcarc resources berveen regiotrs in rrufiv

'Ihe mcrenrcntal_approach followed for prepariog the revenue budget of the MOHF!7 also posses the above limitations, n*rich leads o-wide variation in per capita heahh care expenditure across districts. It vas found thar some districs received more per capita expendiftre thjough rcvenue budgets of dre MOHFW rhan othirs (see F,C"th.e. ,. T[" highest per capita erpendirure vas i59 Taka in Bandarban a]ld dre lovest was 58 Taka in Dhaka: 6 rimes hrgher per epira expendinte in the
former disrrict rhan rhe latter.

Figure 3: Per capita expenditure of MOHFI9 2n05 /06

ia 64 Disttice,

il

$s"$g{"${r$e{x$*"${.:e.;gt$*ego
Source of data: Rabbeni et al (2006)

liorvever, tlis variarion in per capita expeuditure of heahh care resources among districs is invenely related to the poveny stanrs of the district population. It appean from Begum and Ensor (2007) that in 2005106 the 10 very poor districa \&th 15./. of total popularion sprent 11olo of toul health care resources, while the 13 oon-poor disricts s/id1 12y" popularion spent 14olo of rotal heahh care resources. This implies that the cureff resoulce allocation mechanism rl-rerefore:

Feasibility of Devising an Equiry Based Resource Allocarion

109

. .

bears litde relation in principle to the size of the population

is inequitable beween population widr apparemty similar health

needs.

Flence,

it is

rystem

to

necessary to modify dre q,stem towanls a needs- based make allocations more responsive to the healti sector

pnontres.

4, Towatds an Equitable Resource Allocetioo and Budgeting

Mechanism; Opporuaities aod Constarnts

A robust

resource allocation sptem should consider the over all sector poliry and priorities. ttro*ever, in Bangladesll separation of the veflue and developnrnt budges, and lack of coordination between the two institutes in preparing budgets are the imPedirrena to do tlis. Dudng preparation of the rwenue budget HPSP priorities ate not considered (IJEU and MAU, 2001).

Budgea

regular expenditure are determined centrally. Once budgets have been agreed wth the Ivlinistry of Finance, movemem of funding from pay code to anotie! code as *,ell as betweefi lines is not permiued ([IEU and MAU, 2000. As pan of t}le reform process, the Ministry of }lealth is planning to decorcentrate the respomibiliry and authority within the public health spterrr. To support such a decentralised heahh sptern, ar e{feoive rcsource allocatiol mechanism is a tey factor. In Bangladesh, the budgeting sptem is centralised. It is sugested to decentralise drc planniflg function over services incorporatiag a degree of financial autonomy and flexibility over tine budget (tbssaia o1,2001). Ilence, it is necessary to i&rdfy the "t extent to which the financial autoaomy and flexibilig'will be requied in the reform process to decemralise the Planning fuoction. Therefore, a strong central level, within a clear frarreworh of eqr.rity, should accomplish the geographic resource allocatron. Resources can be allocated in broad {inancial terms considering *re needs of tlre decentralised managenent areas, wLile local nranagers will determine the detail vays to use such resources and hence budgeted (Green, 1999).

for most categodes of

In Pakistan, the Balochistan t{eabh

of

Systems Strengthening C-omponent rhe Second Family fleahh Project tried to implement the needs-based

resource allocation and budgetary mechanism under the decentralisation process. They rook *re initiative to adopt the resourcc allocation model under decentralisation in ooly one province. Banglatlesh can also try to

110

The D[a}a UniventySrudi,es, December 2008 _ June 2@9

;x;h.i'nr#*mhit*,*T*rffi f[;[:ffi._t shoutd Ekrn accordintly before implemendng *"

be

pilot proiecr in only one disrncr. Flowever, *"."lgn,tu.h the ca*ses of " tr,er l.rlure, such as centralised a*;.i."_rn*i,g-p-.*;,;jffi

:i

:flfr?#tr

."+L lu{ooor"._ :*"ilfl ':$:nl"f,l-i,i:ffi xt""#ffii"J;qta,"?",,,,r; }i';,g

"I;

jll'#,S.'ff**". f;"midtrT.Xrffij

Ecrease the sophfiticatiorl.

Tfure exisu a mix of capiral and recurrent spending in both revenue and developrnenl budger ifl Baneladesh. f , ;,, tf,"ofor.ir,ag;;;;p"" tlure allocarion merhods: oie lor the recurrenr budger, anor.her for the rccurrenr ponion o[ developmen budger *a , ,frrai..."p,JO{"]i .r,r/, 2@l). Flowever, it would be a coiplex ustd* o f..fi.f Ui,al",l" expenEe rncl nloEnanon in Banpladestu Fleoce. Iike oGe. co,,riu-iei inLroduce a siriple moa.l ,r tl" U.g;"r,ire. 119*:h

*r,*q

;;a';;;
erc

+e ,rcl,abilry .monality "lr" and morbidjw are developng countries, in{ormation on monaliry Sengral]f yeak (Paalnur: * ad 1998). Ivloreover, ,f.id;;;-"i; partrcular dlsmfl, such x areas sulfering from periodic flood or endemic dseases..are nor reflecred ir the regllar suGtics. It is, therefore, essentiJ ro develop a daubase conaining rhe inlorrnrrion o[ size of r_he Populauon, age,/ sex structuie, rnonalty, cross boundary flows. the
relat,ve- cosrs ol services and special healG reeds. Flousehold suwercresearch and routine data collecdon can be used ro gather information.

t'erucutu- anennon should. rherefore, be gaid on dris issue, Thcre is elso hck of injornntion in Bangladesh. Statistics onlv record those,episodes o[ illness tlut are ,"po""a"to ,-U. tum depend on the access ro facilities. Due to uncler-reponing of deadrs, -qr-"?,;r""i. -f-, ol sratistics has U..i

tor rmplerrrfling a needs-based allocarion svs-tem. which is l.-T q:.:".. ,n dy of pakisnn Therefore, significam invesrmem :ro.* m.capacrt), buldrrB l5 necessaiy be{ore introducing any chanse h rhe ef fr8 It is also apparent tlw frequem transfer- o[ suff .rnectransnr s4uun ministries causes problems in rnaintainine coftinuirv .ctrlleren!

Skils ur planmng and budgering expenise and policy zuidetines prerequs[rs

h""1,]-;;"il;;

Feasibilityof Devising an EquiryBased Resource Allocarion

111

cost index irrcorporating rhe cost of providing services in differenr arex is rcquired o adjusr allocatiorl The service mst varies across areas due differential trampon cost and variarions in b,:al prices of basic _to food commodities. Locarioq o[ a pamcllar area also affms *re cost significanrly as in a sparsely populated area, 1xr capiu. coss of care rise with increased transpon cosr and treannenirime lSheldon er a4 I99l). Sheldon and Wan (199J) argues thar rhe cosr of prc,viding serrices in runl areas is higher than in urban areas due ro the following reasons:

. . . . .

Addiional travel cost

lackof

economies o{ scale

Figh level of unpoductive time The extra cosrs of providing mobile and 'our-reach services 'l}e exrra costs of accessing training and other suppon.

In Bangladesh, an index for cost has beea developed rrhich ukes densiry of popular.ion as a proxy for nrasuring cos!. Ltropeaet this does nor capture fie e{fect of odrer cost-&ivers, such as cost of supplies in different areas (ttrossain * at,2@1).

to be decided which proxies are rnosr suiuble lor measurinq rhe of the vulnemble groups. Hossain ./ / (2OOI) sugg.su rhar resources should be moved away to those areas wLere monality heahh status is lovrest. ltrovever, using nronality rate can lead to forrene irrcentive. Moreover, Iilre most of the developing counuies, majority of the health problems in Bangladesh are aiso of acule ,arue. Herce, aaention is requircd before using SMR as a pioxy for rorbidity. Fenfity nte can be considered as a prory of needs instead of SMRs. As there exists a positive relationship between tJre female education and rheir
has
hea.l"h needs

It

health status, in Balochisan, Pakista4 female literary rzte was suggested as a prory of needs in the resource allocation mechanism (Grcen * al, 2000). In Bangladesh, the ESP arges vomen ,!s the rcedy group. The Iirerary rate of women is also extrenrcly low. T!rcrefore, female lircracy rate can be used as a ptoxy o[ rueds in allocating resourres.

However, attention should be paid towar* the prr,blem of pervene iocemive before using female literacy rate and feniJity rare as proxies of needs. It can be assunred tlat district that achiwe high female Iiter:cy rate is more arvare about heahl hazads than those having low female Jireracy rate and hence, will get fewer resources fom MOFI This in nrm may discourage the district to irnprove the {emale literaq, rrte in the

I
112 The Dhaka UniveniryStudies, Decerrber 2008 - June 2@9

threat of getting fever funds frcm tlle centre. To avoid this problenq the Mnistry of l&ahh should have muhi+ectoral collaboration witi the Ministry of Education. Needs should nor be quantified oo the basis of utilisation of services alone. I-figher urilisarion o[ services does not necessari} imply grearcr needs o[ services as availabiliry o[ and accessibiliry to health care provi&r io{luence the use of heakh carc seryices @yles * aL,1991). MorEoyer, grearer utilisation does not indrcate rnorc cost ii the pattem of case mix is different (Sheldon a a/, 199]). Similarly, the extra health care oeeds of t]re dum people in some parts o[ Dhaka reflect lc,cal sitrration and may not be app)ied to other areas.

The needs-based allocation method &scribed above is principally aimed at Ge rllocalion o[ the rccurrent element of th,: budget-bodr revenue and development. Tte resource allocation for capital frmding is a more complex task since past levels of irwestmenr lus ro be taken into accoum. Funher research is required in this areaThe implememation of the needs-based formula depends on several fectors. To a crear exlent this is a polirical choice. Govemnrqt can take -implerreot it wir-hin'a few )&?rs or can male &lays iniriative to Moreover, the trade-offs beween rhe iu interest. on own deoendine degree of- equiry ro be achieved and fie co$.effefi.iveness are political decisions (Sheldon and Wan, 1993). The speed of the irnplenrentation is related to rhe absorptive capaciry o[ additional rcsources of the "under-funded" area (Creen rr a/.2000) The Danicul,rr area rnay not be capable o[ lisir3 the increased amount of rcsoutes due to lack of qualified and cornpetent penonnel, and adequate suDDon services. An immediarc raosidon rmy also not be Possible due ro'fie political sr-rengfi of an "over-rEsowced" area- They can resist rhe decision of reducing fie previous level of allocation Govemnrcnt nny also be relrrcant to"red,rci the allocation o{ a Panicular alea due o the dtear of loosing irs populariry. \Uhile imolementine fie formula, ir is also dilficuh to incorporate cross' "tirho* cost shurning' Thereforc, . a bo*d"ri flo*, "n.orl."ging mechanism should be &veloped to recomPense the receruflg heatth ZOOO)' aurhorityfor the additiond woidoad (GreorI

"1

5.Conclusions alrd Recommendadons: This oaoer was an aflempr p review lhe eq''riry of geographic resotuce r-he'healh sector o[ Bangladcsh- It identifies *r'at ,Uo.rtion ,rst"-

Feasibfity of Devising an EquityBased Resourct Allocaion

113

despirc the nrove towards the sector wide approac[ the 'incremental' resource allocation qttem has remaioed the same in Baogla&sh, which does not ensure equity. The sysrem led to wide variatiors in distrio per 'caoita resource allocation. It is, lherefore, necessary to modify tJre current allocarive qctem rowards a needs_based slsern to meke ir more responsive Jo the priorities determined byHNiSP.

Some supponive componems, such as brdgeting skills, &tabase and ctear oolicv suidelines are required to introduce such a model l-lowever, rJ." ir,l,pl"r*"ot"tlon of fie ;del is mosdy a polirical choice. The policy of decintralisation will also significandyaffect the implementation of it. Therefore, the folloving recomnrcndatiors can be derived from the
review.

Io Bangladesh" the resource allocation slstem should be modified towands a needs-based sptern Due to the lack of supponive conponents, it can intialt inrroduce a relatively shple formula of resource dlocario4 . corsi&ring only the size of the population. \0'nh the developmenr of rhe budgeting skills, darabase and clear policy guidelines, a more sophisticated method can be intbduced, taking ioto account dre age_sex stnrctue of the population, t}le cost of providing services, cross boundary flovs and goxies of nee&. A framevork of overall policy guidelines should be developed for needs-based resource allocation This should incorPorrte tle over all heahh straagy, the criteria by which rcsources are to be allocated" ard thi availability of resouces ia rhe fuure (Greea er at, z(fxJ/). To cooidinate dle two institutions in prepanng developnrnt ald rwenue budges, quarcrly nreting can be *..rng"d b.,*""n these r*o instit tioos for- orrgoing dLlogue and iomulution. 'Ihey car ioindy ptepare a clear policy guideline of budgeting. A strong central level within a clear framework of equiry, sho'lld acconpiish t}te geographic rcsource alloc;rdon. Resources can be allocated in broad iiruncid terms considering tlre needs of the decentralised marugement areas, while local marugers will determine the deail .ap to rrse such resources and hence budgeted (Greeru 1999). Female literacy rate and feniliry rate. can be ried as . ptory of needs in allocating resources in Banglxlesh'

i
114

the

DLalca I-hivenirySardbs, Deceober 2OO8 Jrme 20@

More resowces should be chanaelled to rhose ateas with low female

lieracy rate.

ro record disria-wise healG sutus irf.r*raii" *j also.the infomation on ho"u UnG and UHFViG in;'dr.r; are being wilised by r_he population f.," .G";dir;;3;;; boundary flow). tlouseholi s'uwep cen be cona-*..a-."J*t i"*i ysars. Research and rourine dau collection .* ,L" b; ;J;;; this purpose. l-lowever, a di.,ri.,, . ;;.".*; requrerrems ior some periodic rarural hazards, "ddil;isuch as flood. c)rlone, or eDclemlc, rrvry no be captured by regu.lar statistics. To overcorrr trrs problem ol inuoducing needs_based formulaconringenry flnd can be rcr,;"cd with-r.he ."r* ,,a ._T disbursed in case of emergency.
Capacrty bgdgg brdgedrg skills is necessary. penonnel norms can be developed incorponting Ge number and woes of personnet needed by hvel of infrasmrcttue. ar manager level the sufl rrceds ro be rraired i" Ua*"i* lAii. Orr the- job raining should be encounged alo"c

Flraft-h m.rnagemeru inlonnarion s)srem shou.ld be develooed"

necessary

It

ir

tr&ug.

ft. sLt" wifr;"%;i

The snrdy proposes further research in the area of allocating rcsources for capial investrneat from cenur to periphery.

Referencee

Airdress M rrrd l-fll H (2OOl) The impact of rnditiorul budeftjip s\5rerm on the ettecuveness ol perforrwre-based budgetint: a diffe.im Jiej*pornr on recent {inding bfeftational p,bli 4drni,tnbalior h$pfiJo"naf of .

43592251:!&!ssussli!Eb!a

ches=26 - v2626 (a

(2004 p,,bti c,fr,dituft ftoie,, oJ tbe h.atth rectar 20u/ 04 to. ?:e: J Ad lpj. T 20A / 05, I+rlhEcoaomirs Unir, MOHFW, Rr"rr.h p+ol+.' ----' "''CAIDEN N and VIDAVSK y A (198t) p:hru!!S and budgeury in poor
count ries Transaction pubtishers, I.,Iew Brunswic\

pl; -l;.

Ner.;"o"i1

f11jq t

Fhrdman C, tr4anin S, peacock S. Sheldon T A. Smith p C (lee4 A new lormula for distributing hospital fuftts a Ettgland trkf,,e, Zl pp
ptubhc

U3-a--

C.oombs HI4" and Jenkins D.E. (1991) Chapmr &llall, Londo

Setbr Fiaareiat Mamgcnot

114

The Dhab UnivenitySnrCi:s, December2@8

luae 2009

lVlore resources should be channelled to those areas witb low

remaE lrteracy late.

Flrahh nrarugernenr information sysrem should be develooed- It E necessa_ry !o rccord district-wise healG sarus informarion and also.tl.re information on hov/ t HG ard UFIFTJFG i, are being utilised by r.he popul*ion fmrn other di.,r.i; ooundary tlow). Iiorrsehold survep can b: co"du"td yars. Kesearch and routine dau colleoion "r"rylho" can also be - used for

;"dLd; Z;;. ;s;; ;;;J

this. purpose, ftrosever,

requirements for some periodic hr-"d", cplone, or etrdemic, rhay nor be capnued by regular sratisri,cs. To over.come tqs problem ol innoducurg needs-based formulahnd _can be rerained vith fie centre and can be olsou$ed m case ot errrcrBeDcy.

districr,s additioJ

**-t

;;

.:f*8.1?

uarnrng.

of penonnel needed by--level of infrasmrctr_ue. a.r 6e's'errice rnanager tevel. the sufl rreeds to be trairrcd in budeedns skilsOn- rhe- iob mining should be encouraged al."s ;;-;"%;i
resources for capital irwesmem from cenbE to

bPt1e b.'**"C skils i,, oecessary. penonnel 9rylt ,- irrcorponting t}e norrls carI be dvclopd uumber and qpes

The surdy proposes fiuther research in dre arca o[ allocatinc

periphery. -

References
and lIll H (2003) The iopact of tradiriorral budserine +rdT.v,s tl s$rerrrs on tne eleqft,eness ot Momunce_bxed budgetiag: a an.r.rn i.ipoi"t oo *:t. tjdi* Itlkmarioaar lqre4L-4:-!!!bt!-4d!,in$ation h*p:ll,-

(ap TflT^ J 11d Pi":. r

(r

135

2W4/0t, I+ahh Economics UniL MOHFW, R$earch paper 34. CAIDEN N and MDAVSKY A (r98j) PJaryirg apd budgerrng in ooor coumries Trarsxtioo publishen, New Bnrswick, Ner.prr.y,Gl": Orr-FIll R & fLrdnan c, t\4enio S, peacock S. Slretdon T Srfth p C & (lee4 A new lormula for di{ribrLring hospiul ftuds n Endald ttt.tfaa! 27 p;
Jenkins D.E. (1ss1\ pkbt!. s.tlor Findl,iat Mdrasntnt *..1. Lllapmrn }l!,,,1d 6r Hall. lrndon.

@n tub.ti. b.tbsdn,ft ,r,ic,

of t bc kak

lss. .tot 200r / M h.

115

Covaleski

,r.* .rrrg"r** .o*of

Rnie', 24 pP 17-24.

MA

and Dirsmith

\f

political and witchcnft

0980

Budgeting in the
loses

nmiry

senices

Htaltb Caft Manaacnrnt

Did"i"k.; F Q@4\ Raome alhcatior Jot taohh eqatJ nsaa a nabodt l**l N,nriLion * a poput tion Discrssion Paper. VJxhingtonp. v"a" n, vhirchead M (1994 Rsoure ritrocarion ro hea r ;;;;." :Jfr#;;,',il o*" r.i -.q*"ut" ro''"h; e'i-,io aod sweden 8""
Mcdiul

lomal ENSoR T a

;ffid*;"ilrtr r+ahhE;;ffi iffiiil, J(tsre A need-based

i*iLJ
ffiR i^-i'e
i" <l"i*i",'o*a,
aad Mediciae

115 PP. 87*8' a/. (2001) Ivleasurins$elsE6-9ulElr:lsl4

Unr,

MoHF\'

Res-earchNore'2}

.!!!ryj4+:

merhodologv for irocat,'s Developnrnt and an application Socnl scrence

hi#.cT
lalsc! 1

D (1%

ll

PP 489-5@.

Mora.lity, nrorbidiry and reso.rce allocation

t8019) oo 997- 998.

t,ii'nq oemre tor Aid and ;:ff;,;',';;;l'; ':;i)il\,i,ii", 'E#J;;;;";'D.'eto[r"'n i*ttue'-t-oidon \corkinB P+er 147'
Londoa"

dlb'"tion ir.th' to fZOOrt Th. batu b,dxnra pnbLi': a['inachr! 'anurce Pubric
..

hpslev I aod \qhieoak J (19q2) o, i'ft C Perrin J, Evars Ml" qd; *lW ';;;;' ;;: '-r, A*:;,t ),a vi*,,a coor'zi, eiiriorl cuprran arrd Fra[

[r"tid* t Ort4 t"-u"a

Pqb&drbpEg
2

Heahh Seaor Finarcing and Expenditure t!:e&b

0)

PP

r2'4i'

Ffrahh and PoPularion secror

he",;*",'1sttfut

Di2ka Ba@ladestl GREEN A (1999) An imrodwuoD to t 7"d e.l. Odord Odord UniwrshyPress' ana !uaset1r,*ct1ni5 to1 E*,) Resource alloclion Pakislan Bulettn ol a-"J.rr.. ;..a n"a* .ro,ems' exPerience from Balochista&

a;;i;';;
;ffi
I

,r'.

V.iiJ r+rtl org-i."i."

;H;;. il;';;i.rE,m'.rSo'u-tt*b
Paper-19.

health of rlre poor: ,what do tr l D R (rooo) FleaLh ircqualities and the

ZE(8) pp 102+ I 015'

orgrdz'doo 7i (r) pp

1-

rleuduu.,z'7'!--- - -, ![i'*e-",',,i,*i'g,6@--p,!*L:*P.,-:-i:In*,"fl rec(or ."#fl Unit , MoHFV/. Reseurh Manasemff Accountiry Umt t'otry ttst,r.h

or uw IEU and MAU (2001) Public exoendmre reuew

xa* ^'' ' "v*"""

ffi,

*Xlf

ffifffifiE,.",.i6'c*,a"

)r'

fi.ii"[*i

,, a/

(2ocro)

Mating f.esource:Alocaloni?-ectigrs---in Jbr-heil$ Master thiversiry' Gc;ional Paper No 4'

ffiEF

r.""g"[,.ry,

116

The Dhaie UniversitySrudies,

,ffi*Lffi@ffiffi,fr:,ffi
ffi,&_!Pslrry**

Deo:mber 2@8 _ June 2009

Wi::,:;i,*; ;iK:t:;l{;,{,k:#"i*tr,f ;I::L,,;ffi:{

morbi'dtv for resource alocation Briish Mediqr

ror hearrh and sociar care

{Wffi#yffi#i;,y*

*mffi?:x*:
mtrdflf"ff.t#iflDeveloprnent
Repon ree3 ravestios rn lreartb,

r:rLrr.ffi,ffi I jffi *r.,ffiJ,#*)X##:

1;3ryi,,j;;;1#f"#'.trffi {#$ffi

f.,Hd5ffiW
n'

Bart:h*r h. Baq)adesh