Tracking Revenue and Gauging Financial Sustainability Under User Fee Removal in the Health Sector in Zambia

Presenter: Caesar Cheelo, University of Zambia

Abstract

Rationale: It is widely held that user fees significantly influence the way overall health resources are mobilized, allocated and utilized, especially at the district and facility levels of the health system, with important implications for health service delivery. Zambia removed user fees in rural areas in April 2006 and in peri-urban areas in January 2007, hoping to improve access to healthcare.

Objectives: This study seeks to determine the impact of user fee removal on revenue levels in the health system. It addresses the questions of 1) what have been the revenue collection, allocation and use experiences in health areas (districts and facilities) where user fees were removed compared to localities where fees are still applied? 2) What have been the experiences and implications over time of differentially applying user fee policies in different health districts and health facilities? 3) What are the likely impacts of scaling-up the user fee removal policy to urban areas were fees currently obtain?

Methodology: The study performed in-depth revenue tracking in five health districts and about 20 facilities .The five districts and 20 facilities were selected to allow for different experiences in implementation and the effect of user fee removal. Data were collected using health district- and health facility-specific structured and semi-structured questionnaires focused on revenue tracking, which were administered to district health managers and health facilities managers and administrators. The study employs various quantitative methods to analyze the cross-sectional and retrospective longitudinal data that were collected.

Findings: preliminary observations suggest that user fee revenues were quantitatively not significant, with minimal revenue loss impact, but being relatively fungible, were qualitatively critical for sustaining key service delivery functions, particularly at the facility level. With high transactions costs, which were not directly borne by facilities, the user fee system - though generally favoured by health managers and health facilities - was inefficient. Scaling up the user fee removal policy - should MOH take this policy option - can be expected to have bigger revenue loss challenges since revenue collections in remaining (urban) areas are substantial.

Conclusion: The study contributes to the development of a sounder evidence base around the health financing implications of removing user fee, informing explicitly about the possible financial implications of scaling up the fee removal policy. The evidence is an important input for healthcare financing policy in Zambia and in the African region.