Insight: Healthcare Financing In Nigeria
Healthcare financing refers to the mobilization of funds for healthcare and mechanisms for paying for healthcare services. It entails allocation of funds to regions, groups and specific types of healthcare. It also includes all financing mechanisms that contribute to improved access to healthcare for the poor, rural residents, and other vulnerable groups such as women and children
These mechanisms are usually introduced to address challenges related to funding shortages, poor health indicators, inefficient management of health facilities, low use of health services by the poor, and inadequate numbers of health providers
Current Situation In Nigeria
Healthcare is financed through public expenditure, private expenditure or external aid. Healthcare in Nigeria is financed through a combination of the following:
- Budgetary allocation (State and Federal)
- Out of pocket payment
- Donor Funding
A majority of the expenditure on health by the Federal Government goes to teaching hospitals, specialized hospitals, and Federal Medical Centers; budgetary allocations to the health sector remain low with 2018 figure standing at 3.90% of total budget. A large percentage of government funding available also goes to recurrent spending. 2018 figures read 269.9 billion.
- Only those who can afford to pay have access to good quality or any form of healthcare services.
- Spending power of the household is limited and other essentials are negatively affected e.g. education and feeding.
- Late detection of otherwise curable diseases is high; especially amongst rural and underserved population.
- Over dependence on traditional medicine; which may be ineffective or counterproductive if not properly administered.
- Weak primary healthcare characterized by frequent stock outs and shortages.
- Donor fatigue and gradual withdrawal from healthcare financing initiatives.
- Rise in epidemics and hygiene related diseases.
- Equity Funds
Health equity funds (HEFs) are demand-side financial mechanisms established to improve access to priority public health services for the poor.
- Pooled Funds
Pooled funds are funds from many individual investors that are aggregated for the purposes of investment, as in the case of a mutual or pension fund. E.g. The Abiye Equity Fund in Ondo State.
- Basket Funding
This is a multi donor fund targeted at specific projects within a given timeline. Funds are usually paid into a one account and then disbursed to the different project components. E.g. Zamfara State set up a basket fund to support immunization and selected maternal health services. By mobilising funds from the state’s 14 LGAs, the state government, and development partners, the state mobilized 1.5 million Naira (US$9,684) and set up a state bank account with these funds in 2009.
- Results-based Financing
Under this approach payment structure is based on specific outputs such as patient visits and procedures or results such as improved health status in the community. With results-based financing (RBF), facilities are paid based on their achievements and performance, while in some cases, the payments serve as rewards in addition to regular costs. E.g. BHCPF
Bamidele Odusote is a Business Analyst at ACIOE Associates where she leads Health Sector engagements with multiple clients and stakeholders.
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