Equity in financial resource allocation among districts in the decentralized health system

Date of Award


Document Type


Degree Name

Master of Science in Health Policy & Management (MSc Health Policy & Mgmt)


Community Health Sciences


Health sector reform aim at improving the efficiency, equity and effectiveness of the health sector and have decentralization as one of its central components. A critical element in any decentralized structure is the mechanism through which resources are channeled from center to peripheral units The allocation of resources within decentralized systems is recognized to be one of the most important influences over the impact of decentralization on equity In order to be seen as fair, the allocating authority, while distributing public resources in the context of decentralization tends to use formulae. This allows an explicit presentation of the criteria for funding. As opposed to the overall fiscal transfers, budgetary allocation to the districts in the health sector has not been on well defined criteria which has resulted in wide discrepancies among various districts. With this view, the provincial health departments have been developing criteria for budgetary allocation. The present study set out to explore the perceptions of policy-makers/planners in this regard. For this, semi-structured interviews were conducted with key-informants at the Planning, Finance and Health Ministries/departments at federal, provincial and district Ievels. A range of factors, other than health care influence health status, therefore, in addition to equity in health (and health system), consideration was also given to broader socio-economic issues and overall government resource allocation patterns (rather than simply health sector resource allocation). The results of the study show that at present health budget allocation is based on infrastructure rather than health needs of an area. For equitable allocation, burden of disease was considered more important than population of the district. Consideration of level of health care being provided by the private sector in a district was also mentioned. However the private sector was seen as making health services more inaccessible. Inclusion of utilization of services was considered as important. However, utility of this indicator as reflective of health needs was questioned because of political involvement during planning of health facilities. Block grant allocation to districts was welcomed as a step towards ensuring disbursal according to need. The conclusions drawn from the study are that health services should be planned and targeted on most deprived sections of the society, even if this means a poorer service for those with reasonable health. Although it may seem here that in order to achieve equity, efficiency is being compromised. However, it is seen that the most deprived areas seem to face health problems which have the most cost-effective interventions. Hence focusing on such areas would not only be equitable but efficient as well. This is because marginal gains from such areas would be the greatest. Government policy and allocative patterns have an influence on equity in health. The current health policy considers health as part of the government's poverty alleviation program and makes equity objective explicit. However, there is often a gap between stated objectives and how policies are implemented. Therefore both the implementation and outcomes of policy need to be monitored and judged against the original equity objectives.

This document is available in the relevant AKU library