Session 7: Market Economies & Health Planning PDF

Session 7: Market Economies and Health Planning June 27, 2024 Physical Group Session Objectives 1. Describe various types and characteristics of economies that guide health planning. 2. Discuss the continuum between Not-For-Profit and For- Profit health care providers and their inf...

Session 7: Market Economies and Health Planning June 27, 2024 Physical Group Session Objectives 1. Describe various types and characteristics of economies that guide health planning. 2. Discuss the continuum between Not-For-Profit and For- Profit health care providers and their influence in planning. 3. Discuss the Kenya National Health Sector Strategic Plan I & 2 of the KHPF-1994-2010: Challenges & Remedies. Brainstorm: Class Discussions 1. What are various economies are you aware of? 2. What are the factors of production and how do they influence health planning? References: 1. Public Policy: Perspectives and Choices. Charles L. Cochran and Eloise F. Malone, 3rd Ed. 2007. Lynne Rienner Publishers, Inc.USA 2. Improving Health Policy: Germano Mwabu, Joseph Wangombe, David Okello. Gasper Munishi. University of Nairobi publishers, 2004 Introduction: Economic Structures and Health Planning ❖ Resource allocation in health planning. Who gets what? When and How? Who has what and how was it obtained? For whom are the goods/services produced? ❖ Resources determine how policy directions will be implemented and monitored for effectiveness. ❖ Economic structures provide answers to the questions and provide how policy directions and planning will be guided into implementation. Types and Characteristics of Economic Systems ❖ Traditional Economies ▪ Customs and beliefs inform decisions for resource allocation. ▪ Economic questions such as what, how and for whom to provide are answered based on what happened in the past. ❖ Command Economies (centrally planned economies) ▪ The government owns everything else in the production of the economic activity except human capital (labour). ▪ The government allocates most of the resources and makes most decisions. ▪ Decisions on what, how and for whom goods and services are to be produced and allocated are the mainstream of government decisions. ▪ Inefficiency is the order of doing business. Types and Characteristics of Economic Systems #1 ❖ Pure market economies (Capitalist economies) ▪ The private sector owns all factors of production except the human capital. ▪ Decentralisation is the way decisions on what, how and for whom goods and services are produced are made. ▪ The private sector conducts most of the economic activities. ▪ Entrepreneurship answers the question of what to produce. ▪ How to produce is influenced by the presence of technology. ▪ Efficiency is the principle of means of production for maximum output. ▪ For whom the goods are to be produced is determined by consumer demand. Types and Characteristics of Economic Systems #2 ▪ Pure market economies (Capitalist economies) ▪ The Government makes decisions on to whom the goods and services will be distributed ( theoretically ‘per one’s needs’) ▪ However, in practice, political or party loyalty is the decisions that determine how resources are distributed. ▪ Entrepreneurship responds to only those with purchasing powers ( public policy recognises those willing and having the means to demand the services). ▪ In pure market economies those who do not have can easily lack services and goods if governments do not intervene. ▪ The role of government protect private property, and goods to serve society. Types and Characteristics of Economic Systems #3 ❖ Mixed Capitalism (Pure and Command economies) ▪ The government makes substantial decisions while the private sector makes most decisions. ▪ Because of the inefficiencies in command economies, governments initiate public/private partnerships. ▪ Governments formulate policies that lead to full employment leaving ownership of means of production and profit to the private sector. ▪ In certain countries with mixed economies, public policies in service areas such as healthcare may be challenged not being the legitimate role of governments. Advantages & disadvantages of Command Economies #1 Disadvantages ❖ No economic freedom and no societal goal ❖ The government has control over workers & takes economic choices away from producers and consumers. ❖ All decisions are managed centrally creating inefficiency ❖ Political control and demand for loyalty. Advantages & Disadvantages of Command Economies #2 Advantages ❖ Low unemployment because the government controls employment ❖ Least financial wastage as the supply of resources is regulated ❖ Affordable market prices as the government controls prices. ❖ Profit is not a primary objective. ❖ Restriction on monopoly. Advantages & disadvantages of Free Market Economy (Capitalism/Laissez Faire) Disadvantages ❖ Creates poverty because of economic imbalance. ❖ Little guidance from leaders. Advantages ❖ Employees make decisions increasing innovations ❖ People are expected to solve their problems ❖ Employees have access to resources and tools ❖ Creativity, high morale flexibility and development of skills. Advantages & Disadvantages of Mixed Economy Disadvantages ❖ Lack of sustainability and inefficiencies. Advantages ❖ Government intervenes but does not control economic activity. ❖ economic policies are indirectly implemented through government-led organizations, providing oversight. ❖ Subsidies, legal tender laws, prohibitions. ❖Standards are enhanced. Challenges of Mixed Economy ❖ The economic future is always uncertain and unpredictable. ❖ Market information is imperfect and very expensive to source. Policy analysts call this a market failure. ❖ Public goods/services are affected by collective answers to the question of what to produce by paying higher or lower prices for certain goods and hence signalling their demand for those goods. ❖ The market mechanism is efficient when the benefits of consuming such a good/service are available only to those who purchase such a good/service.  Healthcare Providers by Financial Orientation Not-for- Profit For -Profit ▪ No charges ▪ Minimum charges ▪ Break-even charges ▪ Minimum charges ▪ Non-Profit oriented ▪ Profit-oriented ▪ Minimum or no ▪ Market-driven charges charge to users ▪ Government units -No cost: cost share- Highly subsidized: no ▪ Private-for profit units subsidised facilities ▪ Rural health centres ▪ Specialised hospitals and & dispensaries clinics Kenya Health Sector Strategic Plan 1: Challenges 1994-2010: After 5 Years ▪ Absence of a legislative framework to support decentralization; ▪ Lack of well articulated, prioritized and costed strategies; Inadequate consultations among MOH staff themselves and other key stakeholders involved in the provision of health care services; ▪ Lack of institutional coordination and ownership of the strategic plan leading to inadequate monitoring of activities; ▪ Weak management systems; ▪ Low personnel morale at all levels; ▪ Inadequate funding and low level of resource accountability. Kenya Health Sector Strategic Plan 11: From 2005-2007 The way forward: ▪ Revisiting the financing of the sector: Introduce the National Social Health Insurance Fund(NSHIF) in a phased approach to eventually achieve universal coverage of free health care for the Kenyan population. ▪ Focusing on investments to benefit the poor: ▪ Reallocate resources towards promotive, preventive and basic health services and enlist additional capacity through partnership arrangements. ▪ Increasing cross-sector cooperation: For MOH, strengthen ties and collaboration across sectors in the areas of agriculture, water and sanitation, education, roads, culture and social services, etc. Kenya Health Sector Strategic Plan 11: From 2005-2007 The way forward: ▪ Increasing efficiency and effectiveness: For MOH, adopt a programmatic approach with all partners involved (sector-wide) leading to a jointly agreed strategic plan, financing mechanisms, M&E framework, and procedures for annual sector program review, together with a jointly agreed medium-term expenditure framework (MTEF). ▪ Increasing GOK funding: Increase health sector funding from the current level of 5.6% of total public expenditure to 12% by the end of the ERS period.  A Health Policy Framework: example of Kenya’s Health Policy Framework Policy Orientations & Principles Policy Objectives Policy Goal Eliminate Efficiency Research & ”Attaining the Equity Development Communicable diseases Health highest Health Systems Sbuilding Blocks Leadership Halt & reverse NCDs possible Multi-sectoral People-oriented Health Products & Technologies Reduce the standard of burden of violence Health & injuries health in a Workforce Provide essential responsive Healthcare Health manner” Social accountability Financing Minimise Exposure Participation Service Delivery to health risk Systems factors Health Strengthen collaboration Infrastructure with private and health care