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Key Policy Issues for Effective Health Sector Decentralization

Runana Huquel Nasrin Sultana2


Decentalization is one of lhe major elements of bealth sector reform rn many devetop,ng countries. In the heallh scctor, decentralization. involving a variery of mechanisms to tmnsler n.".f. ai"", managerial and/or political authority for health service"O.iri.t deliverv from the central ministry of health to altemative institutions has been promoted as a key mechanism of improving health sector performance. Though decenhalization has beeo considered as an impo ant change for tle n-roer- essive dwe,opment of the healtf,, it- upp""rs-to 3" rare for the health s:ctoi to take the initiative. n"c""t Airatio" poii"i". are usually adopted by the central govemment and oolv subsiuenrtv by the healtb sector. The govenunents have injtiated national ooticie's by rssuing decrees !r by adopling constitutional changes that set the PatleT fol ,!" f.fonT.. to- be adopred Uy ttr,: aifJent ministries, rncluding the health ministries in developing countries. New efforls oi democratizatioll alrd modernization of ore stle have treneJ mis

Decerfralizatien is often considered as a one-off event to tiansfer power at one time and in one quantiry to the new institutional Iocations. That roay Dot be true in mosl settings because variations aod changes do occur over time in the process ofdecentralization. In facr dece.tralizatioD is a dynamic relationship ofchaoging powers between the. centre apd rhe. periphery rather ttran grantinglffitt p";* i; ;; peqrhery. In practice, these different ofds:entralization are used b?es at the same time for djfferent furctioos and may not necessarilv be h pure form. purpose The of the anicte i", rh"."f";;, Fl"d i; 991. rnterpret different forms of health sector decentralization and lheir respective weakness and s$engths so as to idelrtifo the kev oolicv rssues lhat need to be considered for the successful imptemeniation oi decentalization in the health seclor ofBangladesh.

I -

Assislant Proressor,Illstihle

Lecnfer. Institute ofHert0 Economjcs, UnivEiry ofDhaka.

ofHE ttb Economlcs. Uulersiry ofDhata.


' rqT "&i':


Dhdko Unn errity Studies, June 2004

The paper has been organized as follows: section two discusses the main approaches to and forms of decettralisaliou along with their strength and wealotess, section three aaalyses the rationale for decentralization, and section fout shows the experiences of health sector decentralization in developing countries includilg Bangladesh, section five identifies the basic conditions for &e successful implernentation of decentralization. Finally section six puts forward conclusion and policyrecommendation. Approachqr to and forms of decentralisation
The telm 'decentalization' is used to describe a wide variety ofpower hansfer afiangemetrts and accountability s]sierns. It is basically a transfer of authority 10 make policies and decisions, carry out management functioru, and use resources. It i$,olves the passing of these from central govemment authorities to such bodies as local govemment, administration, semi-autonomous public corpontioN, area wide developmsnt organizations and fu ctional authorities (Collins, I 994).


Therc are two broad approaches to decentralisation ---- a social development approach and a market approacll. Acco.ding to the former ideolory, decentralizatio[ can be adopted as a vital principle of a pdmary health care approach, particularly in enhancing equity, intersectoral .collabor"ation and coEmurdty participation. The later approach sees decentralisation as a mears of promoting privatizatiorq an ingedient of quasi-market in the public sectoa bureaucracies, and as a way in which the advantages of small elterpdse management may be hcoryorated in the public sector. The policy makers, tierefore, need to be very clear about the approach to dece[tralization in order to the formulation and implementation of decentralization policy.

There are also different organizational forms ofdecentralizalion. These forms are not always clear-cut in practice, and couDtries tend to mix a number of diflerent forms of decentralization in their government system. Hence it is, important to idertify the direation ofchange and to understand how the different systems relate to each other. This section,

therefore, presents

brief outliue

of the differcflt forms of

decentralization and highlights their strenglhs and weakness.

.i - 'i
Kef Polky hsues for Efectiye Heaih Sedor



$ ,14i




Decentralization as deconcentration
Deconcentration is one of the mildest foms of decentralization. lt is de{ined as '.... the traDsfer of firnctions within the central govemment hierarchy through the shining of work load from central mmistries to field officen, the creation of field aeencies. or the shiftins of responsibility to local administrative uniii that are the part of ce"nt-al govemmeDt structure' (Rondinelli, 1983a). Since the early 1970s deconcenkation has bee[ the form of decenhalizatiofl most frequently used in the developing countries. For the ministry ofhealth, it implies imbuing local (for example, district) management with clearly defined administrative duties and a degree of discretion that .\vou1d enable the local offrcials to manage without constant reference to ministry headquarters. Deconcentration may be accompanied tIe amalgamation of bolh central and local govemment heallh services within the local organizatiorL in order to facilitate the planning arrd management ofhealth services on an integrated basis.


Therc are two major forms of deconcenhation. Fi6tly, there are functional systems of field administration wherein field officers possess vertical links with the center and are functionally specifrc, concentrating on education, health, rural development and so on. In this system, minisaies have their own deconcentrated hierarchies and line co[trol over their field officers and teams. Thus thana/Upazila Health Office6 are sutrordinated to District Health Oflicers who are subordiDated to DivisionaURegional Health Olfrceis who report directly to the centre (ministr9. The line of recruitrnent, selerfion, lrMsfer, and promolion is equally set out in the vertical fashion. This
s)slem is shown below (figure I ):

Fig. li Decentralization as functiom! deconcentration. line man cotrtrol.

inistrv ofHealth



Other Ministries

Health Offlce/OIficer

Regional Health Team

District Health


District Heath Team

Thafla Health


Thana Ilealth Team



Dhdka Uniyewity Studies, June 2004

Another form of deconcethation is thg integrated prfectoral system, which is explained by Smith (1985). Here the key figure is the prefeci (senior government official) who is appointed by and accountable to the central govenment. There exists a line of command between the centre and the tocal level, the prefect being the representative of the govemment and '...embodies the authority of all miaistries' (Smith 1967). Ministerial field officers are subordinate to aud communicate with the center principally through the prefect. This system is illustrated in the fotlowing figure 2: Fig 2: Decentralizatiotr as prefactoral deeotrcentratiotr.-.main line managerial control.

Regional prefect

DivisionavRegi6nal Healh

Ofrce/Officei OtUr t' t"i"ri".lOiri",t"giorui

----71 ,,/-

DNtrict prEfed

District Health Office/Officer Other Ministries District Office/Omcer

Thana./Upzzila Health Offi celOlfi cer

This system is more usually associated with France, aDd is to be found in its ex-colonies. The direct rule exercised by the British over India

was an exarnple (Collins, 1994).


prefectoral s)rstem

of colonial administration

$.+1 {' 1r:r:.,

Key Policy ks]arjfot Efecrive Heatth S?rtor Decentatization


Decetrtralizatlotr as devolution The secold major form of decentralization is refered !o ar devolution. Accoding to Rondirelli (1983a), -it involves the transfer of functions decision making authority legally ircolporated local govemments, such as centro, districts or local level." In dwolution, the decentralized units are normally characterized by (Mawhoodlgg3): slatuary recognition of the right to cooduct their own budget arangements, a clear legal existence with corporate status, a multi functional role, the authority to take decisionJ on the allocation of resources invoMng revenue raising and expenditurc, personnel management, logistics management, and, appointmeirt and election of key reprresentative members ftom a differint constituency to higher Ievels of govemment. In fact, devolution is rhe ireation- or strengthening of sub-national levels of govemment (often local govemmert or local authorides) that arc substantially hdepsndent of the national level in respect to a defured set of functions. They normally h,ave a clear legal stahE. recognized geogaphical boundarieq and a number of fitoctiolts to perform, and a statutory authority to raise revenue and conbol expenditue. They are rarely completely autonomous, but are Mies largely irdepfideot ol the nitional govemment in their areas of rcsponsibility .ather thar subordinate units as in &e case ofde-concenkation. In the health sector. devolution implies much more radical restructuring of the health service org{tizatiol thalr de-concentration. The concept of devolution is shown in (the figure 3).below:



Fig.3: Decentralization



, iBtergovernmental


Dha*a University Stu.lie:, June 2004

Dectrtralization througt delegatiol

DelegatioB refe6 to tmnsfer of firnctions and Iesponsibility to the local level to achieve greater e{ficiency by increasing cost control, flexibility and rcspon-siveness. The ultimate responsibitity iemains with the cenaal goyemment but its age s have bload discietion to carry out its

specific firnctions atrd duties. ID the heatth fietd delegation has been used to manage teaching hospitals, for example. Delegation has also been used to organize the provision ofmedical care filanced by social insuralce. Delegation is not compatible with de-concertation. If the management of entire national health sen ices is delegated to a separate organization, the rcle of the ministry of health would be conlined to strategic and policy issues.


involves the transf$ of goyemment frrnctions !o voluntary organizations or to private plofit making or non-profit making (or nongovemme al) organizatioN, with a variablc degree of govemment rcgulations. Silce many govemments cannot afford any major expansion of health setvices or even maintain existing services, they need to seek altemative sources of financing and sewice prcvision. Financing mechanisms may include &ee sr:rvice delivery by nongovemmedal organizations, indirect or thid party payment in the form of va ous insurance schemes, or increased direct collsumer pa),rnetrt oI "cost-lecoyery" (though with substantial pubtic flrnding). In such cases the options for service delivery may involve nongoyemmental and yoluntary organizaiions or greater relialce on the
private sector.


Ratiotrale behitrd Decentralizatiotr

There are many complex reasons why govemmgnts in various countries have started or are begiming lo stat decentalizirig their
health services. Looking at the histodcal pqslrective and analyzing the rcasons for the decenkalization of policies and their evolution, it is evidert that different local factors have played a major rcle in different couDaies, e.g. political ide-ology, demand for more regional autonomy and the oed io rationalize overburdned ard ou&noded a&ninistrations (Ihomasoa 2004).

Key Policf ktuesfor Efective Heakh Sector



The objectives of decentralization have been dive6e. Many countries have realized the need lo strenglhen peripheral and local authorilies and have adopted deceDtralizatioB as one of the major means of implementing reforms for better efficiency, quality and equity. On a philosophical and ideologicat level, decentralizatio has been seen as an important politicat ideal, providing the means for community participation and local self-reliance, and ensuring the accountability of govemment officials to the population. On the Faglnatic level, decentralization has been seen as a way of overcoming irBtitutional, phlsical and administrative constraints on development. It has also been seen as a way of traNf{dng some resporsibilities for developmed


the centr to lhe periphery.




The 1990s wihessed globalization occupying centre stage at both intemational and national policy debates along with the issue of
decentralization. Within the health sector, deceotralization of finances,

through unlied/un-earma*ed $ants and responsibilities, emerged as an important topic in the agenda ofnational goverrrne[ts, intematiolal
organizations and development ageIrcies. The ircreasing trend towards privatization ofhealth services and the expansion of the private sector as a motol of economic growth has fostered closer partnerships in

health. Globalization has also inlluenced the community structure, family values, life styles and the disease pattem. A decentalized ryrtem k considered to be morc able to address these changing situations by actitg promptly and appropdately accoding to the local envircnment In additio4 globalization has enhanced the spiead of market-orielted reforms in health. The economic decline in developing
countries has eroded public health rcsources resulthg in widespread degadation of health infrastructure and decline in the health status. The poorest section of the population is affected the most ftom the

increasing inequity in health. Decentralized self-goveming local institutions are seeIl as a vehicle for identifying and reaching the poor more effectively and for mobilizing additiorul resources for public

The Dhd*a UnhlersiE Stl1(lies, June 2004

Health sector detentalization also has several theoretical (Mitls el aI. 1990). These irclud,e the potential for: a more rational aad unified health service that cateN to local preferences
improved implementation of health piograms decrease in duplication of services as lhe target populalions are more specifi cally defined rcduction ofiaequalities between rural and uban areas

cost containment &om moving



streamlined targeted

greater community financing and involvement

. .

local commuDities greater integration of activities of differcnt public and pdvate agencies

of in

improved intrsectoral coordination, particularly govemrient snd nral deyelopmed actiyities.


Exprietrce of Ilealth Scctor Decqrtralisation

The various forms of decentralization prcserf different challenges and opportunities. The most apFopriale form of decentratization depends on the situation and contcxt of the specific @untry. Health protriems are not the s{ulre across societies and cult$es, and health and social services are organized differcntly. Morcoyer, the demoqatic process and socio-economic conditions are differert; public vsrsus pdvate providers, including NGOS, are playing different roles; and qountries or even different states within a targe coultry are at different stages of develo,pment. Thus, different forms of decentralizatiotq fiom decotrcentation to privatization, may be appropdate under differe circumslances.

Decetrtrllisrtiotr itr deyelopinB coutrtries

In Philippine, the devolution of health services nas the major factor causing significant changes in the fiscal $,stems in the health field. (Charles and Stover, 1997). While in Zambia, functioqal decetrtralization facilitated effctive techrical supervision &om the coutle to the periphery and maintaining the policy cohesion within the
health system, decenaalization in the form of devolution laid the trasis



hsues for Efectiye Health Sector


However, devolution also ted

for a multisectoral approach and community involvement in Uganda.

health policy and systems fragmentation and inequity in Ugarda (Jeppson and Okuonzi, 2000).


Evidence from Colombia and Chile suggests that decenhatization, under certain coflditions and with some specific policy mechanisms. can improve equity of resource allocation. h these countries, different forms of decenkalizatio! ld to equitable levels of per capita linancial aliocations at the municipal level (Bossefi, Larrarl- aga, GiedioD, Arbelaez & Bowser, 2003). However, decenaalizatior has failed ifl some counaies in Asia and Africa the absence of skilled professionals, adequate financial resorrces and appropdate inliastructure. In Bangladesll a weak institutional base, rmwillingness on the part of the certral actors to delegate authority at the local level, and strong resistarce ftom health-related human resouces limit effective implementation of decentalizatioq (Pokharel, 2001)


Senegal, under the decertralized health systern localb, elected leaders allocate resources to health services. However, it is found that the elected leaders are more likely to channl resouces towards those interventions that havs the highest visibility and are thus most likely to get them reelected, They tend to cite tangible invshnetts, such as medications, inftastructure and equipment (padiculady ambulances) as priorities in health rather than allocati[g resources for family plarming and reproductive health se_rvices (Wilson, 2000). L1 Mozambiqug the decenaalization_ of resources was erfectively promoted in dre health sphere (Mackintosh and Wh,4s, 1988). The process of decenAalization in health planning and financing led io a shift in relative, and sometimes absolute terms, ftom city hospitals to clinics; from complex medical intervention simpler procedues; from doctoN to para-medicals; and ftom curative to preventive care, There were, however, many goblems with this system as the health worke$ could not be flnancially supported and it was olien difficult to maintain adequate basic supplies (Mackintosh and Whyts, 1988).



It is, &erefore, clear that there is no unique formula, nor any simple technical fix for meeting the health needs in ar effective and efficient way maintaining quality and equity. What is needed is a right mix of approaches. However, though the above foms of decentralizatioo are


Dhak Univtrsitt

Studiet, June 2004

useful for identirying the institutional location ofthe qewly lraosfelled powers it tells us little about the crucial aspect of deciatralization: namely, the range of choice that is granted to the decision-makers ai the decentralized levels. Decentralization, of cou$e, is not easy to inplement in practice, as it is a process, which may take as long as l0 to 20 yea6. Decentnlizatiotr in the health iector of BlDgladesh: Scope atrd forrtr Though Bangladesh has achieved rernarkable success in its health arrd population sector over the last three decadeq a number of challenges stitl remain urmet. Along with increased covemge and quantity of services, improvement of quatity of care and economic efficiercy in resource utilization has to be ensued for development of this sector. The recent Heallh, Nutritio[ and Population Sector prcgramme (HNPSP) also has similar targets in respect of coverage and quality of services. Given the gro*ing scarcity of resouces for the sector, the way to increase covemge and quality of services is to intensively use the existing facilities alld efficient allocation of the resouEes to the sectoral activities. In this context, there remain ample scopes for financial and managerial decentralization in the health sector of Banglades[ which in turn ca help in achieving the dual goals.

Financial.Decetrtialization for elficient allocatiotr of,resources

Bangladesh is divided into 64 Districts in which there is a hospitat with between 50 and 200 beds. These dishicts are divided into sub-districts (upazita) each with an Upazila Heatth Complex (31 beds) and Unions, most of which have a Halth and Farnily Welfare Centre (UIIFWC). Below the union level the s]stem depends on community workers (Ensor et dr,200l).

As a

-.oiiented servicg Essential Servico Package (ESp) is being Fovided on a one-stop basis. The service delivery has been shifted from domiciliary to static site services at the community clinics (CC), each serving 6000 populatiors (GOB, 1998). ESP is delivered in a three- tiered service delivery model (FigwE-4), with the Upazila Health Complex CIHC) at the sub-district level, Upazita Health arld Family l[elfare Cenhe (UHFWC) at the union level, and the CC at the ward/village level (Saxker, 1999).


Key Policy Issue: for Efe.rive Health Sector Derentrdlization


Figure-4: Tiers of ESP Deliyery

ir Rrral Areas
Avemge population sewed



of Facility

Upazila Health Complex

Union Health and Falnily Welfare Ce[tre
Newly coDstucted

Colr[rurity Clinic (cc)-13,500

Aapted from Sarker (1999) pp 8

Bangladesh, the diskict and sub district allocations are deteEnined by norms that relate to the number of beds for food and drugs, and staff in post-for salary. During 1999/2000 a 50-bed district hospital received an allocation of around 7 millions Taka and a sut -districl facitity between 3.5 and 5 millions Taka- A UHFWC received around 240,000 Taka for stalEng and supplies (Hossain et al, ZOOI\.

GOB prepares two separate budgets, Developmetrt Budget and

Reverue Budget, by differcnt institutes ard stall, and at differed times ofthe year (Ensor et a/, 2001). A uew cadrc ofLine Directo6 has been created to prepare the deyelopment budget. Under the coorditration of the Joint Chiefs of Ptanning in the MOHFW, they Eepare the operational plans. The Dircctor General oIEces of Health and Family Planning prepare the rcvenue budget (HEU ard MAU, 2001). Hence, there remains lack of coordination betweea the two hstitutes in preparing budgets. Budgets for most categories of regular expenditure are also detemined centrally.

The budgeting sFtem

Banglade,sh is centralized which creates several problems. Once budgets have been agreed with the Ministry of



The Dhaka

Utive.rity Studie\, Jurc 20U

Fillance, movemelt of fimding from pay code to another code as well as between lines is not permitted (HEU and MAU,2001). Although sometimes decisions need to be taken imrne-diately, due to the censalization it requires lots of time to get the permission of the toplevel policy makers and managers to make decisions lt offen results in financial 1oss. Moreover, the priorities of local people often differ ftom those of donoG, and of central level policy makers These local needs can be incorponted ir planning and decision making tlrough financial decentralizatioB. It is, therefore, necessary to decentralize the planning funclion gYer services incorporating a degree of Enancial autolomy and flexibility over line budga (Hossain e, a/,2001). Ther:efore, a stro[g-.centlal level, within clear fi'amework of equity. should accomplish the geographic resource allocation. Resources carl be allocated in broad financial terms considerilg the needs ofthe de.lentralized management areas, while local maoagers vrill determine the detail ways to use such

resources and hence budgeted.

Along with the rcsources received ftom the central lwel' if the local level can adopt resource-generating mechanism (such as, user fees, drug revolving nmds) under the decentralized system, they can reinvest it for quality enhancement of services at the local level' Matragerial dctrtralizatior for itrtensive use of existing facilities Evidence suggests that staffcost constitutes 52 percent ofthe total ESP service delivery cost at UHc level while 34 percent of the total ESP cost at UI{FWCS is compdsed ofstaffcosts (Fdousi, 2001). However' the findings of some recent studies shorred that many health centres in Bangladesh are not fully utilized and mosl staff have slack time (Ferdousi, 2001). It is ctear that available resources can be used more f.""ing op resources for expanding activities (I{owlader er "ffi"i*tly al. 2004). GeneraUy docto$ allocate 40-50% of their time to inpatient duties i; District and below levets of facilities. The high proportion of the stalf slack time is arisitrg due to krck of modtoring and supervision, and due to lack of coordination between the cenaal and local lwels. Hence, there exists great oPporhmity for effrciency gains because the san1e manpower and oYerhead cost could serve a sigLificantly larger number of patients in these facilities than is currently being served.




fot Effectue Heakh Seeto. Decentratizanon

Therefore, in order to use the existing facilities intensivety the Health Sector of Bangladesh has to increase efficietrcy iIl managernent in the public sector, !o enforce regulations for the pdvate sctor, and carry out some sorts of privatepublic mix. Managerial decentrirlization in the health sector is a prcrequisite to carqr out these change,s. This may involve gleater flexibility of the local level for staff recruihnent, procurement ofsupplies, incentiyes struch[e and so on.

Appropriate approach atrd form of decetrtralization Though the CovemmeBt of Bangladesh (cOB) is constitutionally responsible for the direct provision of the basic health care requireme[ts to all levels of the people of the society, in recent yea$ the role of Ministry of Health ard Family Welfare (MOIIFW) as a monopoly provider is chalging to a commissionq of health services (MOHFW, 2003). In Bangladesh, the NGOS play an important role in providing health, [utrition and family welfare services at the grass root level and thereby comptemert MOHFW efforts (MOHFW, 2004). NcOs
have a compamtive advantage in providing heaith cale service,s as they

can work closely with communities (MOHfw, 2003). Hence, cOB intends to develop a SAategic Framework for NGO conaacting, to purchase health care services in 350 Union Health Complexes for the next three years and to sign cotrtracts with NGOs in 200 Unioru (MOUfW, 2003) Contracting out health services to the NCO8 and private providers is one method of pdvate-public mix a:rd it is an effective marketisation measure which can increase efliciency, improve quality and reduced financial burden of the govemment. Considering the above situatior the cOB has attached special emphasis orl the contacting out of health servics in the agped action plan for reform agelda with Donor.
Evidence, therefore, suggests that COB is planning to adopt a 'ma*et approach' in the health sector ofBatgladesh. HeIIce, under the reform process financial arld managerial decenkalization can be inlroduced as a means of promoting pdvatization and as a way in which the
advantages of small enterprise management may be incorporated

ir the

public sector. In this context, a mix of delegation and privalization would be the suitable form of decentalization in the health sector of

The Dhaka

Untue\ity St|dies, June 2001


existiog public facilities, respoosibilities can be delegated to the local level govemment body. Under the system, the ultimate responsibility witt rsmaias with the cental goverrunent ard the local level will have broad disoetion to carq/ out its speci{ic finctions aDd duties. The local level witt wo* as a semi-autonomous agency attached to the ceot at level, and wilt be responsibte for recruitment of staff, budgetiry, procuremnt alrd other matters, and performing the prescribed firnctions by Ministry of Health and famity Welfarc (MOHFW). The role of MOHFW urtder the process will be policy formulation and strategy making. case
In order to increase coverage aad improve eflicisncy, GOB is plaming to conhact out of health services to private se.tor. Under the contractual relationship, privatization caII be adopled as a mgans of decenhalization. It will irvolve the transfer 01'govemment functions to voluntary organizatiotrs or to private profit making or Iron-profit making (or ron-govemmentat) organizations, with a variable degree of govemment regulations. The system will involve new fnancing mechanisms, such as, indirect or thhd party payment ilr the folm of various insuraoce schemes, or uso fees.
Basic coldltions for the snccisful implement&tioD of decetrkelization

of the

In Bangladesh, a weak institutional base, unrvillingless on the part of the cental actors to delegate authority at lhe local level, and strong resistance frorr health-related hurnan resources limit effective implementation of decedtralization (Pokharel, 2001).
Decentralizatiod works well if sweral key elements are in place. These include formulating clear goals, carefully defining the botmdaries betweer the functions controlted by central level managers and those codtrolled by their field counterparts, and helping to build local lwel capacity by prcviding maoagerial, as well as technical, suppolt to Eeld actors (http ://www.rsprohealth.or9.

Though deceltralization has flumy clear advantages, developing countries often make little preparation for the successful implame ation of decentratization. The gove,rnment of less developed countries should take morc steps for succ$sful implementation of
effective decentalization (Cassels, 1997). This section, therefore, aims

Ker Policy lsr,es[ot Efectite Heahh Sector



to identiry the majol issues that need to be taken into account for the policy fomulation and implementation of decentalization irl

Political commitmetrt The t,laisfer of po\ne. according to propet

order ar1d line malagement under decentralization requires appropriate policy alld legislative changes. The commihnent on the part of the relevant political leaders both at the natioml altd local levels is, therefore, the key prerequisite to take necessary actioas for such changes.

CoNtitutional atrd/or legislative framework: h ordor to reioforce the legitimacy of the political decision ard commitment for e{Tective
decentlalization, rcquired.

constitutional and/or legislative &anrework is

Finatrcial deccntralization atrd rsource mobilization: Financial

decentralization is essential for the successful implementation ofhealth sector decentralizatioL Hence, in ordea to ensure a secure and adequate revenue base for lhis sector, the central govemmtrt needs to decide or the allocation of filnds to decenaalized entities. Moreover, the govemment should make appropdate legislatile and/or administrative arrangements for several issues, such as, levels and distribution of health spending, i[come soulcs, fiscal autonomy aad Iocal discretion in expenditure decisions.

Matragemetrt functionsi ln order to minimize unnecessary duplication

and overlap as well as to maximize the ellicient use

of scarce resources, an efficient division ofresponsibility among dilTerent levels

(centre, regional and district) is crucial. The roles and rcsponsibiiities of each level must be in accordance with its capability. Moreover, a set of explicit and transparent rules defining who has authodty and who will be held accountable is necessary.

Humatr resorrce mtnagement: Conkol oyel hurnan resource management is a critical component of a coherent sl!'ategy otr
decentralizatio[ so as to impaove health sector performance. Hence, an appropriate legislative ftamework is required to ensure an zppropdate and transparent process for recruiting retaining, developing and


1he Dhaka Urtuersity Studies, Jme 2004

motivating men and women of appropriate caliber for the health sector. It is also importaot to improve the quality of the professionals involved many cases, rethe health service delivery and, professionalizatioo of the public service.



Community participatio[ It is expected that increased involvement of the community under the decgntrulized management of health care will be more responsive to the looal needs. HoweYer, the community needs to know the type of services provided, arrd the cost and quality of service provision to dema[d effective govematce and service
delivsry. Hence, the decentralization process neds to provide ways to enabling communities to dircctly participate in local decision-making aflbcting health services delivery.

The role of local level ard ctrtral Sovertrmetrt The rolo of both local level and cenkal governmsnt is more important for successful implemedatiotr of decentralization. It is often argued that primary health care services are the resporuibitity of 0re local government and the cerltlal govemments remain responsitr]e for secondary and specialist services. So for better primary health care services the sKll development and capacity building of local organizations is essential. Besides this, for successful implementatiol! of decentalizatior! the local levels have to be more accountable to the central level for their activities. Strengthering rEgional and district health authorities is also
needed so that they can assume greater responsibilities. On the other

hand, the centrat govemmeot (health ministy) should have to give more emphasis on the fomulation of policies rclated !o health sector priorities, equitabte resouce allocatioq itlisessment of hoalth s)tstem performance at both local and national levels, plomoting basic and emational health operational research, and maintaining liaison with organizations and aid agencies.

However, rapid implementation ofdece ralization creates a major risk of breakdown in the delivery of public health services because the taditionally centralized planning and management of health services may not prcpare local staff to take over this respoffibitity. There is a

KeJ Policf Issuesfot Etectiye Heakh Sector



ned to sup] ort local heat*l stalI dudng the transition period and prepare them for lheir new rcsponsibilities (, 2004).
Conclusion aq4 policy recollmetdatior

Decenhalizatior can be a powerful instrument to imEove health sewice delivery. However, effective decenhalization carmot rest simply on the hansfer of authority, f&ctions aod rcsources Aom ihe national to the local authorities. Different foms ofdece[t.aliza.tion can l%d to significant risks and challenges that have to be caretully addressed if the poterfial beneits are to be realize.d. If poorly formulated alrd implemented, dece[Ealization can have a negative impact on health secto development, such as enhancing inequity, policy fragnentation, and weakening ofthe central and./or local ievel.
The budgeting system ofthe health sector in Bangladesh is cetrtralized. Once budgets have belr agreed with the Minisay of Finance,


of ftnding from pay code to atothe!

between lfurcs is not permitted. This is an impedimenl for th smooth functioning of this secior. Hence, financial decentalization in the health sector of Bangladesh is essential for the efficient utilization of resources. Moreove., fur order to use the existing facilities intensively managedal decen*alization in the health sector is a prerequisite. Thi paper, lherefore, recornmends the following:

code as ]vell


. A atrang central leyel, within a clear ftamewo!.k of equity,

should accomplish the geographic resowce allocrtion.

Resources can be allocated in broad financial termR cotrsidering the needs of the decentralized manement areas, while local managers will detemrine the detail ways to use such resources and hence budgeted

. .

For ensuring equity, the programmes of decenhalization have to be linked to policies, for exampte, or rutional health plarming resource allocations and community participatioo. It is important not to overlook the role of the centre, particularly in relatior to equity issues. In a decenkalized system, the centrg needs to establish equitable means for ailocating resouces betwen dishicts and to erlsure the

existtrce labour
The Dnakt


UniveBity Sludies, Lune


t I



effective mechanisms

for maDaghg the


. .

Deceotalization must be accompanied by a range of measures' I including adequate training designed !o support the newly! ernpowered local auttrorities and creating a conducive I envirooment. ! Active involvemeot of health managers in the decentralizarion I design, clear oational resource allocation srandards and health I service norms, and an ongoing system lbr morutonng arc [ esseotial for guarding e4uity aod quality and lor improving I


There needs to be significatrt skill developmeot and capacity I strotgthening national capacity I building in local organizations -and research ard enhancing the quality ofl for pol-icy analysis intoimation available on policy changes. hstitutional i shengthening is also oeded for policy makerc and researcherc | iealth worken to devlop the capacities to deal I "t wi& reform effectively

* t![



Bossed, Thomas J., LanBn- aga, Osvaldo. Giedion Ursula' Arbelaez Jose'I Jesus, & Bowser Diana M. (2003); Decntrali?ation and Equity of Resowcc I allocation: Evidence &om Colombia and Chile, Bulteth ofthe World Health I

Olganizatiin I Detelopedl in Less Key lssues Reform: C-assels. AM.{199D. Health Sector Coantflt. Discussion Paper No.l, wHO/sllS/ NHP/95 4, world Health I Organization, Cene\, March



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Associttion 2002

Collins, C. (1994). Managemefl afid Orgonization oI Deteloping Healthl Srster6. Oxford Univelsity t Health Care' Creese, A. et al. (2002). Monagenent of Decentrolization of I


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Key Policy lssuesfot

Efect,'y Heakh Sector



Ensor T and Ferdousi S A (20011 Projecting the Cost of the Essrlluial Sen ice Pac&age Dhaka. Health Economics Unit and Management Accounting Unit,

Policy Research Unit, MOHFW, Research Papcr-26. Ferdousi S A (2001) fte Cufte t Costs ofEssential Halth Services-a study of Government Facilities Dhaka, Hea,l tE onomics Unit and Manageme;t Accounting Unit, Policy Research Unit, MOHFW' Research paper-25.

HEU and MAU (2001) Public Expenditure Review oJ the Heahh And Popnldtion Sector Program e,l999/2000 Dhaka, Health Eccnomics Unit and Management Accounting Unit, Policy Research Unit , MOHFW.
Research Paper-19.

Hossain A e, al (2001') ceographic re:ource Allocation In Bangladesh Dhaka, Health Economics Unit and Management Accounting Unit; policy Research Unit, MOIIFW, Reseaich Paper-2 I Howlader S R e, o, (20M) Ptoduclitity aid Cost of Pt btic Health Senice: i4 Banglddesh l^sttn E of Health Economics, Univercity ofDhaka. Jeppsson A and Ol,rlonzi S A (2000) Vertical or Holistic Decenaalization of the Health Sector? Experiences fiom Zambia and Uganda .lnternatio al Joumal of Health Pldnhing and ManagementyoL 15 W 273-289. Mills, 4., Vaughan, J.P., Smith, D.L. aad Tabibzadeh, t. (1990). Heakh Syste Decentraliz.ttion. Concepts Iss,r.s anil coun ry expeience .WllO,

MOLIFW (2003) ModernitiLg Health Nutrition and populatioi Services in Barglarlesl, Discussion Draft . GOB. Poliharel, Bhojraj (2000), Decentalization Of Health Seruicer, Assigtment Report: 20, Arugrst -17 Oclober 2000 Rondinelli, D.A. (1983a). Irplementing Decent'alization progIairmes in Asia: a Compamtive Analysis. Pdric Adfiinistralion and l)eveloprnent,

3,t81207. Sarker S (1999) Operation on EPSP and ESP: lssues for Consiilerution Intemational Cenhe fff Diarrhoeal Disease Research, Bangladcs\ Centre for

Health artd Population Research, Special Publication No.lO5. Smith, B.C. (1985). Decentralization. The territorial tlimension of the state. Allen & Unwin, London. Sen K., and M. Koiwsalo. 1998. "I{ealth Carc Refoms and Developing Countries: A Critical Oveaiew." Intemational Joumal of Health plan ing dnd Managernent l3i 199-215 . Thomason, J. Realitv Check

(2004) Eeslth Sector Reform in Developing

Cntnties: A


Ihe Dhaka aniversity Studies, &/ne


Wilson E (2000). IDplicaiiotrs of Deccotsllization for RcFoductivr Hearr, Planninq ii SercAal Policy Matters No. 3. FunrEs GroBp it$anatiotr5l,
I'Vashington, D.C.

Wodd Bank (20ol) He4lh q.ste,ls Developrne t-Deenrrutization: World Bank Groq; 2001 . ht@://vww.reprohal0r-org/turia part/Weck?tMon2dScs3/Scst ricfdoc lcsfi,oor#tatimsle (2004).