HEALTH SECTOR EFFICIENCY IN KENYA: IMPLICATIONS FOR FISCAL SPACE.
EXECUTIVE SUMMARY
The health system in Kenya is currently going through a major transition with the implementation of the new constitution. The responsibility to deliver essential health services has been devolved to the 47 counties while the national government is responsible for policy making and operating the national referral hospitals. The government is giving a high priority to the health sector and has waived user fees at primary health facilities and introduced free maternity care at all public health facilities to increase access to essential health services. The government is also committed to achieve universal health coverage. While these are notable measures, the challenge is to ensure that there are adequate resources available to meet these commitments. More importantly, given that the available public health sector resources are limited, it is necessary to ensure that they are optimally used for providing health services to the greatest number of people possible ensuring better value for money.
Unfortunately, the Ministry of Health has limited information on the operational efficiency of the health system at different levels of care. The overarching objective of this study is to assess the efficiency in the public health sector. Specifically, the study: i) estimated the technical efficiency of samples of dispensaries, health centres and hospitals in urban and rural counties; ii) reviewed critically the ongoing pilots on performance-based financing and output-based aid to highlight potential efficiency gains and policy options for national scale-up. The study applied the Data Envelopment Analysis (DEA) approach to analyze technical efficiency of randomly selected sample of twenty-four district hospitals, two hundred and ninety-five health centres and thirty-eight dispensaries using output and input data for FY 2012.
Key findings
Technical efficiency:
The DEA suggests that all levels of public health facilities sampled are using more resources than necessary for producing the outputs.
Hospitals:
- The average efficiency level of public district hospitals was estimated to be 72.6%. About half of the district hospitals sampled (48%) were run efficiently while nearly a third (32%) were run less efficiently compared to most efficient peers in the sample.
- Among the referral hospitals in the public sector, the average efficiency level was 82.1%. Nearly two-thirds (64%) of the sampled referral hospitals were observed to be efficient with technical efficiency scores of 100%.
- Generally, private hospitals were found to be more efficient than the public hospitals with one-third of public hospitals (33%) having an efficiency score of less than 50% compared to only 1% among their private counterparts.
- A disaggregated analysis at county level suggests that hospitals in seven out of the sixteen counties studied need to improve technical efficiency.
- Most of the inefficient hospitals exhibit increasing returns to scale indicating the potential to increase the current level of outputs without increasing inputs.
Technical efficiency of health centres:
- In comparison to the hospitals, health centres were found to be less efficient. The efficiency analysis for health centres reveals that 18% had technical efficiency of less than 50% while 11% had a CRS technical efficiency score of 51-80%.
- However, public health centres were more efficient compared to their private sector counterparts.
- The findings further revealed that health centres in 22 out of the 40 counties had an efficiency rating of 100%.
Technical efficiency of dispensaries:
- Most of the dispensaries were found to be inefficient. Only 21% of the sampled facilities were found to be technically efficient with efficiency scores equal to 100% while 58% had a technical efficiency score of less than 50%.
- In terms of efficiency by type of ownership, private facilities appear to be more technically efficient compared to the public dispensaries although the variation remains small. Out of the 38 public dispensaries studied, nearly half (48%) had technical efficiency score of below 50% compared to 18% among private dispensaries.
Review of Performance Based Financing:
With respect to performance-based financing and output-based AID, the review revealed that utilization of the safe motherhood package of services increased significantly to a high of 77% of vouchers redeemed. Other benefits arising from the program include improved quality of services, improved equity through targeting the poor with maternal services, and include limiting eligibility to poor families and/or individuals. However, caution should be exercised when interpreting these results because there is potential for fraud in reporting performance, especially if remuneration is tied to performance. Moreover, some aspects of the RH-OBA scheme use competitive bidding to get suppliers. This competitive bidding has resulted in a reduction in the cost of running these aspects of the OBA program. Also, working with several voucher service providers who compete for clients on the basis of quality has been shown to improve the efficiency of the scheme.
Conclusions
DEA has been used in a number of countries in the region to assess the efficiency of health facilities and programs. The findings of the study indicated that a significant number of public health facilities included in the sample are using more resources to deliver services at the current level of utilization. The findings further revealed that there are productivity differences between public and private hospitals. Public hospitals were on average less efficient than the private hospitals. However, public health centres performed slightly better than private health centres.
Kioko, Urbanus M. (2013). Health Sector Efficiency in Kenya: Implications for Fiscal Space. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/20806 License: CC BY 3.0 IGO.” http://hdl.handle.net/10986/20806
