TOPIC SIX
HEALTH SYSTEM AND FINANCING
6.1 INTRODCUTION
This topic introduces the learner to the concepts of health systems, the importance and rationale
of health financing, definitions for health care financing and different mechanism of financing
health care.
6.2 TOPIC OBJECTIVES
At the end of this lecture you should be able to:
Differentiate between health systems and health care systems
Identify the factors that influence the choice of a financing system
Explore the different sources of financing the health service sector
Understand the strong and weak points of different financing mechanisms.
6.3 Health Systems of Health care systems
In this sub-topic, we define health systems and health care systems and show which one
is more practical to use.
1
,6.3.1 Definition of the health system and Health care system
- The precise definition of what services and activities comprise of the health sector is necessary
to guide data collection and, especially, to make comparisons of health systems across
countries or at different times. The following pairs of items show the difficulty of drawing a
line between aspects of the health sector/non-health sector. Which should be included within
the definition of the health sector?
o Heath services Environmental services (e.g. water, sanitation, Environmental
pollution control, occupation safety etc.)
o Hospitals, social welfare institutions
o Education and training, pure medical research
o Medical social work; social work
o Formally trained medical practitioners; traditional medical practitioners
- In practice, the boundaries of the health sector vary considerably between countries and
different definitions have been developed for different purposes.
- In developing countries, the definition tends to be broader than in developed countries due to
greater deficiencies in certain areas (e.g. environmental health) and extensive use of the
traditional health sector.
- A useful rule of thumb is to include all finance/ expenditure whose primary intention
(regardless of effect) is to improve health.
- Thus health systems include all the activities whose primary purpose is to promote, restore or
maintain health.
- Formal health services including the professional delivery of personal medical attention are
clearly within these boundaries, tradition healers and all use of medication, whether prescribed
by a provider or not, home care (self treatment).
- Public health activities as health promotion and disease prevention, and other health enhancing
activities like road and environmental safety improvement are also part of the system.
2
, - This way of defining a system does not imply any particular degree of integration, nor that
anyone is in overall charge of the activities that compose it.
- In this sense every country has a health system, no matter how fragmented it may be among
different organizations or however unsystematic it may seem to operate.
- Integration and oversight do not determine a system but they may greatly influence how well
it performs.
6.3.2 Goals of health systems
- Improving the health of the population they serve
- Responding to peoples‟ expectations
- Providing financial protection against the costs of ill-health.
These objectives are not always met, resulting to public dissatisfaction with the way services
are run or financed, with account of errors, delays, rudeness etc.
6.3.3 Health care systems
- All the information available about health systems refer only to the provision of, and
investment in health services:
That is the health „care‟ system including preventive, curative and palliative interventions
whether directed to individuals or to populations.
- Thus our focus will be on the health care system and not health system.
6.3.4 Economic objectives of health care/ health care systems
- Health care systems have two key objectives:
1) Efficiency: Given the limited resources available for health in developing countries,
it is essential to raise and use resources as efficiently as possible.
This include:-
a. Allocative efficiency
b. Exchange efficiency
c. Technical efficiency
2) Equity:
- Most governments explicitly identify equity as a policy objective - and, in particular, as one of
the objectives of their health care system. While the precise definition of equity that is adopted
is often not clear it generally reflects a concern to distribute health care fairly, in
3
HEALTH SYSTEM AND FINANCING
6.1 INTRODCUTION
This topic introduces the learner to the concepts of health systems, the importance and rationale
of health financing, definitions for health care financing and different mechanism of financing
health care.
6.2 TOPIC OBJECTIVES
At the end of this lecture you should be able to:
Differentiate between health systems and health care systems
Identify the factors that influence the choice of a financing system
Explore the different sources of financing the health service sector
Understand the strong and weak points of different financing mechanisms.
6.3 Health Systems of Health care systems
In this sub-topic, we define health systems and health care systems and show which one
is more practical to use.
1
,6.3.1 Definition of the health system and Health care system
- The precise definition of what services and activities comprise of the health sector is necessary
to guide data collection and, especially, to make comparisons of health systems across
countries or at different times. The following pairs of items show the difficulty of drawing a
line between aspects of the health sector/non-health sector. Which should be included within
the definition of the health sector?
o Heath services Environmental services (e.g. water, sanitation, Environmental
pollution control, occupation safety etc.)
o Hospitals, social welfare institutions
o Education and training, pure medical research
o Medical social work; social work
o Formally trained medical practitioners; traditional medical practitioners
- In practice, the boundaries of the health sector vary considerably between countries and
different definitions have been developed for different purposes.
- In developing countries, the definition tends to be broader than in developed countries due to
greater deficiencies in certain areas (e.g. environmental health) and extensive use of the
traditional health sector.
- A useful rule of thumb is to include all finance/ expenditure whose primary intention
(regardless of effect) is to improve health.
- Thus health systems include all the activities whose primary purpose is to promote, restore or
maintain health.
- Formal health services including the professional delivery of personal medical attention are
clearly within these boundaries, tradition healers and all use of medication, whether prescribed
by a provider or not, home care (self treatment).
- Public health activities as health promotion and disease prevention, and other health enhancing
activities like road and environmental safety improvement are also part of the system.
2
, - This way of defining a system does not imply any particular degree of integration, nor that
anyone is in overall charge of the activities that compose it.
- In this sense every country has a health system, no matter how fragmented it may be among
different organizations or however unsystematic it may seem to operate.
- Integration and oversight do not determine a system but they may greatly influence how well
it performs.
6.3.2 Goals of health systems
- Improving the health of the population they serve
- Responding to peoples‟ expectations
- Providing financial protection against the costs of ill-health.
These objectives are not always met, resulting to public dissatisfaction with the way services
are run or financed, with account of errors, delays, rudeness etc.
6.3.3 Health care systems
- All the information available about health systems refer only to the provision of, and
investment in health services:
That is the health „care‟ system including preventive, curative and palliative interventions
whether directed to individuals or to populations.
- Thus our focus will be on the health care system and not health system.
6.3.4 Economic objectives of health care/ health care systems
- Health care systems have two key objectives:
1) Efficiency: Given the limited resources available for health in developing countries,
it is essential to raise and use resources as efficiently as possible.
This include:-
a. Allocative efficiency
b. Exchange efficiency
c. Technical efficiency
2) Equity:
- Most governments explicitly identify equity as a policy objective - and, in particular, as one of
the objectives of their health care system. While the precise definition of equity that is adopted
is often not clear it generally reflects a concern to distribute health care fairly, in
3
