Budget 2020: Improving how the Health Ministry manages its funds


  • Vital Signs
  • Thursday, 15 Aug 2019

Getting a predictable source of funding for the Health Ministry is important, but stewardship of that funding is equally important.

SPENDING public money is always “fun”, because there’s a lot of it and it comes from other people.

It is also risky for obvious reasons, and that is why institutions like the Asian Development Bank, World Bank, IMF and OECD produce guides in public expenditure management.

These guides promote the responsible use of resources, efficiency, justice, accountability (or good governance or anti-corruption), measurable performance, and transparency – all of which I will group under the banner of “stewardship”.

There are four ways to increase the stewardship within the Health Ministry (MOH), on top of the standard ruthless elimination of waste and corruption.

Firstly, the MOH must strengthen the role of financial targets in the Sasaran Kerja Tahunan (SKT, Annual Work Targets) for front-line leaders holding budget responsibilities, like hospital directors or heads of departments.

It may seem unusual, but although the SKT is designed to reward and incentivise better performers, it does not place budget responsibility as a major target.

This is probably because the allocations and spending decisions are already pre-determined in Putrajaya, and front-line leaders don’t have flexibility or autonomy in this area.

So, as an example, relevant leaders could be given a more relevant budget management target, such as “spend the allocated budget within a +/-3% variance”.

In all other industries and sectors, leaders are measured on their ability to balance a budget, so the MOH is only meeting the best practices in management.

For relevant leaders, budgets should be as important as the current criteria of work output, knowledge and skills, personal qualities, and activities outside formal work.

A chicken-or-egg situation might arise where although we want hospital directors to manage budgets more directly, they might not yet have the capacity or confidence to do so. I’ll address this after the second suggestion below.

Decentralising decisions

Secondly, the Health and Finance Ministries, together with the Treasury and Accountant-General, can decentralise accounting practices to allow some discretion by front-line units, such as hospitals and clinics.

We can start with a pilot programme and gradually expand nationwide, so as to gradually ease hospital directors into managing budgets more autonomously.

As one example of the current system;s inflexibility, funds that are allocated for purchasing office furniture cannot be re-allocated to purchase medicines, even when the medicines have run out.

Imagine the benefits if a hospital director is allowed to reallocate funds to different line items, as long as they meet the “overall budget management target” for the entire hospital.

This promotes agility and localised decision-making, leading to better, faster and more relevant decisions.

Local leaders will feel empowered, with less reliance on Putrajaya. Frankly, the administrators in Putrajaya may themselves be secretly pleased to stop making such micro-decisions for places like Kangar (Perlis) and Tawau (Sabah).

These two suggestions are meant to decentralise decision-making and empower frontline clinician-leaders.

To build their capacity, they must be supported with financial management skills (provided by mini-MBA classes) and by a new cadre of finance and accounting officers.

Of course, this must be done cautiously and progressively in a pilot programme before gradual national expansion. All this will re-moralise and professionalise the civil service.

Of course, there’s the flip side of lack of knowledge, decision paralysis and fear, which can and must be mitigated.

On balance, decentralisation is more likely to have better outcomes than inflexible targets set by central planners, especially if implemented gradually and with simultaneous capacity-building.

A gargantuan MOH will be better-served with more frontline autonomy, because central planning is nearly impossible.

More specific KPIs

Thirdly, the MOH can be more effective and efficient by changing their set of Key Performance Indicators (KPIs) to be more targeted and more within the ministry’s direct control.

The choice of KPIs determines how the MOH behaves and more direct targets will help the MOH gain mission focus.

Two examples of MOH targets for 2019 are to increase a woman’s life expectancy to 78.17 years (i.e. better outcomes) and the doctor/population ratio to 1:530 (i.e. better access).

Although both are important, they both depend on significant non-MOH factors such as women’s empowerment and the Education Ministry, and as such, may depend significantly on non-MOH decisions.

The targets are also too broad, and thus, may fail to create the necessary focus and break inter-department silos.

As an example for a different KPI to break silos and improve effectiveness, the MOH can target that “only <30% of all cancers in women are diagnosed in Stage 3-4”.

This KPI is not only hyper-specific to one non-communicable disease, but it also indicates that health literacy, primary care, high-risk screening and physical access to services must all be adequate.

In other words, it is a primary KPI in itself, and also a proxy indicator of the adequacy of other segments of the health system.

Another advantage is that it also stands a better chance of breaking inter-department silos within the MOH, forcing different units to talk to each other.

Further, it will also require the MOH to reach out to ministries and the private sector to build a national agenda and a national target.

Naturally, targets like these will need stronger partnership and data management between the public and private sectors through an integrated national cancer registry (another advantage resulting from a better KPI).

All this provides “national targets for Malaysia”, rather than “targets for MOH only”.

To provide even longer-term mission focus, the MOH can publicise multi-year targets, e.g. <30% in 2020, <25% in 2021, <20% in 2022 and so on, which will imbue Malaysia with a strategic vision (rather than daily fire-fighting).

This multi-year target encourages policy-makers and front-line staff to plan better, and to feel that they are fulfilling a national mission, rather than being an invisible cog in a giant machine.

Empowering evidence-based assessments

Finally, we can increase stewardship by using economic evaluations to improve our resource allocation decisions.

This field is called Health Technology Assessments (HTAs) and it uses evidence to support value-based decision-making in the health system.

In other words, it studies whether medicines and technologies are effective, cost-effective or safe.

In the West, and even in our Asian peers like South Korea, Singapore, Indonesia and Thailand, HTAs help governments decide whether or not to reimburse a new drug or technology.

Using a combination of medical, economic and ethical criteria is an improvement on the previous (narrower) combination of clinical need and budget impact.

With HTAs, MOH will have a neutral criterion to decide on allocation of finite resources.

In that finite world, everyone shouts that “my disease is more important than yours”, leading to inefficient and unfair decisions. HTAs reduce that possibility.

In MOH, there are two such teams: the Health Technology Assessment Section (HTAS) and the Formulary Management Branch (FMB) of the Pharmacy Practice and Development Division.

FMB is pharmacist-led and assesses medicines only.

HTAS is multi-disciplinary and assesses medicines, programmes and devices.

These two teams should be empowered by increasing their funding in Budget 2020, to allow more hiring and research.

At the moment, for example, HTAS has only 34 full-time staff (supporting an MOH of 270, 000 people).

This must be accompanied by more decision-making privileges and political space for both teams to introduce cost-effectiveness as a formal criterion for purchasing decisions.

To engage in a multi-year reform of our gargantuan health system, we will need these four solutions to increase stewardship.

They will also support the creation of self-governing work units tied together nationally by aligned KPIs.

These semi-autonomous work units will make decisions supported by rigorous economic evidence from their HTAS colleagues.

This multi-year reform is like performing surgery while running a marathon. If we do this right, we get to tell our grandchildren that “I was there when we made Malaysia’s health system healthier, and I did my part”.

Next week, we’ll look at the first three steps of that surgery. Stay tuned!

Dr Khor Swee Kheng has postgraduate degrees in internal medicine and public health, and has worked in five health sectors across three continents. He is currently specialising in health systems and policy in a public university and a local think tank. The views expressed here are entirely the writer’s own.

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