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Hospital prepares its own budget and sends it to MOH; bulk of the budget is salaries which are
fixed due to government wide caps; consulted on proposed budget during the budget process
managed by the Budget Commission of the MOH
Hospital executes the budget; does not request many changes as virements are difficult and limited
in scope
MOH purchases the drugs so a large input to services is not procured by hospital
Hospital hires staff except executive director; can fire but procedures are difficult; limited potential
for promotion except into formal positions in structure; no potential to reward performance; all staff
are civil servants (this will change soon under the changes to the Civil Service Law)
Do internal reporting during the year but no formal in year reporting to MOH on activity data;
prepare budget execution report which is submitted to MOH
Finances- have own bank subaccount in Treasury system; do not retain fees and charges which
are subject to an MOU between MOF and MOH and only 51% revenue earned in health sector is
to be returned to MOH in 2009
Monitoring- some internal audit type monitoring on procurement
The World Bank report on health financing noted that: 12
Health facility managers have little authority over spending, staff levels, staff selection and
performance, and capital; they are unable to take stpes that would improve efficiency of care, for
example, throught strategic staffing or pharmaceutical management. Hospitals are manged
centrally by bureaucratic rules rather than on the basis of efficinet operations.
The formal accountability framework currently in place for the hospitals, the National Institute of Public
Health and other institutions in the health sector is not designed for an institution with some autonomy, as it
lacks features commonly associated with these institutions such as: a governance board; an ex ante plan
of performance linked to the finances that is treated as an accountability document; ex post reporting,
monitoring and external auditing of this; and agreements on services to be produced with funders of
services. These agencies lack internal management functions including financial management and full HR
management functions. Instead they have limited decision rights with regard to HR and finances and
under-developed management capabilities to plan, manage and monitor services, including a serious lack
of management information. Considerable work would need to be undertaken to develop the legal
governance and accountability framework and to put it into operation.
As noted in the Whole of Government Review, the Government could consider an agency law to provide a
robust accountability framework for agencies that are suitable to be moved out from the usual ministry-style
arrangements. The Government would also need to classify the entities into groups that are suitable to be
agencies and those that are not. Some may be commercial State Owned Entities (SOEs) regulated by
private commercial laws and sometimes by a SOE law. Some might be better as a department under a
ministry. Others might be suited to be agencies with varying degrees of freedom, possibly expressed in the
form of requirements tailored to certain classes:
Those that must implement government policies (e.g., suppliers of services like health services,
research council, etc)
Those with independence from government policy and responsibilities under law (e.g., Competition
Commission, Securities Commission, etc)
Both agencies can have similar basic accountability requirements, but the degree of independence can be
reflected in the law through defining the requirement or not to follow government policy. Ministers can be
required to make their directions transparent, by tabling them in parliament. Note that the class of agencies
with greater independence discussed here must not be confused with the independent agencies under the
Constitution which are a very special class of institutions with special protections. The health sector
institutions should not fall into this class of constitutionally independent agencies for the reasons discussed
in Appendix G.
The basic accountability framework would need to consider the governance arrangements, powers in
relation to the use of resources, reporting line, ex ante specification of performance and finances, ex post
12 Ibid, page 11. See also the draft Master Plan page 129 which discussed the lack of flexibility for hospital managers to use inputs
in an efficient way.
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