Draft Paper for Minister of Public Health on More Autonomy in Hospital Management [Archives:1998/09/Health]

March 2 1998

This paper explains why autonomous public hospitals should be piloted in Yemen. An autonomous public hospital usually means a hospital with its own Board of Trustees. It has a highly skilled management team which manages the budget and hires and fires its own staff. It received its income by entering into service agreements with the Ministry of Health by which it receives a lump sum for an agreed package of services. It remains a public body which is accountable to the Minister of Health. It is a model that delivers the best value for money and which works in the UK and other countries. It is being introduced into an increasing number of developing countries.
The proposal is for pilots to be conducted at two district hospitals and one governorate hospital. District hospitals are chosen because they play a critical part in the delivery of primary health care which is a priority area. A governorate hospital is chosen because tertiary hospitals consume a disproportionate share of the national health budget and to test the autonomy principle at that level. The criteria for selecting the recommended pilot sites is described below. At each pilot hospital attempts will be made to establish proper referral systems so that patients are seen at the appropriate level of health center or hospital.

The Present Situation
The extent of the failure of system for delivering health care is obvious to health workers and the users of the service alike. Studies by the World Bank and expert consultants have highlighted the weaknesses. Hospitals and health centers in urban areas are overstaffed, yet there are shortages of doctors and other health workers in rural areas and not enough money for supplies, drugs and equipment and maintenance. The physical conditions with hospitals and health centers fall below levels of acceptability. It is common to find broken water and sewerage systems. A recent report on diagnostic services indicated that not a single laboratory in Yemen meets basic international standards. It is no exaggeration to state that in the current conditions in hospitals it is almost impossible to practice good medicine and to provide modern standards of care.
Some of the problems are caused by lack of funding but perhaps 50% of what little there is available is lost through theft, wastage and inefficiency attributable to poor management. There needs to be radical change.
The Ministry of Public Health under its new leadership acknowledges the unacceptable standard of the service it has inherited and is impatient to tackle it by a two-pronged program of decentralization and management development. (It is also addressing the problems of funding by negotiating for an increased budget and by income generation from cost sharing and more private beds – but that is not the subject of this paper.)

How Money Flows Through the System:
With this model, the Revenue money flow for the delivery of services is as follows. (The question of whether staff, activities and MOPH HQ; Governorate health offices and District Management Teams continue to be funded in accordance with the old systemÕs needs to be determined and for the purposes of this paper it is assumed that they will).
Ministry of Finance – Agrees on a budget for autonomous hospitals with Ministry of Public Health and asks for indicators to measure the performance of the hospitals. Issues a lump sum (or single line) allocation not divided into chapters.
Ministry of Health – Agrees on a budget with hospital based outputs of activity and quality.
Hospital – Employs staff and manages resources to provide services which meet the requirements for volume; range and quality contained in service agreements. May generate income in accordance with MOPH polices on cost sharing and private practice and may retain that income for uses determined by Hospital Management Board and in accordance with MOPH policies. Produces annual financial statements based on commercial accounting practices and is subject to audit by the Ministry of Finance. Makes activity returns to appropriate level within MOPH, as required for planning and monitoring purposes.

Development Funds and Capital Investments
These should be allocated to the lowest level that has the expertise to manage them.

Separating the Funding & the Delivery of Hospital Services
The central “command” system which operates in Yemen is a system once found in most countries but which has become widely discredited for the poor quality of the results and its resistance to change. Countries are now decentralizing the government machine and training local managers to deliver services in the most cost effective manner by allocating lump-sum budgets to them in return for agreed levels and standards of services. This means that hospitals are becoming autonomous with local management boards and trained managers making decisions about staffing and controlling expenditure.

Role of Ministry of Health Freed from the burden of operational management, the role of the Ministry headquarters becomes one of strategic planning; policy development; monitoring and quality assurance. Similarly, the Governorate Health Office concentrates on assessing the health needs of its population and planning services to meet those needs. It assists with the development of national policy and ensures that MOPH policies are carried out through systems of service agreements with providers such as hospitals. This role is continued by District Health Management Teams.

Autonomous Management of Hospital The advantages of an autonomous hospital are that local managers can decide how resources can be used effectively to obtain best value for money and they become accountable for their performance. Management Boards may hire and fire their own staff and reward good performance. This differs from the traditional model which has resulted in inefficiency; low quality and resistance to change.

The features of an autonomous public hospital are:

1. It is established by as a statutory body.
2. It has a Board of governors or Trustees who are non-executives and who are appointed by the Minister with recommendations from local communities for district hospitals.
3. The Board appoints a Chief Executive who is accountable solely to the Board.
4. There is a Management Executive team whose core members should be a doctor; a nurse and a finance director.
5. The Board is accountable to the Minister of Public Health for the performance, financial and otherwise of the hospital.
6. All staff are appointed by the Board on terms and conditions determined by the Board. The Board decides on the numbers and skill mix and has freedom to hire and fire staff within the relevant employment legislation.
7. The Board receives funding subject to written service agreements which set out the volume; range and quality of services to be delivered.
8. The Board may raise its own income which it may retain to improve services e.g. from private beds.
9. The Board uses commercial accounting standards and practices.
10. The Board adopts Standing Orders and Standing Financial Instructions that regulate its conduct of meetings and its business and financial affairs.

This model of an autonomous hospital was discussed at the Workshop held on 12/13th October 1997 and attended by the Minister for Public Health and 35 participants from various levels of the Ministry and some donors. It was agreed that hospital autonomy should be suitable for Yemen and that it should be the objective.
Autonomy should be the aim for the referral; governorate and larger district hospitals. The rural district hospitals are small enough to be cost effective management units and a better model would be for the rural district hospital and its nearby health centers to form a single management unit which could be autonomous. This arrangement whereby the rural district hospital forms the focal point for delivering primary health care services both in terms of management and logistics is consistent with the objective of strengthening first line health services.

Membership of the Board
The size and membership of the Board is important to its success. The Board members are not executives e.g. a Board member should not sign cheques. They are there to advise; determine policy; monitor the executive directors and to represent the opinions of the community. At district level, the majority of Board members should be selected on the advice of the local community. At a referral or governorate hospital which has added responsibilities of teaching or research and a more national role, the composition of the Board will differ.
Members are likely to be picked for their skills and experience and other relevant bodies such as the University might be represented. The government’s policy of promoting women’s interests would be served by ensuring that a minimum number of women – perhaps 20% – are on the Board.
In any event, the Board membership should be limited in size (10-15) if it is to function efficiently and be a decision making-body rather than an assembly.