Healthcare Finance

The Project's Healthcare finance activity comprises a wide range of efforts that will result in a more effective utilization of healthcare resources at both national and facility levels. This activity closely cooperates with the Ministry of Health (MOH) and the State Health Agency (SHA) of the Republic of Armenia, regional and local health authorities, as well as primary healthcare service providers. The key outcomes sought under this Project component include:

    •   Awareness of the national planning and budgeting process improved and extended to facility level;

    •   New standards for National Health Accounts (NHA) data collection and analysis introduced;

    •   Performance-based contracting mechanisms institutionalized; procurement systems strengthened;

    •   Cost accounting and cost management systems established in target facilities; cost of PHC services determined;

    •   Facility reporting streamlined, transparency and accountability in healthcare finance process improved;

    •   Facility managers trained in health care management, financial accounting, cost accounting and governance;

    •   Targeted sites upgraded with hardware and information technology systems (the PHCR Project will install 390 computers and related equipment).

NHA and Healthcare Budgeting

The Project assists the Governmental NHA Working Group in improving the NHA methodology; refining data sources within the NHA system, identifying and resolving gaps in information; minimizing time lag between data collection and publication of NHA results. The Project also started assessing training needs and will provide assistance in strengthening technical and analytical capacities as required.

The efforts also focus on establishing enhanced links between the NHA and broader national budgeting processes, including the Medium-Term Expenditure Framework (MTEF), which aligns the proposed allocations for public resources to national strategic priorities while fostering performance measurement, accountability, and transparency. To that end, the Project seeks to extend national budgeting awareness to the facility level to enable the MOH to provide even more detailed, tangible, program-related information, which meets other relevant national policies. This will further deepen the involvement of the MOH in the national budgetary and MTEF process.

At the same time, in view of the ongoing decentralization of healthcare management in Armenia, the Project will endeavor to foster the “bottom up” approach working with regional and local authorities, as well as targeted PHC facilities to help improve accounting and reporting practices.

Costing and Financial Management at Facility Level

Costing of PHC services is critical to ensuring proper resource allocation. The Project will support development of costing methodology/tools for PHC services and activities, as well as financial management system for PHC facilities. Both costing and financial management tools will be tested at the pilot sites and refined as necessary.

Results attained through these activities will considerably increase the transparency and accountability at the facility level, thus promoting equitable allocation of healthcare resources.

Performance-Based Contracting

Performance-based contracting mechanisms that the Project will assist the SHA to deploy will link funding and, ultimately, provider salary with performance and quality of care. Under these mechanisms the SHA as the conduit for health financing receiving funds from the Ministry of Finance and Economy of the Republic of Armenia and distributing them to healthcare providers will allocate funds to achieving performance goals. The facility’s success in meeting them will be considered when preparing new budgets.

Performance-based budgeting offers managers the flexibility to reallocate resources to meet performance goals, and provides rewards for success.

Capacity Building

The PHCR Project has also launched management training programs that will help facility managers in Yerevan and marzes develop their skills in various topics, including performance-based budgeting, financial management and reporting.

The introduction of the new financial management and accounting practices will require that the facilities in Yerevan in marzes are adequately equipped with hardware and are able to operate the systems. The Project will work with the MOH, USAID and facility staff to issue a tender for appropriate hardware and software packages.