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February 20, 2019

Sharing of the conditional grant

Sharing of public resources ought to take into account both equity and equality in order to fulfill the mandate of equitable development that is promised in the new constitution. This is one of the key issues emphasized during the Equity Week held last week by the International Budget Partnership. While both equality and equity are strategies that are used in an effort to achieve fairness, and sometimes they are used interchangeably, they do not mean the same. Equality is treating everyone the same, while equity is giving everyone what they need to be successful. That means even though equality aims to promote fairness, it can only work if everyone starts from the same place and needs the same help. One of the areas of focus during the Equity Week was the sharing of the conditional grant in county-based hospitals that have a regional reach. These include level-five hospitals in Embu, Garissa, Kakamega, Kisumu, Mombasa, Nakuru, and Nyeri, and high-volume hospitals in Meru, Machakos, and Kisii. Because health care is a devolved function, the national budget provides a conditional grant to those hospitals to cover the cost of providing healthcare to patients from other counties. The grant in the current year 2016-17 is Sh4 billion.

 A close look by IBP at the criteria used to share the conditional grant shows it is short of being equitable. The current criteria is the bed occupancy rate, which is the average number of beds occupied in the year, and is obtained by taking a daily midnight count of inpatients. Although the criterion, a general pointer to need, does not take into account the actual needs of the hospitals in terms of infrastructure such as medical equipment and staffing. Furthermore, most patients visiting a hospital require outpatient rather than inpatient care, but no consideration is made to the number of outpatients. This could have the unintended consequence of rewarding inefficiency such as not timely discharging patients who no longer need inpatient care, or making admission that could be safely handled in outpatient. Motivating inpatient services rather than outpatient not only increases the overall cost of healthcare, it could also lead to further infections as patients are exposed to additional diseases in a hospital environment. 

A case in point, is that of Meru and Nakuru hospitals which have the same occupancy rate and hence the formula grants them equal amounts of the conditional grant. However, Nakuru facility treats almost double the number of patients that are treated in Meru, and therefore ought to equitably receive a higher allocation in this respect. The formula could also be further improved by rewarding effort and efficiency in the utilisation of the revenue collected for service delivery. Overall, equitable distribution of the conditional grant will require more detailed analysis of various factors that promote equity such as need, capacity, effort and efficiency, and a single criterion such as bed occupancy is insufficient.

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