DECENTRALIZATION AND HEALTH

6/2/2020 SECTOR REFORM: Lessons from Ethiopia

Term Paper Prepared for Requirement of

Health Service Management Assignment

Lalisa M Gadisa (BSN & Candidate of MPH)

ADDIS ABABA MEDICAL AND BUSINESS
COLLEGE
Table of Contents
Table of Contents................................................................................................................................................i
Acknowledgments..............................................................................................................................................ii
Abbreviations and acronyms.............................................................................................................................iii
1.1. Health system decentralization...........................................................................................................1
1.2. Main modalities of health sector decentralization....................................................................................2
1.3. Health sector reform...........................................................................................................................3
2. Literature review........................................................................................................................................4
2.1. Reviews of global health reform & decentralization experiences.......................................................4
2.2. Review of developing country’s health reform & decentralization experiences..................................5
2.3. Reviews of health reform and decentralization in Ethiopia.................................................................6
2.3.1. Health care financing reform and decentralization in Ethiopian health sector............................8
2.3.2. Human resource reform in Ethiopian health sector reform.......................................................11
a) Health Extension Program (HEP).................................................................................................11
b) Task-shifting and scaling-up of mid-level health professionals....................................................12
c) Utilization of non-teaching hospitals as training centers: health officers and emergency surgical
officers.................................................................................................................................................13
d) Training mid-level professionals with nurse-level entry...............................................................13
e) Focus on mid-level health professionals.......................................................................................14
3. Methods and Materials.............................................................................................................................14
4. Summary and Lessons from Ethiopian health sector decentralization and reform....................................15
5. References................................................................................................................................................18
6. Annexes....................................................................................................................................................24

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Acknowledgments
Frist and for most, I would like to express my deep & sincere gratitude to creator of me, scholar of
heaven & earth, Almighty God for he helped & stand by me infinitely in all aspects of my study,
from beginning to end. Next, I’m also indebted to my academic supervisor during my undergraduate
study, instructor Tesfu Zewdu for he catch me up the hint of research through his continuous
comment and advice. Also I would like to thank Addis Ababa Medical and Business College, School
of post graduate for support and encouragement I got from. Additionally, this research was matured
by feeding from different online articles, reports a nd national environment guidelines. So, it is my
great pleasure to thank all authors of these literatures. And Lastly but not the least, all my staff co-
workers who cover my daily work to which I assigned when I conduct this study and other buddies,
who their name are not mentioned here were played memorable role for this study. Hence, it is my
great pleasure to say them all thanks a lot!

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Abbreviations and acronyms
AHOTP Accelerated Health Officer’s training program

BoPED Regional Bureaus for Planning and Economic development

CSCBP Civil Society Capacity Building Program

CSO Civil Society Organization

DPPB Disaster prevention and preparedness bureau

EDHS Ethiopian Demographic and health survey

ESO Emergency Surgical Officer

FMoH Federal Ministry of Health

HEP Health Extension Program

HEW Health extension Worker

HSDP Health Sector Development Program

HSF Health Service Frastructure

HSF Health Sector Reform

ICPD International Conference on Population and Development

MCH Mother and Child Health

MMR Maternal Mortality Rate

MoFED Ministry of Finance and Economic Development

NCBP National Capacity Building Program

NGO Non- Government Organization

PHC Primary Health Care

rHBS Regional Health Bureau

SPDRP Sustainable development and poverty reduction program

USAID United States Agency International Development

WHO World Health Organization

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Abstract

Background: Decentralizing health sector, division role, power and authority of decision making in
public health issue from top to lower structure, is the key means of improving community health
status through which health sector reform of one country is achieved. Hence this study is aimed to
address Decentralization and Health sector reform in Ethiopia.

Objective: To express health sector reform achieved in Ethiopia as a result of decentralization and
list all health reform indicators specifically in human resource and finance during the past three
decades.

Methods and Materials: This study was conducted using four purposely selected reliable reports
and articles as a source by focused on the two main reforms activities that have been achieved
through health sector decentralization in Ethiopia; Financial health sector and human resource health
sector reform in Ethiopia. Because the rest health sector reforms are included under these two main
reform activities. To intensify evidences of this study, additional Federal ministry of health annual
reports and other documents were used. After important information was extracted and generalized
from these documents, vital points of reforms achieved in the past three decades were summarized at
the last literature of this study. Overall parts of this study was accomplished between May 11,- 30,
2020 Findings: The major indicators of Ethiopian health care financing reform include: Retaining
and using region’s internally generated revenue, Practice of Outsourcing of nonclinical services in
public hospitals, introduction of fee waiver and exemption systems, establishment of a private wing
in public hospitals and health facility autonomy through establishment of governing bodies. Human
resource reform in Ethiopian health sector include Health Extension Program (HEP) improved
community health toward family planning, antenatal care, maternal health care, and hygiene and
sanitation significantly, between 2005-2010, task-shifting and scaling-up of mid-level health
professionals, which intended to delegate tasks to existing or new cadres who receive either less
training or narrowly tailored training, utilization of non-teaching hospitals as training centers: health
officers and emergency surgical officers, training mid-level professionals with nurse-level entry,
focus on mid-level health professionals and local recruitment.

Conclusion: Finding of this study concludes that in Ethiopia, in the past three decades, there was
significant health sector reform mainly in the two major dimension; toward financial and human
resource. Toward financial, it was aimed to improve community health through affordable cost in the
continuous line of service access and availability which guarantees health status of the community.

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Toward Human resource, HEP, the major avenue for reform, played a major role with succeeded
brief indicator of community health service.

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 1. Introduction
1.1. Heal
th system decentralization

Decentralization is a complex process, but it can be described as the transfer of power or authority
over decision-making from higher (e.g. central, federal, or national) to lower levels (e.g. state,
regional, cantonal, district, provincial, municipal, or local) of administration (1–3). It has been
emphasized in many countries typically with an overall aim to improve health system performance.

Emerging in the wake of the 1978 Primary Health Care (PHC) conference at Alma Ata,
decentralization of the health sector is by no means a new concept (4). Alma Ata endorsed
PHC as the mechanism for achieving better health, underpinned by principles of equity,
community participation and intersectoral collaboration(5). Decentralization and the PHC
approach thus became closely associated as they shared these principles. Decentralization was
viewed as a means for achieving PHC goals. Interest in health sector decentralization was
renewed in the 1990s when it was identified as a key health reform strategy in the World Bank’s
World Development Report 1993: Investing in Health (6). Decentralization has been a key
strategy within health sector reform (HSR) policies of many countries(7, 8, 9), and has
been seen as a means to improve efficiency, effectiveness and equity in the health sector.
As of 2004, there were decentralization projects in the health sector supported by the World
Bank in at least 47 developing countries(10). The Program of Action of the International
Conference on Population and Development (ICPD POA) in 1994 also highlighted the role of
decentralization. The POA recommended that governments promote community participation in
reproductive health services by decentralizing the management of health programs (11). Sexual
and reproductive health advocates viewed decentralization as a vehicle for enhancing access,
community participation and empowerment of communities (12, 13).

In recent years sexual and reproductive health advocates have increasingly asserted that HSR
initiatives, including decentralization, undermine the ability of health systems in developing
countries to deliver on ICPD goals (14, 15, 16). Different types of decentralization include fiscal
decentralization (the transfer of financial resources in the form of grants and tax raising powers to
sub-national units of government); administrative decentralization (the functions of central
government are shifted to geographically distinct administrative units); and political decentralization
(where powers and responsibilities are devolved to elected sub-national governments). The spending
autonomy concept encompasses some facet of all these types of decentralization, but mainly focuses
on administrative decentralization.
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Fundamentally, decentralization reform changes the way health services are delivered (13),
including sexual and reproductive health care. The critical challenge in a decentralized health
system lies in achieving a careful balance of power between central and local levels in
decision-making, priority setting and resource allocation, to ensure that decisions favor, or at the
very least do not negatively impact on, availability and equitable access to health services,
including sexual and reproductive health services.

Over the past 40 years, in both developed and developing countries, health system organization has
undergone a decentralization process from the national to regional and local levels, introducing a
multi-level governance structure (17–21). The main aims of the devolution reforms have been two-
fold: to increase efficiency and to improve the financial responsiveness of decentralized authorities
(18, 22, 23).

1.2. Main modalities of health sector decentralization

Decentralization of health services is undertaken with the assumption that it will improve health
service delivery. One assumption is that local communities have better knowledge of local needs and
conditions and can make better decisions if they are granted the authority to manage resources and
organize and supply health services. Deconcentration is transfer of authority and responsibility from
central agencies to field offices of those agencies at a variety of levels regional, provincial, state,
and/or local. Delegation, transfer of authority and responsibility from central agencies to
organizations not directly under the control of those agencies. In the health sector this typically
include semi-autonomous entities such as health boards, hospitals as well as arrangements whereby
non-governmental organizations undertake certain service provisions on behalf of the central
government (such as implementation of primary health care campaigns).

Devolution whereby authority, responsibility and resources are transferred from central government
agencies to local governments. Local governments will have multiple functions, legislative and
revenue raising powers and be responsible to a locally elected council. Privatization involves the
transfers of government functions to voluntary organizations or to private profit making or non-profit
making enterprises. Many developing countries have for long depended on voluntary organizations
typically religious organizations – to provide a substantive part of what otherwise is considered as
public health services. The interplay between the private sector and public sector is in most countries
a key factor for successful health service delivery that also needs to be considered in design of a
possible decentralization program of public health services.

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 1.3. Heal
th sector reform

Reform means positive change. But health sector reform implies more than just any improvement in
health or health care. In 1995 DDM advanced a definition of health sector reform as “sustained,
purposeful and fundamental change” – “sustained” in the sense that it is not a "one shot" temporary
effort that will not have enduring impacts; “purposeful” in the sense of emerging from a rational,
planned and evidence-based process; and “fundamental” in the sense of addressing significant,
strategic dimensions of health systems (24). Clearly health sector reform can include a wide range
of action on health systems.
Secondly, the reform should be "purposeful." This means that the elements and components of
the reform need to have been developed in a rational manner: identifying clearly the problems of
the health systems evidence-based and linking the mechanisms of system change to solving those
problems. A clearly articulated policy of health reform is required so that major actors responsible
for implementing the change can specify goals and objectives, acknowledge the relationship of
their activities to achieving the goals of reform, and the purposeful linkage among different
components of system change.
Third, the reform should be “sustainable.” Most fundamental changes will be sustained because
they involve significant transformation of systems and the creation of actors who will defend their
new interests in the political process. However, reforms that are passed by legislation and not
implemented would not qualify; nor would failed reform efforts that are later reversed. For
instance, the ambitious "managed competition" reforms of the Netherlands were not sustainable—
they were never fully implemented and the reform laws were amended to remove most of the
anticipated system changes. We can certainly learn lessons from aborted or unsustainable reform
efforts, but they are not complete examples of health sector reform.
It is important to distinguish purposeful health reform from changes in the health sector that are
imposed by reforms from outside the sector. This distinction allows us to evaluate health reforms
on their own terms as purposeful means of achieving articulated goals. The use of the term “health
sector reform” in many settings and by many actors with different motivations accounts for some
of the negative experiences with health system change. Changes imposed by broad governmental
initiatives, often with international donor support, usually do not have the explicit goal of
improving the health system. Rather, they seek to achieve non-health goals such as
macroeconomic stability or more democratic political systems. Changes of this type may or may
not produce improvements in health systems or in health. They were often not designed explicitly
to do so. We should be cautious in calling such changes “health sector reform,” since they may
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tell us little about purposeful programs of health system change. They may nonetheless have
important impacts.
2. Literature review
2.1. Revi
ews of global health reform & decentralization experiences

In the states emerging from communist rule such as the states of the former Soviet Union and
eastern Europe or those still retaining communist party government, but having opened up their
economies to the world (i.e., the People’s Republic of China and Viet Nam) I find that, structural
and economic changes imposed by market reforms have had an impact, usually negative, on the
health sector. In China, the economic changes that began in 1978 (25) rapidly dismantled the
socialized mechanism for financing health care. The result was a sudden introduction of market
forces into what had been a state-organized system. Primary level services lost their collective
funding base in much of rural China. State budgets were inadequate to support urban hospitals.
These changes unleashed a variety of subsequent changes such as privatization of village doctor
practices, introduction of financial autonomy for hospitals, and cost escalation as prices were
liberalized and providers were free to try to increase revenues. Health sector change in China has
largely been in response to these economic reforms (26). To date, the state has given little priority
to a purposeful health sector reform, although there are indications that there is interest now in
using this period of change and experimentation in some provinces and cities to develop a more
coherent national strategy. The second type of health system change imposed from outside
resulted from the reform of the state and decentralization, which was particularly apparent in
many Latin American countries. In the late 1980s and early 1990s, Latin America was inundated
by a wave of interest in reform of the state as a response to the financial "debt" crisis of the 1980s
and an interest in restoring democracy after decades of military rule in many countries (27). In
Bolivia, for example, the new government of President Sanchez Lozada assumed power in 1993.
Reform of the state there took the form of reduction of state budgets and substantial
decentralization of government functions to the municipalities. The government’s health care
functions were included in this decentralization program, but not as an intentional program of
health sector reform. This reform initially resulted in reduced funding for health facilities, until a
specific "small R" health reform directed municipalities to assign an earmarked portion of their
funding to health (28).

Decentralization reforms also occurred in other continents and the experience of Senegal is
particularly instructive. In Senegal, after years of efforts to decentralize to district health offices

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within the health sector, the government imposed a radical decentralization to local municipalities
with no guidance on how to fund and operate the health system. This led to widespread
breakdown of the health system and almost no communication between health officials and newly
empowered mayors (29). In both Bolivia and Senegal, health system managers and international
organizations have tried to make a virtue out of necessity by investing in health systems
improvements under the newly decentralized state. But that is a far cry from a purposeful policy of
decentralization designed specifically to improve health systems. Chile's health reforms began in
the early 1980s and were among the first of the current wave of health reforms. (The prior wave
was the establishment of major national health systems in many developing countries in the 1950s
and 1960s.) The Chilean system created private insurance plans and decentralized its primary care
system (30) involves creating a significant private insurance system funded largely through social
insurance contributions; decentralization of primary care facilities to municipal governments;
changes in payments mechanisms involving first fee-for-service, then per capita payments. The
Colombian reforms of 1993 also covered all of the "control knobs" in an innovative social
insurance scheme that allowed "managed competition" among public and private health insurance
plans and contracting with public and private providers (31). The Zambian reforms initiated in
1991-92, and elaborated in subsequent years, included an innovative institutional restructuring of
government health care by creating a Central Board of Health to oversee health care delivery
matters external to the Ministry of Health. It also involved significant decentralization to district
health management teams and health boards, the introduction of user-fees, and the development of a
nationally defined benefits package (32). The Central and Eastern European nations also instituted a
variety of fundamental reforms of the Soviet style systems that had been imposed on them. The
Czech Republic reforms in the early 1990s involved rapid privatization of state-owned services, the
creation of multiple state-linked and private health insurance funds, and the introduction new
payments mechanisms and regulatory organization. And, in Hungary, less ambitious reforms
involved more modest privatization of primary care, introduction of a centralized social insurance
system, and decentralization of ownership to the municipal level. While Poland experimented with
decentralization, the creation of hospital and clinic autonomy and some pilots of privatization of
primary care providers in selected regions and cities, it was not until it passed a health insurance act
in 1997 that fundamental change was initiated (33).

2.2. Review of developing country’s health reform & decentralization experiences

Developing countries in Africa and elsewhere face severe challenges in improving health sector
performance. The challenges are connected to access, efficiency and quality calling for system

5
reforms in the macro-organization, distribution and financing (34). Since the World Health
Organization (WHO) proposed decentralization as a way to empower communities to take
ownership and control of their own health in 1978 (35), the strategy has been variously pursued in
both developed and developing countries as a key management approach on the belief that it
enhances efficiency in public sector performance (36). Based on such assumptions, decentralization
has been strongly promoted in developing countries (37) although largely without systematic
empirical evidence as to its efficacy in improving health outcomes (38). A number of studies have
shown little success of decentralization in attaining its defined goals or the overall health objectives
in countries such as Zambia and Uganda (39), in causing disparities in service delivery in some East
Asia countries (40) and in worsening macro-economic instability in Latin America (41).

Research on decentralization in Ethiopia is scanty. In the most extensive survey on fiscal, political
and administrative decentralization in some 30 African countries (42) found uneven progress
across the continent. Furthermore, on all the measures these countries lag far behind developed as
well as developing countries in Asia and Latin America. Computed on the basis of the country
having direct elections and participation in such elections, the study found that Ethiopia and Kenya
scored equally among the most politically decentralized countries in the sub- continent. Using an
index measuring clarity of legal framework defining roles and responsibilities for the different
levels of government as well as the extent of delegation, the two countries score moderately for
administrative decentralization. On the third measure of fiscal decentralization, Ndegwa used the
existence of an established formula for transfers and proportion of the public expenditures at the
local level and found Kenya to be more moderately decentralized than Ethiopia where local
government controls 3% of expenditures and 1.5%, respectively.

Many analysis of literatures reviewed reveals that health care reform efforts in Africa have limited
implications on the overall health system improvements, which was mainly due to minimum
commitments the countries had exerted in the implementation of the reforms. The effects of the
reforms were shown to be highly influenced by political principles and the unique health concerns of
each country. Other studies in Ethiopia find the level of local government control of resources much
higher (above 20%) (43) and a much deepened administrative decentralization at regional and
woreda (district) level (44, 45). In another assessment of fiscal decentralization, (46) finds that
regional governments are receiving higher transfers for recurrent health spending while at the same
time increasing their revenue generation.

2.3. Reviews of health reform and decentralization in Ethiopia

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Ethiopia is one of the least developed countries in the world with low development indicators even
by sub-Saharan Africa standards. 85% of the country’s population of 70 million lives in the rural
areas, 44% living below the national poverty line (Federal Democratic Republic of Ethiopia (47).
National average health coverage is 64% but utilization per capita is only 0.36 (48). Following over
20 years of dictatorship under the Dergue regime, in the early 1990s a new democratic government
took power and set a new environment for health policy. The new Constitution set a federal system
of government comprising nine autonomous largely ethnically distinct regions and two
administrative councils, which were further sub-divided into sixty two zones and 523 woredas
(districts) (49). In 1993 the government published the first health policy in 50 years setting the vision
for developing the healthcare sector for the next 20 years (50). Some of the aspects of this policy
focus on radical reforms in the system including decentralization, expanding the primary health care
system, and encouraging partnerships and the participation of private and NGO actors.

To translate the policy for implementation the first Health Sector Development Program (HSDP-I)
was launched in 1997/98. In addition, a healthcare and financing strategy was developed in the same
year. Covering the first five years (1997/98–2001/02), HSDP-I put disease prevention at the centre of
the sector development. The policy aimed at reorganizing the health services delivery system under
decentralization. By and large, the targets set in HSDP-I were not met and a modified HSDP-II
(2002/03 – 2004/05) was developed with the inclusion of NGOs in the implementation of the health
package. Ethiopia is now in its third HSDP-III developed in 2005 to cover the years 2005/06-
2009/10. HSDP-III stresses the strategic role of NGOs as partners in both planning and
implementing healthcare delivery especially at district level and also emphasizes the need to
strengthen government-NGOs collaboration (51). Decentralization and collaboration with NGOs
were also strongly emphasized in the country’s poverty and social economic development
framework the Sustainable Development and Poverty Reduction Program (SPDRP) in 2002.

The healthcare system in Ethiopia is characterized by some of the lowest health expenditures and
poor health indicators by regional and world standards. In coverage, the healthcare system reaches
only about 61 % of the population according to the Health and Health Related Indicators (2002/03)
(52). The physician to population ratio of 29,000 is well below the WHO standard of 1:10,000
(reference). Hence, about 40% of the population does not have access to any modern health service
facility. At 871 per 100,000 live births, the maternal mortality rate (MMR) is one of the highest in
the world. At the same time, infant mortality rate is 96.8 per 1,000 live births, which is higher than
the sub-Saharan average of 93/1,000. Decentralization in Ethiopia entails the devolution of
administrative powers and responsibilities as well as fiscal devolution up to the woreda level. Fiscal

7
transfers of unconditional federal grants are enshrined in Article 62 of the Ethiopian Constitution.
Since fiscal year 1995 block grants have been disbursed using a formula devised by the Federal
Ministry of Finance and Economic Development (MOFED). Although the formula has undergone
various revisions over the years, the latest being in 2007, it has maintained a core of weighted
variables based on population size, level of development and level of revenue generation (49). A
second wave of decentralization initiated in 2002 in the largest four regions (Amhara, Oromiya,
Tigray and the SNNP) aimed at enabling woredas to take primary responsibility for the delivery of
basic services with block grants being given directly to woredas starting June. The highly
decentralized system enables planning to occur institutionally at every administrative level with
broad participation of citizens directly and through electoral representation (45). The health system
of the Federal Democratic Republic of Ethiopia is guided by a 20-year health sector development
strategy, which is implemented through a series of five-year health sector development programs
(HSDP). The consecutive HSDPs are aligned with international commitments, such as the
millennium development goals and national plans such as the Plan for Accelerated and Sustained
Development to End Poverty (2005/06–2009/10), and the Growth and Transformation Plan
(2010/11–2014/15). Currently, the country is implementing the fourth health sector development
plan (HSDP IV).

2.3.1. Health care financing reform and decentralization in Ethiopian health sector

The rapid expansion of the private-for-profit and nongovernmental organization (NGO) sectors is
playing a significant role in expanding health service coverage and utilization of the Ethiopian
Health care System, thus enhancing the public/private/NGO partnerships in the delivery of health
care services in the country.

Offices at different levels of the health sector, from the Federal Ministry of Health (FMoH) to rHBs
and woreda health offices, share decision-making processes, powers, and duties where FMoH and
the rHBs focus more on policy matters and technical support while woreda health offices focus on
managing and coordinating the operation of a district health system that includes a primary hospital,
health centers, and health posts under the woreda’s jurisdiction. Regions and districts have rHBs and
district health offices to manage public health services at their levels. The devolution of power to
regional governments has resulted in a shift of public service delivery, including health care, largely
under the authority of the regions. The decentralized structure of government requires that project
implementation by NGOs is vetted through the government bureaucratic machinery. NGOs must
sign tripartite agreements with the regional Disaster Prevention and Preparedness Bureaus (DPPBs)
(an inter-ministerial agency), the regional Bureaus of Planning and Economic Development
8
(BoPEDs) under the Ministry of Finance and Economic Development, and the Regional Health
Bureaus (RHBs) under the Federal Ministry of Health to outline project modalities and
responsibilities for the signatories (53). The DPPB/BoPED and RHBs are responsible for appraising
project documents before project approval and also to monitor on-going projects. NGOs are
required to submit quarterly progress reports during project implementation to the DPPB/BoPED,
zonal and woreda health offices. Mid-term and end-of-project evaluations are mandated to be
jointly undertaken by a team comprising representatives from the NGO, DPPB, and RHBs.

Decentralization in Ethiopia has opened up important avenues for health NGOs to participate
in the health sector reform program. At the local district level, the woreda is the central unit
coordinating planning, budgeting and implementing programs and projects. The National
Capacity Building Program (NCBP) launched by the federal government in 2001 has targeted
woreda governments to strengthen their implementation of block grants which have been awarded
directly to them since 2002. Following publication of the NCBP, the Ministry of Capacity Building,
established to oversee this program, developed a consultative document for the involvement of civil
society organizations (CSOs) in the government’s poverty reduction program (54). NGOs and
the myriad of CSOs are mandated to participate in the three pillars established under these
programs, namely, democratization, delivery of services, and decentralization. The Civil Society
Capacity Building Program (CSCBP), as it was called, aimed at, among other things,
streamlining registration and coordination, increasing resources for CSOs, enhancing engagement
with government, establish a Civil Society Capacity Building Partnership Fund, and building CSOs
capacity for service delivery and engagement with the public.
According to USAID report of 2020 (55), the following health sector financing reform have been
recorded in Ethiopia;
Following ratification of the required legal frameworks and adoption of operational guides, health
facilities (hospitals and health centers) in Amhara, Oromia, and SnnP regional States were able to
retain and use their internally generated revenue as additive to their regular government budget. In
the last two to three years, all the remaining regions approved the legal and operational frameworks
and introduced retention with the exception of Somali and afar regions. These regions are still in the
process of approving legal frameworks and adoption of operational guides. In the regions that are
already implementing the reform, only the new health centers have not yet started retention as they
need to complete necessary planning, which includes recruiting finance management staff. The
health facility-level retained revenue is being used for quality improvement, as defined in the
respective legal and operational frameworks of the regions.

9
In 2009/10, data collected from Amhara, Oromia, and SnnP regional States through supportive
supervision showed that out of 299 health centers, nearly 84.6 percent (253) have had an
appropriated budget for EFy 2009/10.The average amount of appropriated budget for the health
centers from the retained revenue in EFy 2009/10 was 208,930.00 Ethiopian Birr (ETB). Health
centers utilized nearly 73 percent of their appropriated budget from their retained revenue per
quarter. only 17 hospitals (81 percent) provided data on the total amount in their appropriated budget
for the same fiscal year.

The average annual appropriated budget per hospital was 1,647,821.08 ETB. Although the amount
varies from health facility to health facility, generally the retained amount is large enough to
contribute to improving the quality of health services in health facilities. In the Amhara region,
where the new fee waiver system is fully implemented, an increasing number of poor households
experienced better access to health services. A total of 1,319,114 indigents were selected through
community participation and benefited from free health care services. The average number of fee
waiver beneficiaries was 7,946 and the government budget allocation for waiver reimbursement per
district was 20,791 ETB. Some of the federal and regional hospitals established private wings to
generate additional income for health professionals and health facilities. The private wings offer
more choices to users while also addressing improvements in health worker retention and income
generation for the facilities.

Health centers and hospitals in health care finance reform starter regions established governing
bodies, and regions where reforms are being expanded are following the same steps. Governance is
one of the six building blocks of countries’ health systems (56). HSFr project’s supportive
supervision synthesis report revealed that out of 320 health facilities visited in Amhara, Oromia, and
SnnP regions, 96.3 percent (288) of health centers and all 21 hospitals established a health facility
governing body/board at the time of supervision visits in 2009/10. Only 3.5 percent (10) of health
centers in the SnnP reported that they had not yet established a governing body. of those that
established a governing body/board, nearly 83 percent (269 health facilities) indicated the frequency
of governing body/board meetings as well as procedures followed such as recording minutes.
Facilities listed major health care finance-related decisions made by the governing body/board.
These included approval of the health facility work plan and budget utilization of retained revenue,
use of retained revenue for procurement of drugs and medical supplies, evaluation of the overall
performance of the health facility, and oversight of the implementation of the new fee-waiver
system. This coincides perfectly with their duties and responsibilities in the legal framework.

10
Practice of Outsourcing of nonclinical services in public hospitals, to improve efficiency, reduce
costs, and enable health facilities to focus on their core clinical services. The HSFr project 2009/10
supervision report showed that among all hospitals covered during supportive supervision, three
hospitals in amhara region – Enat, debre Birhan, and Felege Hiwot – outsourced nonclinical services
such as supply of food items (bread, injera, and wat [stew]).

The health care financing policy of the government promotes cost sharing between the government
and users as one of the key principles of the health care financing strategy. The regional laws vary in
terms of mandating the user fee revision and setting. For instance, in Amhara and Oromia, this
mandate is given to the regional government, while SnnP health facilities are given the responsibility
of setting and revising user fees taking into consideration the community’s willingness and ability to
pay as well as cost of services. However, a recent user fee revision study conducted by the HSFr
project showed that there are discrepancies in adherence of regional legislation. For instance, in
Amhara region, although the regional law gave the mandate of user fee revision to the regional
council, of the 12 health centers and six hospitals covered in the study, nine health centers and four
hospitals revised user fees on their own.

2.3.2. Human resource reform in Ethiopian health sector reform

The health sector in Ethiopia has shown remarkable progress involving a number of health, nutrition,
and population indicators over the last decade. The country achieved the targets of the millennium
development goal on child health well ahead of time (57). The 2011 Ethiopian demographic and
health survey (DHS) reported that infant mortality declined by 42% and under-five mortality by
47% over the15-year period preceding the survey. There has been a major expansion of primary
healthcare units in the last two decades through rehabilitation and upgrading of existing facilities
and construction of new facilities. The number of health centers has increased almost fivefold and
the number of health posts has more than doubled (58). While we appreciate reforms achieved
through human resource, the health reform and improved community health status through the
program so called Health Extension program (HEP) is never undermined.

a) Health Extension Program (HEP)

The large gap in access to health services between urban and rural populations was a major
motivating factor for launching the health extension program (HEP) and the creation of a new cadre
of salaried community health extension workers. The clinical curative health services provided in
Ethiopia neglected the needs of more than 80% of the population living in rural areas. They were
also poorly aligned with national health priorities. More than 75% of the disease burden in the

11
country was related to preventable and communicable diseases. An analysis of investment and
recurrent costs, as well as of the epidemiological situation in the country, led to the conclusion that
most healthcare needs of the rural population could only be met through the expansion of primary
healthcare facilities (59, 60). The main agenda of this program was to promote communities’ ability
to improve their own health services. The program established community health services that aimed
to improve access to high-impact preventive and basic curative care, especially for people living in
rural areas (61). The Government’s goal was to provide two salaried community health workers for
each village. The targeted density of coverage was an average of two HEWs for each population of
5000 people.

HEP was having 3 components under which 16 packages were included to be implemented. These
components were: Hygiene and Environmental Sanitation; which includes Excreta disposal Solid and
liquid waste management, Water supply safety, Food hygiene and safety, Healthy home
environment, Arthropod and rodent control and Personal hygiene. Disease Prevention and Control
under which, Prevention and control of HIV and other STIs, Tuberculosis prevention and control,
Malaria prevention and control and First aid are included. Family Health Services included Maternal
and child health, Family planning, Immunization, Adolescent and reproductive health and Nutrition.

By the end of 2012, a total of 35 347 health extension workers had been trained and deployed,
surpassing the community-level service component of the HSDP III target for ensuring universal
coverage (62). Since 2010, the HEW training has focused more on upgrading skills and career
development for existing HEWs, rather than training new ones. Training new HEWs, however, still
continues for pastoralist and urban areas. Compared to 2000 –2004, health indicators during the
period following the introduction of the program (2005–2010) show marked improvements for high-
impact interventions such as family planning, antenatal care, maternal health care, and hygiene and
sanitation. Similarly, studies which compared areas served with HEP with those not served have
shown that the program has positively impacted health determinants. For instance, there is improved
knowledge and use in HEP areas compared to non-HEP areas in improved sanitation (75.6% and
36.3%, respectively), proper human waste disposal (57.6% and 34%) and hand washing facilities
present (55.7% and 39.9%). A recent study by the World Bank documented that pregnant women
in the poorest rural households were 15% more likely to receive antenatal care and 12% more likely
to vaccinate their child against measles if they had received a visit from an HEW than if they had not
(63, 64).

b) Task-shifting and scaling-up of mid-level health professionals

12
Task-shifting is defined as delegating tasks to existing or new cadres who receive either less training
or narrowly tailored training (65). It may take various forms – including substituting tasks
among professionals; delegating tasks to professionals with less training; creating new
professional or paraprofessional cadres, whereby tasks are shifted from workers with more general
training to workers with specific training for a particular task; or a combination of these. The
accelerated expansion of primary healthcare units and the general commitment to bring health
services closer to communities fuelled a major demand for human resources in Ethiopia (60, 66). It
aimed to shift some of the tasks and functions of generalist and specialist physicians to two cadres of
mid-level health professionals: health officers and emergency surgical officers (ESO). The
Government of Ethiopia therefore launched the accelerated health officers’ training program
(AHOTP) with the objective of training and deploying them to provide and lead primary healthcare
services in health centers and primary hospitals. Through the AHOTP, more than 3573 health
officers had been trained and deployed by the end of 2010 (62).

c) Utilization of non-teaching hospitals as training centers: health officers and

emergency surgical officers

Shifting tasks from physicians to non-physician clinicians such as health officers and emergency
surgical officers required a major increase in training capacity. There was limited capacity in
universities and colleges to scale up the production of health professionals. The expansion of this
capacity under the AHOTP was achieved through the utilization of non-teaching hospitals as training
centers. This approach was later expanded to the training of other cadres. The universities and
colleges, on the other hand, had insufficient clinical faculty members and practical training sites to
expand their enrolment. To fill this gap, twenty non-teaching hospitals were linked with five nearby
universities. This has strengthened collaboration between the health and education sectors in the
production of health workers. The increased training output translated into remarkable progress in
the deployment of health officers, improving their ratio to population from 1:63 785 in 2007–8 to
1:17 128 in 2012

The training program for emergency surgical officers followed the same model. Implementation was
begun by universities that had already gained experience in training of health officers, and was
rapidly scaled up to 11 colleges and universities and 34 affiliate hospitals in just five years. As of
June 2013, a total of 536 officers were enrolled in the program and a total of 136 emergency surgical
officers had graduated and been deployed across the country (67). The ESO training program has
also improved access to emergency obstetric services in rural communities, as indicated by a recent

13
report on the volume and type of surgical interventions conducted by ESOs and the context in
which task-shifting was implemented.

d) Training mid-level professionals with nurse-level entry

In 2009, Ethiopia had only 1379 midwives, falling far short of the target of deploying two
midwives to each of the 3516 health centers planned to be established by 2015 (62). Capitalizing on
the availability of a relatively large number of nurses in the labor market, the Government launched
an accelerated midwifery training program in 15 regional health science colleges, targeting nurses as
training candidates. In the subsequent three years, 3200 nurses graduated from the midwifery
training program and were deployed nationwide and the midwife to population ratio decreased from
1:60 965 in 2007–08 to 1:21 866 in 2011–2012 (68). The increased availability of midwives has
translated into an improved institutional delivery rate. For example, according to a recent report
(69) which compared the institutional delivery rate before and after the deployment of midwives at
selected health centers, institutional deliveries have markedly risen after the deployment of midwives
with an increase of over 60%. In parallel, a training program for nurse-anesthetists was launched in
11 regional health science colleges.

e) Focus on mid-level health professionals

The focus on mid-level health professionals such as health officers, emergency surgical officers,
midwives, and nurse-anesthetists has improved the distribution of human resources for health across
the regions. The retention of these cadres in rural posts appears to be better than for medical doctors,
although there are no published studies to confirm this.

Local recruitment is reform indicators where government imposed the facilitating the rural pipeline,
creating regional quotas for applicants from disadvantaged regions as long as they met entry
requirements.

3. Methods and Materials

This study is conducted using four purposely selected reports and articles as a source. Among
various health sector reform and decentralization activities, this study focused on the two main
reforms activities that have been achieved through health sector decentralization in Ethiopia;
Financial health sector reform and human resource health sector reform in Ethiopia. Because the rest
health sector reforms are included under these two main reform activities. For analysis the sources
were divided in to two parts. The first part analysis was undertaken using USAID report for Ethiopia,
Health Care Financing Reform in Ethiopia: Improving Quality and Equity to get data of health sector

14
reforms achieved toward financing in Ethiopian health sector (55). The second part of analysis was
undertaken using Meta-analysis study, Community health extension program of Ethiopia, 2003–
2018: successes and challenges toward universal coverage for primary healthcare services (70) and
WHO report for Ethiopia, improving health system efficiency (71) and Study conducted on Ethiopia
and Kenya, by Harvard university; titled Reforming health systems: the role of NGOs in
Decentralization – lessons from Kenya and Ethiopia (72). To intensify evidences of this study,
additional Federal ministry of health annual reports and other documents were used to get sufficient
data for human resource reform and financial reform in health sector of Ethiopia. The reason why
annual reports, meta-analysis study and WHO report were selected was to get actual and reliable
data. After important information was extracted and generalized from these documents, vital points
of reforms achieved in the past three decades were summarized at the last literature of this study.
Overall parts of this study was accomplished between May 11, 2020- May 30, 2020.

4. Summary and Lessons from Ethiopian health sector decentralization and reform

Decentralization in the health system is transfer of power, authority and decision making for public
health care facility. In actual decentralization, the maximum reform with beneficiary and expected
community health can be attained in everywhere. However, though health system decentralization is
a major key for optimizing and implementing community health policy in advance, specially in a
developing country where health system is going parallel with political desire, politics of a country
plays a huge role in implementing health sector decentralization policy.

Ethiopia, using three tier health system are showing dramatically reform in health sector after more
setup were adjusted and facilitated for health system decentralization. Current Ethiopian health
system reform can be summarized in two broader means which high reforms and transformation
were achieved through. In health care financing evolution, marvelous reforms and changes have been
recorded. Least of these reforms are: Establishment of a private wing in public hospitals, which have
been providing alternatives and choices of private health service users, and generating additional
income for health facilities, Health facility-based revenue retention and utilization, which most
regions are using as the additional source of income to facilitate health service and infrastructure
increase their community satisfaction in getting quality health care. Major indicators of health
facility based revenue retention and retention is availability of essential medicines increased,
Continual quality of care maintained, Water supply and electricity to health facilities improved,
Diagnostic capacity of health facilities improved, Operational costs including paying utility bills
covered and Health infrastructure improved.

15
Systematizing fee waiver and exemption systems is another achieved financial reform. Intensifying
Health facility autonomy through establishment of governing bodies strategy increased management
role in country’s health system as governance one one of the six building blocks of health service. To
improve efficiency, reduce costs, and enable health facilities to focus on their core clinical services,
outsourcing of nonclinical services such as food, in public hospitals was also successfully achieved
financial reform activities.

Another health sector reform through which changes and transformation was achieved is human
resource reform by which numerous trained low level health workers were participated in the
community to improve community health status. The evaluation of the first five-year health sector
development program triggered the introduction of major human resource reforms. At the end of the
program in 2003, the overall performance of the health sector had improved, but there were major
gaps in the delivery of essential services in rural areas. To handle these gaps, the program so called
health extension program (HEP) was launched by the creation of a new cadre of salaried community
health extension workers. Basically it was formulated with three components under which 16 health
extension packages were generalized. In almost one decade, it accomplished with the fabulous
change specially on mother-and-child health (MCH) program.

Task-shifting and scaling-up of mid-level health professionals, where previously existing health
professionals were developed their carrier toward the maximum proficiency healthcare with the
advanced materials with less training preparation have been maintaining health status of the
community till now. Utilization of non-teaching hospitals as training centres: health officers and
emergency surgical officers increased health officers and other health workers per population ratio.
Focus on mid-level health professionals to reserve these cadres in rural posts appeared to be a vital.
Another reforms attained changes are: Local recruitment where government imposed the facilitating
the rural pipeline, creating regional quotas for applicants from disadvantaged regions as long as they
met entry requirements, efficiency gains through optimizing the mix of skills that provided logical
positive outcome because the expenditures necessary for training high level care provider is always
less than of training to specialize the existing one. This approach generates efficiency gains in terms
of overall training costs and the wage bill.

Besides, the following lessons are learnt from Ethiopian human resource health sector:

Defining and prioritizing the staff categories to be scaled up in a reform of human resources for
health contributes to increasing the effectiveness and efficiency of the health sector. Social,
epidemiological, geographical, and economic context of the country, as well as the evidence for

16
high-impact interventions in health have to be taken into consideration. Carefully planned and timed
supply-side measures in human resources and focusing on conventional and alternative cadres of
mid-level health workers, have a great potential for improving the density, distribution, and
performance of health workers, as well as the cost of delivering health services. The supply of health
workers can be increased significantly in a relatively short time if there is sufficient political and
managerial will.

Salaried community-based health extension workers provide cost-effective interventions, ensure that
supplies (such as vaccines) are used appropriately, and work in areas and among communities with a
high need for services, task-shifting (for example, from doctors to health officers) can increase
technical and allocative efficiency by providing priority interventions at a lower cost in areas of
need. The appropriateness of the training infrastructure and the availability of skilled and motivated
trainers must be assured, enabling factors for the realization of efficiency gains through human
resource reforms include regular follow-up of the reform by top management, strong monitoring and
coordination mechanisms for training and deployment, the inclusion of relevant stakeholders, and
alignment of funding by government and development partners with agreed priorities. Although
efficiency gains in terms of an improved staff mix, a decreased wage bill and improved geographical
distribution of health workers can be ascertained early, assessing the impact in terms of increased
utilization of services and improved health outcomes requires further studies, quantification of the
efficiency gains achieved through human resource reforms is difficult. There remains a need to
develop guidelines and standardized methodological tools.

17
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6. Annexes

Term definition

Essential health service package (EHSP) also called the minimum health services package, refers
to a set of cost-effective, affordable, and acceptable interventions for addressing conditions,
diseases, and associated factors that are responsible for the greater part of the disease burden.

Ethiopian essential health service package has been designed based on core health and
health-related interventions to address major health problems and disease conditions in the
country. It includes the basic preventive, promotive, curative, and rehabilitative interventions
that are considered to be the minimum that people can expect to receive through the various
health-delivery mechanisms and facilities within their reach. The major components of the
EHSP for Ethiopia are aligned with the health service extension programme (HSEP). The
Ethiopian EHSP is organized into five major components (with the addition of a category
containing basic curative care and treatment of major chronic conditions starting from the health-
centre level) similar to the following HSEP components:
 Family health
services
 communicable disease prevention and control
services ñ hygiene and environmental health
services
 health education and communication
services
 basic curative care and treatment of major chronic
conditions.

 Health service extension programme (HEP): A package of basic and essential promotive,
preventive and selected curative health services, targeting households in the community,
based on the principles of primary health care to improve the health status of families
with their full participation. It forms the basis of the national health system, focusing
mainly on preventive aspects of health services and promotion of healthful living in the
community.

 Health extension workers (HEWs): a new cadre of community-based health workers in

Ethiopia. HEWs are selected by the community in which they live (in collaboration with
district administration), to provide (after completing one year of training) promotive,
preventive, and selected curative health services to the community of their origin, based
on the values and principles of primary health care.

 Primary health care unit (PHCU): first level of care in the new three-tier system of
Ethiopian health care, comprising primary hospital, health centre, and health post

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