NHA-Pakistan-2021-22.pdf - Page 12

Pakistan Bureau of Statistics National Health Accounts

Table 43: Federal & Provincial ABs/Cs Health Expenditures for the period 2015-16 to 2021-22
(Million Rs.) Fiscal Year Federal ABs/Cs Provincial ABs/Cs Reimbursement Own health facilities Health
Insurance Total Reimbursement Own health facilities Health
Insurance Total 2015-16 8,955 4,227 53 13,235 774 126 135 1035 2017-18 8,078 5,115 61 13,254 936 138 148 1,222 2019-20 9,330 5,908 70 15,308 1,032 152 163 1,347 2021-22 10,983 6,955 83 18,021 1,215 179 192 1,586

Classifications and International Guidelines

Pakistan Bureau of Statistics National Health Accounts

6.1 Definitions and boundaries The framework of health accounting has to be in line with international recommendations and clas- sifications (of NHA) and with National Accounts as well. For these reasons, PBS is following the interna- tional guidelines of WHO and applies it tailor-made to Pakistan. The NHA-methods for the developing coun- tries are derived from the System of Health Accounts (SHA). The SHA defines health care activities which are more focused on health services in health system.
“Activities of health care in a country comprises the sum of activities performed either by institutions or individuals pursuing, through the application of medical, paramedical and nursing knowledge and tech- nology, the goals of: • Promoting health and preventing disease; • Curing illness and reducing premature mortality; • Caring for persons affected by chronic illness who require nursing care; • Caring for persons with health-related impairment, disability, and handicaps who require nursing care; • Assisting patients to die with dignity; • Providing and administering public health; • Providing and administering health programs, health insurance and other funding arrange- ments17”. In SHA manual, Total Health Expenditure (THE) includes health care functions under classification codes HC.1 to HC.7 plus capital formation18by health care providers (HC.R.1). The HC.1 to HC.7 & HC.R.1 include HC.1 Services of curative care HC.2 Services of rehabilitative care HC.3 Services of long-term nursing care HC.4 Ancillary services to medical care HC.5 Medical goods dispensed to outpatients HC.6 Prevention and public health services HC.7 Health administration and health insurance According to the above definitional framework, medical education and health-related professional training & research are not included in the Total Health Expenditure (THE). This definitional framework is important, when it comes to cross country comparisons. The method recommended for developing countries by WHO gives them the liberty to include cat- egories which are seen as integral part of the health system such as health education or health related research or training and is called “National Health Expenditure”. So, Total Health Expenditure (THE) is the definitional framework provided by OECD (for international comparisons) and the National Health Expendi- ture (NHE) is the definition adopted by any particular country.

17Organization for Economic Co-Operation and Development (OECD), 2000, A System of Health Accounts Version 1.0, pp. 42. 18Gross capital formation in health care industries are those expenditure that add to the stock of resources of the health care system and last more than an annual accounting period

Pakistan Bureau of Statistics National Health Accounts

As for NHA Pakistan, regardless of the type of the institution or the entity providing or pa ying for the health care activity, it is as follows: “National health expenditure encompasses all expenditures for activities whose primary purpose is to restore, improve, and maintain health for the nation and for individuals during a defined period of time19”.
NHA Pakistan comprises of the health expenditures for the four provinces (Punjab, Sindh, KP and Baluchistan) and federal health expenditures, which amounts to the national health expenditures. NHA Pakistan shows health expenditure for Pakistani cit izens and residents as well as spending by external agencies, like bilateral donor and UN agencies, on inputs to health care in Pakistan. This means that NHA Pakistan: Includes:
■ Health expenditures by citizens and residents temporarily abroad
■ Donor spending (both cash and in-kind) whose primary purpose is the production of health and health-related goods and services in Pakistan Excludes:
■ Health spending by foreign nationals o n health care in Pakistan (as NHA treats this as an export of health services and does not include in NHA estimation) in Pakistan ■ Donor spending on the planning and administration of such health care assistance It is recommended that NHA may use the accrual method in accounting for expenditures, not the cash method. This would mean that expenditures are related to the time period during which the actual activity takes place. The accrual method uses the expenditur es, which are attributed to the time period during which the economic value was created whereas the cash method refers to the expenditures, which are registered when the actual cash disbursements take place. However, the data situation in Pakistan does not yet allow for application of the accrual method. The numbers presented in the first-round report and in this report of NHA are both cash-based. 6.2 ICHA-Classification adapted for Pakistan The NHA classification categorizes the dimensions of health care system (namely, financing sources, financing agents, providers and functions). Each classification and category of NHA has a code. A letter code is used for the four main classifications used in NHA Pakistan. For example, financing sources are denoted by the code FS, financing agents by HF. For more details see Annexure 6 and 7.
NHA Pakistan estimates are based on the concepts and accounting framework outlined in the "Guide to Producing National Health Accounts - with special applications for low-income and middle-income countries20“. Classifications for financing sources, financing agents and health care providers have been prepared for Pakistan (see annexure) including the linkages between them as shown in various matrices. Analysis of financing sources may be of particular interest where funding for the health system is diverse or changing rapidly in response to new financing strategies. Figures on financing sources are de- signed to reflect some of the key policy interests in the health system as well.

19World Health Organization, 2003, Guide to Producing National Health Accounts: with special applications for low- income and middle-income countries, pp. 20. 20See WHO website, http://www.who.int/nha/create/en/.
Pakistan Bureau of Statistics National Health Accounts

FS.1 covers all public funds. It is further divided into three sub -categories. FS.1.1 captures funds generated through general government. General government in Pakistan is federal government, provincial government and district / tehsil government. The ministry of finance acts as a main source of finance for civilian and military part. The provincial governments are the main source of finance for each province. The cantonment boards are placed un der district government section as they are financially autonomous and act as source of finance.
Unlike government revenues, money that is collected by government and dedicated to social se- curity funds is not counted under category FS.1.1. Therefore, employers’ contributions to social security schemes are categorized as other public funds. FS.2 covers all private funds. Here FS.2.1 covers employer funds. Similarly, household funds (FS.2.2) include household out of pocket payments, Zakat and Bait-ul-Mal.
FS.3 category is reserved for funds that come from outside the country. External resources such as bilateral and multilateral international grants as well as funds contributed by institutions and individuals outside the country are included to the extent that they are used in that current period. The classification scheme for financing agents allows categorizing the institutions and entities that pay or purchase health care in different groups . Financing agents include institutions that pool h ealth re- source collected from different sources, as well as entities (such as household and firms) that pay directly for health care from their own resources. As with the functional classification scheme in ICHA, NHA will likely show policy relevant subcat egories of financing agents under many of the two digits heading of the ICHA-HF. For example, under central government (HF 1.1.1) countries probably will add additional catego- ries for the Ministry of Health, Ministry of Education, and other ministries and so on. The reimbursement of medical charges and claims in Sehat Sahulat Programme (SSP) by federal and provincial governments are included as lump sum in the category defined as “Other”.
The Pakistan health care financial agents are classified into two major categories: general govern- ment and private sector. Under general government the main categories are territorial government and social security funds. In territorial government the classification code HF.1.1.1 explains the federal govern- ment part under which federal (civil) and military are categorized while, Ministry of Health, Ministry of Pop- ulation Welfare and other ministries are considered in the federal civil part. Code HF.1.1.2 covers the provincial government expenditures by provinces. Each provi nce has been further categorized into different departments like health, population welfare, and other departments. HF.1.1.3 covers the district/tehsil/local government and cantonment boards sections. The next main cate- gory under general government is soci al security funds, which from Pakistan’s perspective includes the social security funds channeled through ESSI (coming from the employers) and Ministry of Religious Affairs, Zakat & Ushr (coming from household Zakat contributions). HF.1.3 covers the Autonomous bodies/Corpo- rations. The private sector (HF.2) is classified as private health insurance, a private household OOP pay- ment and, if any, local/national NGOs involved in providing health services. Rest of the world funds are covered under HF.3. Most of them are under the official donor agencies category HF.3.1 In the 8th round of NHA 2019-20 reports, the classifications for compiling country health accounts have been revised as per recommended global standard document called SHA 2011. The Tri-Axial classi- fications namely financing schemes, health care providers, and health care functions have been populated through health expenditures incurred in 2019 -20. The cross tables namely -HFxFA, HFxFS, HFxHP, and HPxHC have also been developed for the fiscal year 2019-20 as per SHA 2011 framework. NHA section is working diligently to come up with a new report on Health Accounts-Pakistan based SHA 2011 framework. Pakistan Bureau of Statistics National Health Accounts

6.3 Revision of the System of Health Accounts As more countries are implementing NHA, the demand for improved analytic tools related to health expenditure is growing. Health accountants are encountering more expectations from policy analysts, policy makers and the general public alike for sophisticated health expenditure data. It is desirable to have data which is more reliable, timely, and comparable, both across countries and over time.
The SHA 2011 provides global standard s and is expected to avoid the development of divergent methodologies for the compilation of health expenditure accounts. It shares the goal of the System of Na- tional Accounts to constitute a system of comprehensive, internally consistent and international comparable accounts, which should be compatible with other aggregate economic and social statistics as far as possi- ble. The SHA 2011 draws on countries best practices and relevant international standards and is the result of a wide-ranging consultation process.
SHA 2011 has introduced a number of changes and improvements. It starts with a greater focu s on health consumption expenditure, with a more detailed consideration of prevention, long -term care, and traditional medicines. It provides more comprehensive guidance on recording the financing of health ex- penditures through health care financing scheme s and their revenues. SHA 2011 interprets financing schemes as the key components of the health financing system from the point of view of access to care, and hence connects them to providers and health care functions in the SHA’s tri-axial system of consump- tion, provision, and financing (see Figure 4). All four components of the health system can be linked to the three axes of health accounts. Each axis is associated with a specific classification, but there is no unique classification matching each axis. For example, the financing axis can equally be measured by financing schemes and financing agents. Con- sumption is the starting point and the goods and services consumed with a health purpose (functions) set the boundary of the health accounts. What ha s been consumed has been produced and provided, thus another axis is the provision, and what has been consumed and provided has been financed. This means that the third axis, financing as well as the second axis on provision are measured around consumption. Figure 7: Three axes of health accounts

There is also a greater separation of the accounting for consumption expenditure and capital ex- penditure on health system to reduce the ambiguity regarding their links, resulting in a new chapter in capital formation. It also introduces some new chapters l ike expenditure by groups of beneficiaries according to Consumption Financing
Provision Health Care Pakistan Bureau of Statistics National Health Accounts

disease, age, gender, region and socio -economic group. Building on the methodological work of the Pro- ducer Guide, there is also chapter of the factor costs of healthcare providers.
There is distinction between the developing and developed countries as far as health accounting methodology is concerned. D eveloped countries are using System of Health Accounts (SHA) while the developing countries are using the National Health Accounts (NHA) guideline. Thi s distinction has been removed and the revised system of health accounts (SHA 2011) is now the recommended Global Standard for compiling Health Accounts. 6.4 Charts of Accounts Classification for government finance “The Finance Division deals with the subjects pertaining to finance of the Federal Government and financial matters affecting the country as a whole, preparation of annual budget statements and supple- mentary/excess budget statements for the consideration of the parliament accounts and audits of the Fed- eral Government Organization etc. as assigned under the Rules of Business, 1973 21”. The Accountant General Pakistan Revenues (AGPR) is responsible for the centralized accounting and reporting of federal transactions. Additionally , the AGPR is responsible for the consolidation of sum- marized financial information prepared by federal self -accounting entities. The AGPR receives accounts and reports from the District Account Offices (DAOs), Provincial Accounts Offices (PAOs), Federal Treas- uries, and State Bank of Pakistan/National Bank, of Pakistan, and provides Annual Accounts (to the AGP) and Consolidated Monthly Accounts (to the Federal Finance Division). There are AGPR sub-offices in each of the provinces which also act as the DAO in respect of Federal Gove rnment transactions relevant to the Provincial Headquarters. The Controller General of Accounts is the administrative head of the AGPR.
The Provincial Accountant General (AG) offices, located in provincial capitals, are responsible for keeping the Provincial Accounts.
In December 2000, the New Accounting Model, which includes the new Chart of Accounts (CoA), was prescribed by the Auditor General of Pakistan under the Project to Improve Financial Reporting and Auditing (PIFRA). The new CoA is expected to provide a uniform basis for classification of Receipts, Ex- penditures, Assets, Liabilities and Equity through elements such as: Entity: The Entity element enables reporting transactions by the organizational structure or the organ- izational unit, which is creating a transaction. Function: The Function element provides reporting of transactions by economic function and program. The Function code is mandatory for transactions relating to expenditure. The Health Function code is 7. Object: The object element enables the collection and classification of transactions into expenditure and receipts and also to facilitate recording of financial information about assets, liabilities, and equity. The use of the object element is mandatory for all accounting transactions.
Fund: The fund element is a one alpha character and identifies the fund as being the consolidated fund or public account. Project: The project element enables transactions to be aggregated and reported at a project level.

21See MOF website, http://www.finance.gov.pk/.
Pakistan Bureau of Statistics National Health Accounts

The public sector data utilized in this report classifies according to PIFRA or CoA. For PIFRA Clas- sification (by function for health and other codes relevant to health expenditures) see Annexure 10.

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