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Challenges with decentralisation in practice

Disagreements over decision space and accountability reduce the effectiveness of the health system. Watch this video to see how this can be managed.
KRISHNA HORT: As you may have guessed from the Batik shirt, I’m going to discuss the experience of decentralisation and its impact on the health sector in Indonesia. Indonesia faces many of the challenges of large countries with diverse social and ethnic groups dispersed geographically. In Indonesia, a population of 250 million dispersed across 18,000 islands and over 300 ethnic groups. Following two decades of autocratic rule, popular protests resulted in democracy in 1999, but also demands for more local control and autonomy. Decentralisation was introduced at the same time, primarily, in response to these demands with the aim of maintaining the integrity and unity of the country.
The type of Decentralisation introduced was extensive with responsibility for most population and community services devolved to the local level of government– the district or municipality of which there are about 500. While the provincial level, 34 provinces, had the role of representation of the central government. However, provincial and district governments were considered of equal status and provinces do not have authority over districts. The management and delivery of health services was largely devolved to district government– with provinces retaining responsibility for provincial hospitals and the central government, responsibility for national referral hospitals.
It was hoped that Decentralisation would address one of the long-standing issues of Indonesia– the inequality between the richer islands of Java and Bali and the poorer islands of eastern Indonesia, including West Timor and Papua. Decentralisation introduced a new funding mechanism, which provided a general budget allocation to districts and provinces based on a formula, which aim to balance population numbers and need as well as additional funding streams that provided additional funds to disadvantaged and more remote or border areas. What were the impacts on health services? The transfer of control of public service staff to district level, although with national limits on the total number and on recruitment, resulted in an increased number of local and contract health staff.
But health workers continue to prefer urban and wealthier areas, resulting in much lower staff-to-population ratios in rural and remote areas. Appointments to leadership and management positions were influenced by local political considerations, and appointees did not always have the appropriate qualifications. Health was not prioritised in local budgets and most of the budget that was provided ended up spent on salaries. This resulted in a lack of operational funds for public health activities, such as outreach to villages, and priority public health programmes, such as immunisation. Hospitals also gained a degree of autonomy and reported directly to local government, bypassing the district or provincial health office. This disrupted the integration of hospital and primary care services.
Some governments in wealthier areas introduced local health insurance schemes that reduce costs for their populations in accessing care. Policy responses from the central level went through three phases. Firstly, an attempt to assert national authority by introducing a requirement in the health law mandating a minimum local government allocation to health of 10% and defining national minimum standards and priority programmes that were obligatory for local governments. However, there was weak enforcement of these requirements and they are regularly flouted. Policy makers then sought to bypass local control through specific target national funded programmes. These included supplementary funding for operational expenses direct to community health centres. National programmes directly purchased and provided vaccines and medicines for priority programmes, such as malaria control.
A national programme reimbursed user costs for child birth in a health facility. While these strategies delivered funds to local level, they did not encourage local government ownership or investment. And, thirdly, since 2014, a national health insurance programme, the JKN, has significantly increased funding from national level to health and provided those funds as demand-side funding that amalgamated existing programmes and linked payment to performance. This enables central agencies to retain some control over use of funds and shifted some of the power back toward the central level, but sets up a dual system with centrally directed funding through the JKN and decentralised funding through government budgets. This is well illustrated by the Decentralisation pendulum introduced by my colleague Professor [INAUDIBLE]..
In Indonesia, the pendulum swung to the left with Decentralisation and the initial law of 1999. But then started to swing back to the right and more centralization with the revised law of 2004 and more recently 2013. Overall, there has been increased government funding for health and improvements in access to services and financial protection for the poor. But these improvements have favoured those provinces with better access and better resourced health facilities, notably in central and western regions. Facilities and staff in eastern regions remain much below these areas with lower utilisation and access to services. And health indicators in these areas remain poor.
Recent studies indicate that these inequalities result from a complex interaction of multiple disadvantage– this starting from childbirth, through education, to employment. Locally specific strategies are needed together with redistribution of national funds to address these problems.
If you have experienced a health system caught in the ‘decentralisation pendulum’, or seen the effects of disagreements between national and subnational health system levels over decision space and accountability, you will know first hand that these can greatly reduce the effectiveness and efficiency of the health system, and demoralise the health workforce. While there is great potential to strengthen the health system by changing the decision space of subnational health system levels, these changes must be done carefully, be well resourced, and consider ways to prevent or mitigate the unintended consequences of such a realignment of power.
While decentralisation approaches often focus on increasing decision space at ‘higher’ subnational levels (e.g. province, district, state, county) they may also increase accountability and responsiveness at the level of individual communities, and it is this important part of the health system which we will now explore. As we do so, reflect on how the decision space at these ‘district’ type levels will impact on how a community health system functions.
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Health Systems Strengthening

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