The Flipped Break-Even: Re-Balancing Demand- and Supply-Side Financing of Health Centers in Cambodia

Supply-side healthcare financing still dominates healthcare financing in many countries where the government provides line-item budgets for health facilities irrespective of the quantity or quality of services rendered. There is a risk that this approach will reduce the efficiency of services and the value of money for patients. This paper analyzes the situation of public health centers in Cambodia to determine the relevance of supply- and demand-side financing as well as lump sum and performance-based financing. Based on a sample of the provinces of Kampong Thom and Kampot in the year 2019, we determined the income and expenditure of each facility and computed the unit cost with comprehensive step-down costing. Furthermore, the National Quality Enhancement Monitoring Tool (NQEMT) provided us with a quality score for each facility. Finally, we calculated the efficiency as the quotient of quality and cost per service unit as well as correlations between the variables. The results show that the largest share of income was received from supply-side financing, i.e., the government supports the health centers with line-item budgets irrespective of the number of patients and the quality of care. This paper demonstrates that the efficiency of public health centers increases if the relevance of performance-based financing increases. Thus, the authors recommend increasing performance-based financing in Cambodia to improve value-based healthcare. There are several alternatives available to re-balance demand- and supply-side financing, and all of them must be thoroughly analyzed before they are implemented.