Improving the implementation of cost recovery for health: lessons from Zimbabwe

In the current debate over health financing policy in developing countries, governments are increasingly focusing on cost recovery--having patients pay part or all of their health care costs--as a way to mobilize more resources for health, improve equity by selectively charging the wealthy, and increase efficiency by encouraging reinvestment of fee revenues into cost-effective primary care. Zimbabwe offers an important example of a country with a tradition of levying fees in government health facilities, but where enforcement became lax in the 1980s. In 1991, policymakers resolved to resuscitate and strengthen cost recovery, as part of a broader economic reform program. This paper discusses the strengths and weaknesses of Zimbabwe's cost recovery system, its potential for improvement, and the obstacles to change in revising the fee structure and billing and collection procedures. It argues that cost recovery can help to achieve Zimbabwe's health objectives, but only in conjunction with other measures to redirect public spending to essential public health and clinic care and improve the efficiency of government services. The paper finds that during the 1980s, the fee schedule became badly misaligned with actual medical care costs and created distortions in patient referral patterns. Billing and collection were also weak, because of deficiencies in personnel and information systems and lack of incentives for revenue generation. The paper concludes that if key steps were taken to raise the collections-to-billings ratio, recover fees from privately-insured patients, and adjust fees in line with medical cost inflation, recoveries could increase fourfold, from 5% to 20% of government spending for clinical care. At the same time, access to government health services for the poor could be maintained by improving exemption procedures.