NATIONAL PRIMARY HEALTH CARE DEVELOPMENT AGENCY BASIC HEALTH

NATIONAL PRIMARY HEALTH CARE DEVELOPMENT AGENCY BASIC HEALTH CARE PROVISION FUND (BHCPF) BHCPF Financial Management November 2020

Learning Objectives At the end of the session, the participants should be able to: § Understand demonstrate knowledge of best practices for managing the financial operations of a facility § To acquire knowledge and skills in financial management § How to use financial management tools and templates 2

Content Overview of financial management Financial management processes Fund tracking Question and answer

Brainstorm § What in your understanding is financial management? § What is/are the importance of financial management? 4

What is Financial Management? § The healthcare environment today, and in the foreseeable future, is forcing managers to place an increasing emphasis on financial implications when making operating decisions § Financial Management means planning, organizing, directing and controlling the financial activities such as procurement and utilization of funds of an organization Financial management is the efficient and effective procurement and use of financial resources to accomplish an organization’s objectives 5

Importance of Financial Management § Proper recording of funds received § Transparency, accountability and proper utilization of funds § Re-allocation of un-utilized funds to where it is needed subject to approval § Proper planning, budgeting and policy formulation § Provision of complete, accurate and timely reports to stakeholders for decision making 6

Roles of Finance Officers § Keeping records of all financial documents § Preparation of payment vouchers § Attaching all supporting documents to payment vouchers § Cheque writing § Updating of cheque release register § Updating of assets register § Preparation of monthly and quarterly financial Report § Any other duty that may be assigned by the head of the facility ‒ A staff of the facility will be designated as the finance officer and must receive some specific financial management training at LGHA level ‒ Where facilities general quarterly revenues exceed N 2, 000, the LGHA would be mandated to ensure the provision of an accounting clerk with at least an ordinary national diploma (OND) in accounting for the facility ‒ Contiguous facilities can similarly be clustered and serviced by a singular clerk

Content Overview of financial management Financial management processes Fund tracking Question and answer

Key financial management processes In any functional financial management system, there are three important processes that must take place for such a system to be effective Funds retirement 03 Funds disbursement 02 Budgeting 01

Budgeting (1/2) Budgets translate a health facility’s vision, commitments and goals into clear decisions on how to use available financial resources to meet the health facility’s competing needs § A budget is an economic and financial management instrument for allocating resources in order to achieve stated objectives § It is defined as a process of objectively determining the needs of the organization for a specific period and costing the identified needs using a systematic approach 10

Budgeting (2/2) § The quality improvement committee objectively determines the healthcare requirements of the community and the needs of the facility annually using a quality improvement plan § Based on the identified community needs, outstanding issues from the quality improvement plan, a costed quarterly business plan is made and submitted to the LGHA § The LGHA collates and reviews the quarterly business plans to ensure that it aligns with the overall health goals of the LGHA and forwards same with a summarized ledger for all PHC facilities in the LGHA to the SPHCB 11

Budgeting tools - 1/2 Budgeting tools 1 Quality improvement plan Description: Responsible: § Quality improvement committee of the health facility with support of the § It is developed based on outcome of the baseline and/or WDC and LGHA supervisor annual health facility quality survey § It is an annual plan used for planning how to improve quality § It guides the health facility in developing their quarterly business plans 2 Quarterly Business Plan § The business plan describes all planned activities costs across all the key BHCPF program priority areas for the quarter under review § Three copies of the finalized plan is to be signed by the OIC and the WDC chairman for onward submission to the LGHA for approval Source: Team analysis § It is developed by the health facility management in collaboration with the WDC and the support of the LGHA

Budgeting tools - 2/2 Budgeting tools 3 Intervention form Description: § It is used to seek immediate intervention from the BHCPF in cases of disasters/unplanned occurrences § Examples of these incidences will include but not limited to theft/burglary, collapse of facility, roof removal due to heavy wind/downpour insurgence and refugee situation etc. Source: Team analysis Responsible: § The health facility OIC with support of the WDC chairman and submitted to the LGHA for approval before onward submission to the SPHCB

Fund disbursement (1/6) § Disbursement refers to the release of budgeted funds for the execution of planned pre-approved activities i. e. the business plan § All facilities must transmit an approved annual quality improvement plan and a quarterly business plan to the LGHA for onwards transmission to the SPHCB § The LGHA will collate all approved quality improvement plan and business plan, and forward to the SPHCB. The SPHCB will only transmit funds to facilities after receipt of approved plans § The SPHCB transfers funds electronically and directly to health facilities within a period of not more than two (2 weeks) after the funds have been received from NPHCDA and after receiving approved business plans § SPHCB to send SMS notification when funds are disbursed to the health facilities 14

NPHCDA Gateway Operations: Fund Flow Pathway BHCPF 100% (CBN TSA) NPHCDA Gateway 45% (TSA) 5% for Midwives DFF to PHC (35%) (PHC Facility Account) Utility, fueling, transport, waste management, meeting support, finance, ad-hoc HR, stationeries, consumables, seed drugs SOURCE: Team analysis, BHCPF guideline 10% for PHC HR 5% for CHIPS Transfer are conditional and implementation arrangements to be cleared, tracked and supervised by the NPHCDA. Engaged Midwives must first meet BHCPF Facility Gaps. | 15

Funds will be disbursed to the SPHCBs quarterly States that do not meet the requirements for the release of funds in any given year are deemed to have forfeited their allocations 16

The financial reports will be transmitted upwards from the facilities to NPHCDA gateway system of fund disbursement BHCPF Funds NPHCDA SPHCB Retirement § The SPHCBs will directly disburse programmatic funds to PHC quarterly § The operational funds disbursed to states will be shared between the SPHCB and the LGHA to support implementation LGHA § All retirements will be sent from the facilities to the state through the LGHA to ensure accountability for all disbursed funds § All facilities must submit retirements of the 1 st quarter before the 3 rd tranche of funds is disbursed to them Health facility

All funds must be lodged into the facility’s account § All funds belonging to the facility shall be paid into the account and all expenses relating to day operations and general maintenance of the facility should be paid from the same account § All payments must be made by bank transfer following the transmission of a payment instruction to the bank accompanied by a duly signed cheque or mandate for the total amount on the instruction 18

The funds disbursed to PHCs as DFF will be used for the following activities Cost component Description 1. Drugs and commodities § Procurement of seed drugs, Laboratory reagents, treatment commodities (cotton wool and bandages) etc. 2. Consumables § Procurement of detergents, disinfectants, and bleach etc. 3. Ad-hoc Human Resources § Payment for hire of temporary staff i. e. midwife, cost of in-house facility-based training etc 4. Transportation § Transport for out reaches and emergency referrals 5. Utility and maintenance § Electricity, water, borehole maintenance, airtime, internet services, etc. 6. Waste management § Procurement of waste bins, payment to professional waste management, maintenance of incinerator, movement of waste etc. 7. Fuelling § Fuel for generator, motorcycle, and lamps, cooking gas, etc. 8. Stationeries § Registers, writing materials, Envelope, Letter headed papers, Papers, etc 9. Meeting Support § Management meeting, transport for WDC meeting, transport for community dialogue discussion etc 10. Bank charges § Bank statement, cheque book, transfer charges, maintenance charges etc. SOURCE: Team analysis | 19

The funds disbursed to PHCs should not be used for the following activities § Payments in cash or kind to the employed government staff of the health facility § Hiring contractual workers below the level of midwife § Air conditioning equipment § Payments to any officials of the local, state, or federal government 20

Fund retirement § The main aim of this process is to provide objective and verifiable proof that disbursed funds were used as planned at the health facility § Health facilities must properly document fund utilization using provided templates and submit to LGHA § LGHA compiles retirements for all health facilities and SPHCBs collates the retirements from all LGAs § PHCs would be expected to keep original receipts for all purchases and expenditure in a safe cupboard within the facility for at least 7 years (inline of extant laws) for the benefit of auditing 21

Attachments for retirement The under-listed documents must be attached to the payment vouchers, depending on the nature of transaction. The attachments are: § Approval. § Invoices (if any) § Receipts (if any) § Invitation letters/letter of admission; certificate of attendance in term of training § Bus fare tickets § Minutes of meeting and attendance list § Reports etc.

The financial reporting data from facilities will be collated and validated at the LGA Retirement level PHC officer fills quarterly financial reporting template at the end of the quarter and share with LGHA LHGA officer collates and reviews financial reports and feeds into the LGA fund retirement summary sheet Responsible person Timeline Officer-in-charge PHC 1 st week of proceeding quarter LGHA Health Secretary 2 nd week of proceeding quarter State officer at the SPHCB reviews and collates retirements from all LGAs into the state fund retirement summary sheet DFA, SPHCB 3 rd week of proceeding quarter A report is generated and shared with the NPHCDA Executive Secretary, SPHCB 4 th week of proceeding quarter

BHCPF Facilities will use the quarterly financial template to report how funds where used at the end of the quarter § The quarterly financial report allows visibility into the health facility’s finances and allows for accountability of use of the BHCPF § It captures all projected and actual revenues and expenses of the health facility § The facilities will attach statement of accounts and photocopies of receipts to all transactions reported § The facilities will ensure the hardcopy of the template is sent to the LGHA by the 1 st week of the proceeding quarter § LGHAs who are assigned as mentors will ensure that they review the form before submission

The LGHA will collate all retirements from BHCPF facilities within them and forward to the SPHCB § The LGHA will receive retirements from facilities and collate it into the retirement summary sheet § The LGHA will also retire all operational funds received and input them into this sheet § The LGHA will ensure the quarterly financial report from facilities and a soft copy of this template is sent to the SPHCB by the 2 nd week of the proceeding quarter § The LGHA will check for completeness of supporting documents by the assigned officer before they transmitted to the SPHCB

The SPHCB will collate all retirements for all funds received under BHCPF and forward to the NPHCDA (1/3) § The SPHCB will receive retirements from LGHAs and collate it into the state PHC retirement summary sheet § The SPHCB will review all quarterly financial reports of facilities forwarded to it by the LGHA § The SPHCB will ensure a soft copy of this and submissions from LGA is sent to the NPHCDA via email by the 4 th week of the proceding quarter

The SPHCB will collate all retirements for all funds received under BHCPF and forward to the NPHCDA (2/3) § The SPHCB will retire all funds expended for activities under the HRH § The SPHCB is to attach receipts, attendance sheets, payment schedules for all activities and send together with this sheet to NPHCDA § This sheet is to be sent together with the state PHC retirement summary sheet

The SPHCB will collate all retirements for all funds received under BHCPF and forward to the NPHCDA (3/3) § The SPHCB will retire all funds used for operational activities funded by the operational funds § The SPHCB is to attach receipts, payment vouchers, payment schedules etc. for all activities and send together with this sheet to NPHCDA § This sheet is to be sent together with the state PHC retirement summary and 10% HRH retirement sheet

Audit (validation) of retirements (1/2) § This refers to the processes involved in independently evaluating and verifying the authenticity of submitted retirements § Staff of the NPHCDA, SPHCB and LGHA would during monitoring and supervisory visits conduct some level of physical auditing to verify that purchases reported from previous quarters were made § This would include but not limited to: – Verification of physical infrastructural work – Monitoring staff engagement and expenditure from bank account i. e. reconciliation of the bank account and monthly expenditure sheets 29

The auditing process will go through a 4 -step approach Approach Description Retirement verification § Validation of financial retirements submitted by PHCs workers to confirm that PHC activities were conducted as claimed in the report § This is to be completed by the 2 nd week of the proceeding quarter Retirement counter-verification Internal auditing External auditing § At the end of each funded quarter, the validated financial retirements submitted by facilities to the LGHA will be forwarded to the SPHCB for counter-verification § The SPHCB will ensure that all financial reports submitted by facilities in the state are counter verified § The counter verification will involve visiting the facilities and verifying all original receipts and activities carried out § This is to be completed by the 4 th week of the proceeding quarter Responsible LGHA Health Secretary DFA, SPHCB § The SPHCB will ensure that 25% of facilities in the state are visited and have their financial reports verified biannually § The internal auditing will involve visiting the facilities and verifying all original receipts and activities carried out DFA, SPHCB § The Office of the Auditor General of Nigeria shall audit the accounts of the NPHCDA pathways across the whole levels of implementation at the end of every financial year Office of Auditor General of Nigeria

The different levels in the retirement process will be held accountable when they do not submit retirements on time Level Infractions Action to be taken 1 § Lack of submission of facility retirements § Fund will not be disbursed to the facility until retirement is submitted § Lack of submission of summary of facility and LGHA operational retirements § The LGHA will not get funding for it’s operations § Lack of submission of state retirement sheets § SPHCB will not get additional disbursement from NPHCDA Facility 2 LGHA 3 SPHCB

Incentives for PHCs § PHCs are required to utilize the funds received through the NPHCDA gateway as efficiently as possible § The NPHCDA will work with SPHCBs to assess and rank each health facility based on indicators on financial management, quality of service and patient satisfaction § PHCs and/or PHC staff that performs excellently will be recognized in yearly award ceremonies 32

Sanctions for PHCs If there are infractions where the PHC does not follow the stipulated business plan or emergency intervention measure; – At first default, the PHC would be informed and cautioned by way of documented communication – At second default, the LGHA shall engage the health facility management committee of the health facility and the WDC to take necessary cautionary actions. The PHC will be given 3 months to make amends, after which a re-assessment will be done. – At the third default, the health facility shall be delisted from the BHCPF and a new health facility within the ward shall be enlisted. In cases of fraud the case would be handled according to the civil service rules and regulations 33

Content Overview of financial management Financial management processes Fund tracking Question and answer

The SPHCB will track fund disbursements and retirement using a state fund tracking sheet § The SPHCB will use the state fund tracking sheet to track disbursements of programmatic and operational funds § The tracking sheet tracks: - Total funds received from NPHCDA gateway - DFF disbursements to PHCs - CHIPS and midwife's intervention funds utilization - Utilization of operational fund § The tracker will be managed by the state core team § The use of the tracking sheet is optional and it is meant to guide states on how funds are utilized

Content Overview of financial management Financial management processes Fund tracking Question and answer

Facilitated Q&A National Primary Health Care Development Agency

Further reading 1. A Guide for the Effective Management of Direct Facility Funding and Strengthening Human Resource for Health developed by the Joint Learning Network for Universal Health Coverage in Nigeria 2. NPHCDA gateway handbook 38