Many countries are grappling with economic challenges due to a convergence of multiple crises and shifting policy priorities, underscoring the urgent need for strengthened public health financing. In this context, nations are increasingly exploring domestic solutions. However, limited fiscal space often restricts their ability to expand health spending. Given these constraints, what options exist to meet health financing needs?
One major challenge is the inefficiency in public health financial management. A significant portion—often between 20% and 30%—of allocated health budgets remains unspent by the end of the fiscal year. Additionally, many countries lack the capacity for effective priority setting, leading to suboptimal utilization of limited resources. Evidence suggests that investments in health promotion, disease prevention, early detection, and comprehensive primary healthcare yield better clinical and economic outcomes than many other healthcare expenditures.
Another critical issue is low-value care—the overuse of unnecessary consultations, tests, and treatments—which accounts for 20% to 40% of health expenses in countries with weak regulatory and quality control systems. The prevalent fee-for-service model incentivizes excessive service provision, whereas pay-for-performance strategies offer a more effective alternative. However, many countries lack the robust health data management systems needed to measure outcomes and implement such models effectively.
To address these challenges, countries can unlock additional funds by improving public health financial management, prioritizing preventive and primary care, and adopting strategic purchasing methods to optimize both cost and quality. Alternative financing mechanisms—such as philanthropy, corporate social responsibility contributions, and crowdfunding—are also being explored to supplement public revenues.
Since human and material resources constitute the bulk of health expenditure, LMICs are innovating by optimizing workforce deployment through community health volunteers, task shifting, and expanded training programs for health professionals. Telemedicine is increasingly being leveraged to mitigate workforce shortages. Meanwhile, pooled procurement, patent pooling, and licensing strategies are helping reduce the costs of essential drugs and vaccines.
While no single approach can resolve the complexities of health financing, a combination of efficient financial management, strategic investments, and cross-sector collaboration can pave the way for more sustainable healthcare systems. By adopting innovative financing mechanisms and sharing best practices, countries can build resilient health systems that provide equitable access to quality care—even in the face of economic constraints.