Of the US$7.1trn spent annually on healthcare globally in 2014, less than 1% (US$35.9bn) is Development Assistance for Health (DAH). This funding remains crucial for low- and middle-income countries to address their challenges. Before the financial crisis of 2008, development aid had been on an upward trend as steps to address the Millennium Development Goals advanced. However, funding levels have stagnated since 2010-

Therefore, difficult decisions on healthcare prioritisation are constantly being made by governments and aid organisations, with an increasing focus on allocative efficiency to achieve greater returns on investment. The World Health Organisation (WHO) has identified substantial inefficiencies in healthcare financing, amounting to between 20% and 40% of total spending. These inefficiencies have several sources, from allocation decisions based on poor cost-benefit analyses to losses in the supply chain. Aid allocation decisions are often based on non-objective criteria, such as shifting political priorities in aid-giving governments or geopolitical factors. Aid financing can also go “missing” as a result of poor governance, or be consumed by the high running costs of organisations.

This report, commissioned by the International Decision Support Initiative (iDSI) and written by the Economist Intelligence Unit (EIU), reviews the current research and methodologies used to analyse resource allocation and identifies gaps that could be bridged to improve health outcomes. To reduce waste and improve efficiency, the report then seeks to lay the groundwork for developing an index—a multidimensional measurement framework—that will evaluate the “enabling environments for health aid effectiveness”. Such a tool could, in our view, become a powerful resource for quantifying how effectively the healthcare sector works in low- and middle-income countries.

The report can be found here.