The impact of financial support and budgeting on medication availability and purchasing behavior in the Nigerian primary healthcare system

Previous work has shown that primary healthcare facilities can benefit from both in-kind support (e.g., medication shipments) as well as increased cash-on-hand to spend to address service readiness gaps. However, there is limited evidence on how facility managers choose to spend available cash or how their decisions to manage their facility budgets are affected by in-kind support. Economic theory suggests that the optimal allocation of cash resources would depend on the context and constraints to how it can be spent, and expenditures would in turn affect the availability of supplies and medications. We test this theory using regression analysis on data from the Nigeria Service Delivery Indicators for Health (SDI), a health facility survey from twelve states in 2013 that included both hospitals and primary healthcare centers (PHCs). We find that facilities with financial resources available to them have higher availability of essential medicines, especially if the facility had earmarked some cash for medication expenditures. However, earmarking for other expenditure categories did not have the same effect on medication availability, which indicates that budgeting processes are an important factor in ensuring medication availability. We find that cash support had large effect (p < 0.001) on availability and that in-kind donations had a negative effect on the probability of expenditure of medications. Additionally, we find the difference between hospitals and PHCs is due to their financial situation (variables become insignificant once support variables were in regressions). Regression analyses also showed that facilities that received in-kind medications had higher availability, but this only had a significant effect in facilities that did not have cash available to spend on medications, implying that facilities are able to address their own supply needs when they have resources available to them. Thus, in-kind supplies should be targeted to facilities that cannot otherwise procure them. Overall, facilities appear to be making effective trade-offs in the context of limited resources and they should receive both cash and support for appropriate budgeting and procurement practices.