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Africa: "Diagonal" Health Financing

AfricaFocus Bulletin
Mar 27, 2008 (080327)
(Reposted from sources cited below)

Editor's Note

The dichotomy between "vertical" financing (aiming for disease-specific results) and "horizontal" financing (aiming for improved health systems) of health services in developing countries is both destructive and unnecessary, argue a team of health activists and researchers in a new peer-reviewed policy paper published in the journal Globalization and Health. They propose expanding a "diagonal" approach that recognizes the necessary complementarity between disease-specific programs and improvement in health systems, with costs shared by both international and domestic funding sources.

This AfricaFocus Bulletin contains excerpts from this article by Ooms, Van Damme, Baker, Zeitz, and Schrecker on the "diagonal" approach to Global Fund financing, published on March 25, 2008. The full article, with footnotes, is available at

For earlier AfricaFocus Bulletins on health-related issues, visit


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The 'diagonal' approach to Global Fund financing: a cure for the broader malaise of health systems?

Globalization and Health 2008, 4:6 doi:10.1186/1744-8603-4-6

Gorik Ooms (, Wim Van Damme (, Brook K Baker (, Paul Zeitz
(, Ted Schrecker (

Submission date 14 November 2007 Publication date 25 March 2008

Article URL

This peer-reviewed article was published immediately upon acceptance. It can be downloaded, printed and distributed freely for any purposes.


The potentially destructive polarisation between "vertical" financing (aiming for disease-specific results) and "horizontal" financing (aiming for improved health systems) of health services in developing countries has found its way to the pages of Foreign Affairs and the Financial Times. The opportunity offered by "diagonal" financing (aiming for disease-specific results through improved health systems) seems to be obscured in this polarisation.

In April 2007, the board of the Global Fund to fight AIDS, Tuberculosis and Malaria agreed to consider comprehensive country health programmes for financing. The new International Health Partnership Plus, launched in September 2007, will help low-income countries to develop such programmes. The combination could lead the Global Fund to fight AIDS, Tuberculosis and Malaria to a much broader financing scope.


This evolution might be critical for the future of AIDS treatment in low-income countries, yet it is proposed at a time when the Global Fund to fight AIDS, Tuberculosis and Malaria is starved for resources. It might be unable to meet the needs of much broader and more expensive proposals. Furthermore, it might lose some of its exceptional features in the process: its aim for international sustainability, rather than in-country sustainability, and its capacity to circumvent spending restrictions imposed by the International Monetary Fund.


The authors believe that a transformation of the Global Fund to fight AIDS, Tuberculosis and Malaria into a Global Health Fund is feasible, but only if accompanied by a substantial increase of donor commitments to the Global Fund. The transformation of the Global Fund into a "diagonal" and ultimately perhaps "horizontal" financing approach should happen gradually and carefully, and be accompanied by measures to safeguard its exceptional features.


The potentially destructive polarisation between "vertical" and "horizontal" financing of health services in developing countries has found its way to the pages of Foreign Affairs [1] and the Financial Times. [2] This debate is not new; Uplekara and Raviglione describe a pendulum that has swung between vertical and horizontal for decades. [3] However, the new International Health Partnership Plus (IHP+) gives renewed life and urgency to the debate. [4]

The opportunity offered by the "diagonal" approach ű briefly mentioned in the Financial Times article by Anders Nordstrom, Assistant Director-General of the World Health Organization (WHO) responsible for health systems and services ű seems to be obscured in this polarisation. The terminology originates with Julio Frenk and Jaime Sepulveda [5], who captured what leading AIDS activists had believed for many years: that funding for AIDS treatment and prevention will be the driving wedge for urgently needed increases in the overall level of resources available for health. Frenk and Sepulveda describe the diagonal approach as a "strategy in which we use explicit intervention priorities to drive the required improvements into the health system, dealing with such generic issues as human resource development, financing, facility planning, drug supply, rational prescription, and quality assurance." [5]

In April 2007, the board of the Global Fund to fight AIDS, Tuberculosis and Malaria (Global Fund) agreed to consider comprehensive country health programmes for financing. [6] The IHP+ - which embraces the International Health Partnership initiated by the government of the United Kingdom [7] and related initiatives, including the Deliver Now for Women + Children campaign initiated by the government of Norway [8] - will help low-income countries to develop such comprehensive country health programmes. In a joint statement with UNAIDS, the GAVI Alliance, UNICEF, the United Nations Population Fund, the World Bank and the WHO, the Global Fund confirmed its support: "We, as international health partners committed to improving health and development outcomes in the world, welcome and fully support the International Health Partnership"s mission to strengthen health systems." [7]

Similarly, discussions within the United States on the reauthorisation of the President"s Emergency Plan For AIDS Relief (PEPFAR) increasingly focus on expanding human resources and improving procurement and supply chains, patient information, and laboratory systems. [9]

The authors believe that the diagonal approach is an essential concept for changing the global architecture of health assistance. This evolution could substantially broaden the scope of Global Fund financing; it might be critical for the future of AIDS treatment in low-income countries, yet it is proposed at a time when the Global Fund is starved for resources.


Resource starvation and the policy preoccupations that create it

The conventional approach to health system development is that foreign assistance should make itself redundant. Sooner or later recipient countries must be able to finance health services with their own resources. Adopting this approach to the "sustainability" of health services in low-income countries is a recipe for failure. [10] In 37 of the world"s 54 low-income countries, as defined by the World Bank, public health expenditure was less than US$10 per person per year in 2004 [11] ű as against the US$40 per person per year cost of an adequate package of healthcare interventions, including AIDS treatment, as defined by the Commission on Macroeconomics and Health (CMH).

The Global Fund has abandoned this conventional approach, in favour of a new form of sustainability that relies on a combination of domestic resources and predictable, open-ended foreign assistance. ...

This paradigm shift was essential, and should extend beyond priority disease programmes focused on AIDS, tuberculosis and malaria. Advocates for improved general health services should organise around this new paradigm of sustainability and additionality, and insist that donors do so as well. Donor failure on this point is one reason that general health services remain catastrophically under-funded, according to a range of observers who may agree about little else.

The limits of the vertical approach


AIDS treatment cannot be provided in isolation from health systems. A vertical approach works for a while, and then it hits the ceiling of insufficient health workers and dysfunctional health systems, particularly in countries with high HIV prevalence. [14] Africa alone needs well over a million new health workers, [15] including 427,500 full time equivalents for universal access to AIDS treatment alone,[16] which will require expanded health education systems, in-service training systems, human resource management, skills and task shifting, and improved supervision and referral systems. Wages and working conditions must be improved across the board to retain health workers and to stop external and internal brain drains. In addition, there are growing calls for greater programme integration between priority diseases initiatives and underlying health care delivery. Because priority disease prevention and treatment requires greater coordination between health services focused on co-morbid conditions and on reaching different populations, and because priority disease programming depends ultimately on the vitality of the underlying health systems, priority disease programming must become increasing diagonal in order to be effective.

Against this background, it seems logical to argue that foreign assistance should support a diagonal approach, rather than a purely vertical or purely horizontal approach. In practice, strident advocacy for purely vertical or horizontal approaches may encourage destructive competition for resources of the kind exemplified by claims that: "HIV is receiving relatively too much money, with much of it used inefficiently and sometimes counterproductively." [17] Instead of competing, diagonal funding would follow the new realities of AIDS programming, which is becoming increasingly diagonal both in terms of integration and coordination with other disease programmes, with sexual and reproductive health, with child and maternal health, and in terms of strengthening shared health systems, e.g., labs, procurement and supply management, patient information, and human resources. In sum, diagonal funding expands resources for health system strengthening.

How and why the IMF gets in the way

Integrating disease-specific interventions into general health services is easier said than done. Bosman describes how Zambia"s tuberculosis control programme suffered immensely because of rapid integration into general health services. [18] ...

The current policies of the International Monetary Fund (IMF) present a major obstacle to expanded spending. Although the IMF"s importance as a lender of last resort is declining, it must still sign off on a country"s macroeconomic policies before a country is eligible for various forms of development assistance, including debt cancellation under the Multilateral Debt Relief Initiative (MDRI). The IMF"s signoff is also regarded as a valuable seal of approval by foreign investors.

Although the religion of sustainability based on domestic resources has many believers, the IMF is its high priest. The IMF"s assumption that development assistance is, at best, temporary and precarious and its scepticism about "fiscal expansion" have important consequences for health systems, notably in terms of ability to hire badly needed health professionals. ...

As the domestic primary deficit is calculated as government revenue excluding grants, minus current expenditure, it is in effect a ceiling on the use of general budget support or health sector budget support. [20] ...

The diagonal approach: a way into the future, at a price (worth paying)

Health GAP, the Global AIDS Alliance, and many other AIDS activists have long urged the Global Fund to support the hiring and training of an expanded health workforce, argued for broader measures of health system strengthening, and supported the integration of sexual and reproductive health and child and maternal health services with AIDS treatment. A more ambitious alternative to destructive polarisation between vertical and horizontal approaches is gradually to turn the Global Fund into a Global Health Fund, which would require that the Global Fund"s resources be expanded significantly. To ˘consolidate towards a global health fund with one health sector funding channel÷ was suggested by Tore Godal, special advisor to Norway"s Prime Minister as one of the options to implement the Deliver Now for Women + Children campaign, [27] and already elaborated by one of us as in terms of "World Health Insurance". [11] ...

Such a Global Health Fund would need to disburse about US$28 billion per year, assuming for purposes of argument that it did not fund any programmes in countries where per capita public health spending exceeds US$40. The CMH estimate of US$40 was calculated to cover a set of priority interventions with the infrastructure necessary to deliver them, but not the costs of training new personnel, preventive programmes like family planning, emergency care or referral hospitals. If anything, it is a conservative estimate, especially in light of new resource needs estimates for HIV/AIDS, tuberculosis, malaria, child and maternal health, sexual and reproductive health, and human resources for health and health system strengthening.


A Global Health Fund is therefore feasible, but only if donor and recipient governments are willing to abandon the conventional approach to sustainability, and only if this Global Health Fund is not subjected to IMF policies. (In theory, the latter should not be a problem, as the unpredictability of foreign assistance is the main purported justification for the IMF"s conservatism about letting recipient countries spend it; foreign assistance from a Global Health Fund should be perfectly predictable.)

A Global Health Fund receiving and disbursing US$28 billion per year would require several times the annual funding level of US$6-8 billion for which the Global Fund is currently aiming. [6] The Global Fund"s replenishment meeting in September 2007 resulted in a disappointing US$9.7 billion commitment for three years: a little bit more than US$3 billion per year. [29] Total annual foreign assistance for health is estimated at approximately US$12 billion in 2004, [30] and while it is possible that some of these contributions would flow instead to an expanded Global Health Fund, the proposal made here would require a ten-fold increase in commitments to the Global Fund. Knowing that foreign assistance for health rose from US$2 billion in 1990 to US$12 billion in 2004 [30] - a six-fold increase in total annual foreign assistance - allows for some optimism.

Such a transformation would have to go through a transitional phase of diagonal financing coupled with diagonal programming, as discussed above. Diagonal financing would help finance the disease-specific AIDS, tuberculosis, and malaria programming that is required, it would help fund increased programme integration and coordination, and it would contribute to strengthening underlying health systems.


The eligibility of comprehensive country health programmes for Global Fund financing provides an opportunity and a threat. If such eligibility allows expanding health workers, increasing programme integration, and enhancing supply systems, laboratory systems, and management systems, then the Global Fund could simultaneously achieve its disease-specific and health system strengthening purposes. But if the Global Fund"s diagonal intentions were undertaken without additional and sustained contributions or if a diagonal approach could not continue to bypass IMF policies, the Global Fund could be sucked into the swamp of past failed health development efforts.

Against this background, reservations are in order about IHP+. As Christopher Murray, Julio Frenk and Timothy Evans diplomatically observe: ˘[T]he probability that these complex efforts will have a major impact on the behaviour of donor agencies and their interactions with developing countries will be greater if they come with new resource commitments.÷ [31] In less diplomatic words: this new global campaign looks like a rabbit-in-a-hat trick, sans rabbit.


IHP+ and the Global Fund"s commitment to support this new initiative(s) and their aim for comprehensive country health programmes, provides an opportunity and a threat.

The opportunity is that the Global Fund"s exceptional features - its aim for international sustainability, rather than in-country sustainability; and its capacity to circumvent spending restrictions imposed by the IMF ű could be extended to the improvement of health systems, and no longer be limited to disease-specific interventions. The threat is that the Global Fund might lose these exceptional features in the process of becoming a Global Health Fund.

Rather than preserving its vertical financing approach, and rather than shifting overnight to a horizontal financing approach, the Global Fund should adopt a diagonal financing approach to support increased diagonal programming. But if the Global Fund"s diagonal intentions were undertaken without additional resources and without preserving long-term, sustained foreign assistance and if a diagonal approach could not continue to bypass IMF policies, the Global Fund could be sucked into the swamp of past failed health development efforts.

AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

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