How decentralized facility financing improved supply chains and product availability in primary healthcare centers, a randomized trial in Nigeria

Background: The availability of essential medicines and supplies remains a serious impediment to effective primary health care (PHC) in many lower and lower middle-income countries. Most of these countries rely on centralized procurement, centralized stores, and a "push" distribution system. We describe here the impacts of a large-scale randomized trial in Nigeria, which provided modest funding directly to facilities to spend, on supply availability. Methods: Districts in three states were randomly allocated to either direct facility financing (DFF) or performance-based financing (PBF) and matched to a control group. Both DFF and PBF transferred funds to facility bank accounts and allowed the facility management committee to spend on operational costs, including essential drugs. Facilities could procure medicines on the government's essential drug list from pre-approved suppliers if they were certified by the national drug regulator. We conducted a difference-in-difference (DiD) analysis using facility survey data to assess the impact on availability of essential drugs and supplies. Results: Drug availability was initially similar for the three arms of the trial (9 of 29 essential medicines). After three years, DFF and PBF facilities had significantly higher product availability than control (p<0.05). This amounted to an increase of 28/ 34 percentage points in DFF/PBF facilities (an additional 8/10 products, respectively), and only 10% in control (3 additional products). We did note that there was little difference between control and intervention arms in the availability of medicines for donor-supported vertical programs like immunization, family planning, and malaria. However, there were very large improvements for products like antibiotics, obstetrical drugs, diagnostics, and TB medications. Conclusion: Providing funds directly to health facilities improved drug availability. It was superior to the typical centralized procurement and "push" distribution system that is widespread in lower-income settings. This approach is already spreading and should be adopted more widely.