Healthcare spending and health outcomes: evidence from selected East African countries

BACKGROUND: Over the last decade, total healthcare expenditures, comprised of both public and private healthcare expenditures, have increased in most East African countries. At the same time, health outcomes such as infant mortality rates, life expectancy at birth and other health outcome indicators have improved. OBJECTIVES: This paper examines the association between healthcare expenditures and health outcomes for eight East African countries: Burundi, Eritrea, Ethiopia, Kenya, Rwanda, Sudan, Tanzania, and Uganda. In this study, health outcomes are defined as an improvement in adult life expectancy and a reduction in the number of neonatal, infant, and under-five deaths. METHODS: We implemented a panel data regression technique, analyzing both cross-sectional and time series information. This combined method has been used in healthcare studies by several authors. Data obtained from world development indicators for the years 2000-2014 was used for the panel study. RESULTS: First, we documented that there is a strong, positive association between total healthcare expenditures and total life expectancy. While we identified a positive relationship between healthcare expenditures and female and male life expectancy, we found that healthcare had a stronger effect on improving life expectancy in females than in males. Moreover, we found a negative relationship between healthcare expenditures and the number of neonatal, infant, and under-five deaths. CONCLUSION: The results of this study have important policy and management implications for the eight East African countries. From a policy perspective, it is necessary to understand if a greater allocation of resources to the healthcare sector is worthwhile and to determine whether to encourage private healthcare investment. From the management perspective, investing in more private institutions, such as hospitals and clinics, is essential for health outcomes in the average country. The results of this study can be used by the World Health Organization as well as other non-governmental organizations that provide financial assistance to East African countries.