Heavy investment in many developing countries in the social
sector including health is based on the premise that human capital is
vital to the growth and development of a nation. However, Pakistan's
spending on this sector has been one of the lowest in the region. In the
present environment of high budget deficits, one does not expect
substantial public funds to be forthcoming and diverted towards the
social sector in the intermediate- or medium-term future. The critical
issue facing the public sector should then be to design health policies
which must be cost-effective and efficient. This study examines these
health policy issues within the context of an optimisation framework for
public health system, forecasts future upto (2002-03) and discusses an
efficient optimal mix of health inputs, outputs, expenditures, and wage
policies under alternative scenarios. The study recommends that, first,
growth of health infrastructure building in the urban areas be slowed
down in the short-term (two to three years), and some of the resources
reallocated towards the rural sector either in terms of building new
Basic Health Units or upgrading the existing Rural Health Centres.
Second, not only attractive wage policies be formulated for health
personnel, but the status of nurses in the public health system be also
elevated by giving them higher grades. Third, for every rupee of
development expenditure incurred, Public Health Department must plan or
keep provisions for recurring outlays. All this reallocation of
resources is feasible within the projected actual budget and it will
lead to efficiency gains in the order of 8 to 10 percent for the entire
public health system.