Mid National - PFM Expert

KPTA: Implementation of Facility-Level Budget and Expenditure Management Policy (Health Sector) — Expansion to Five Additional Districts

Programme Overview 

Evidence for Health (E4H) is a Foreign, Commonwealth & Development Office (FCDO)-funded programme aimed at strengthening Pakistan's healthcare system, thereby decreasing the burden of illness and saving lives. E4H provides technical assistance (TA) to the Federal, Khyber Pakhtunkhwa (KP), and Punjab governments, and is being implemented by Palladium along with Oxford Policy Management (OPM).

Through its flexible, embedded, and demand-driven model, E4H supports the government to achieve a resilient health system that is prepared for health emergencies, responsive to the latest evidence, and delivers equitable, quality, and efficient healthcare services. Specifically, E4H delivers TA across three outputs:

Output 1: Strengthened integrated health security, with a focus on preparing and responding to health emergencies, including pandemics.

Output 2: Strengthened evidence-based decision-making to drive health sector performance and accountability.

Output 3: Improved implementation of Universal Health Coverage, with a focus on ending preventable deaths.

Position Summary

To support the implementation of the FLB-EMP by expanding from the first pilot district to ten districts (five already approved and five additional ones), institutionalising decentralised budgeting within government systems to enhance transparency, efficiency, and equity in primary healthcare financing.

 This TA will achieve its goals via three objectives:

• Objective 1: Strengthen the capacity of DHOs, Primary Care Management Committees (PCMCs), and PHC facility in-charges in planning, budgeting, and expenditure management, including supporting facility in-charges to perform Drawing and Disbursement Officer (DDO) functions.
• Objective 2: Institutionalise FLB-EMP processes within DoH systems (including Provincial Health Services Academy (PHSA), the Financial Cell, and Health Sector Reform Unit (HSRU)) through integration of Key Performance Indicators (KPIs), digital tools, and structured performance monitoring.
• Objective 3: Develop a scalable, province-wide implementation strategy for FLB-EMP grounded in lessons from five districts, ensuring sustainability through phased rollout, government buy-in, and stakeholder alignment.

Strategic Approach

Contributions to health systems strengthening

This TA will contribute to health systems strengthening by advancing decentralised financing in KP's PHC sector. Building on the pilot in Peshawar and the ongoing expansion in four districts, it will extend support to an additional five NHSP-priority districts through facility-level planning, budgeting, and expenditure routines.

The TA will institutionalise Direct Facility Financing (DFF), enabling evidence-informed decision-making using data from DHIS2, IMU, and EPHS costings, while leveraging FLB-EMP-linked KPIs and cost centres in the Integrated Financial Management Information System (IFMIS) to promote financial transparency and performance tracking. Through targeted capacity building of DHOs, facility managers, and PCMCs in these five districts, the TA will strengthen resilience, equity, and accountability in health service delivery.

Alignment with other E4H TAs/investments

This TA complements the ongoing first-phase expansion to four districts and will specifically focus on five additional NHSP-priority districts. It aligns closely with other E4H investments, leveraging the Sustainable Training System (STS) standardized modular curriculum to deliver accredited financial management training for District Health Officers, facility managers, and PCMCs, ensuring consistent capacity building across five districts. It will work in tandem with E4H’s support to the National Health Support Programme (NHSP) in developing District Health Plans, integrating FLB-EMP budgeting tools to enable needs-based resource allocation for the EPHS. By fostering these synergies through PHSA-led training and NHSP planning processes, the TA will aim to enhance efficiency and impact, and advance financial autonomy, governance, and equity within KP’s primary healthcare system.

Alignment with other donors (if relevant)

The KP Spending Effectively for Enhanced Development (SPEED) project has completed preliminary work on developing digital solutions to operationalise components of the FLB-EMP. The proposed TA will provide critical support to KP SPEED in testing these digital solutions across five additional districts. In parallel, the facility-level budgets will feed into the NHSP resource mapping exercise to support evidence-based allocation models for the EPHS. Furthermore, it will contribute to the ongoing development of DAPs in selected districts (where these overlap with the FLB districts) by ensuring that facility-level action plans, cost estimates, and budget submissions are aligned with DAP costing and planning frameworks developed under NHSP.

Scope of Work and Methodology

The initiative builds on the ongoing E4H support for implementing FLB-EMP in Peshawar and the four districts where expansion is currently underway by a separate TA team. This TOR covers the additional five NHSP-priority districts, to be supported by a dedicated new team that will work closely with, and in tandem with, the pilot/expansion team. This collaboration will ensure harmonisation of tools, consistency of approaches, and alignment of timelines across all nine districts.

The purpose is to consolidate the lessons from the Peshawar pilot, and other districts ensure standardisation of tools and processes, and institutionalise FLB practices across a wider set of districts. Specifically, the pilot in Peshawar has achieved the following:

• Facility-level budgets were prepared for 100% of BHUs and RHCs in Peshawar and officially published in the FY 2025–26 KP Budget Book, marking a full transition from pooled to individual budgeting.
• All HR expenditures were shifted from pooled cost centres to newly established facility-level cost centres, completing the technical transition within the IFMIS system. This configuration is now fully self-sustaining.
• Facilities have begun executing budgets and processing transactions directly through their cost centres, with active financial flows now aligned to specific health facilities rather than aggregated pools. This has led to reduced bill processing delays and improved compliance with budget codes (quantitative figures can be inserted if available).
• A set of KPIs for primary healthcare facilities was developed and endorsed by the Department. These are used to conduct quarterly budget execution reviews with PCMCs, laying the foundation for performance-linked budgeting.
• A formal Working Group within the DoH has been established to oversee FLB-EMP rollout. This group includes representatives from NHSP and KP SPEED, both of which are mandated to support FLB implementation.
• A province-wide FLB scale-up strategy has been co-developed with stakeholders and validated by the TWG, setting the stage for institutionalised, government-led expansion.

The methodology for this TA will follow a phased, participatory approach that integrates provincial leadership, district-level implementation, and hands-on mentoring. The TA will build upon the work completed in the pilot and aim to strengthen decentralized financial management and advances capacity building, budget operationalization, and long-term scalability of reforms.

It will leverage validated tools, processes, and institutional frameworks from Peshawar while adapting them for district-specific contexts. The TA will be delivered through a mix of orientations, practical tools, and technical support to embed facility-level planning, budgeting, and expenditure management into government systems. Focal points from the Financial Management Cell (FMC) and DoH Budget Wing will be actively involved in implementation.

The scope of work is detailed below:

Phase I – Initiation (TWG endorsement, Orientation, and HR reconciliation across five additional districts)

• Re-engage the Technical Working Group (TWG) established in the pilot phase to endorse expansion, appraise progress, review lessons learnt, provide overarching strategic direction, and align on the five-district rollout.
• Conduct joint orientation workshops (15 sessions) in five districts, where the TA team and Financial Management Cell (FMC) co-mentor DHO, RHC, Cat-D Hospital, and PCMCs staff on FLB principles and guidelines.
• Undertake the Human Resources (HR) reconciliation process to distribute the pooled HR within the existing budget codes (i.e., pooled budgets for BHUs, RHCs, and Cat-D hospitals, respectively).^[1]  The HR reconciliation process will include:

1. Acquire Sanctioned Posts for FY 2025-26 for respective districts from Budget Officer VI of the Finance Department.
2. Obtain the latest standard posts criteria for each health facility from the Director General of Health Services (DGHS). 
3. Distribute Basic Pay Scale (BPS) and designation-wise posts among concerned facilities (BHUs, RHCs & Cat-D Hospitals).
4. Collect Payroll data from the District Accounts Officer (DAO).
5. Assign each employee to the respective Facility based on Sanctioned Strength.

Checkpoint 1: Completion of HR reconciliation and endorsement by TWG.

Phase 2 – Planning (Needs Assessments, Annual Action Plans, Facility Draft Budgets Prepared).

• Conduct sessions with facility managers to guide the needs assessment process, annual action plan preparation, and budget preparation using standardised templates for their respective health facilities.
• Support DHOs in reviewing and compiling facility-level budgets aligned with FLB-EMP and EPHS costing tools.

Checkpoint 2: Submission of compiled facility budgets from DHOs to DOH for consolidation.

Phase 3 – Consolidation (Compilation and Consolidation of Budgets by DHOs; inclusion in FY 2026–27 Demand for Grant).

• Assist DHOs in consolidating and integrating budget estimates for submission into the FY 2026–27 Demand for Grant, aligning with Integrated DAP processes.
• Hold a consultative validation workshop to refine the updated rollout strategy and ensure broad stakeholder ownership and commitment beyond the TA.

Checkpoint 3: Evidence of FLB reflected in FY 2026–27 Budget.

Phase 4 – Execution (Facilities initiate expenditure routines, generate financial statements)

• Support configuration of position codes in the HR module of IFMIS in respective cost centres of BHUs, RHCs, and Cat-D hospitals.
• Support RHCs and Cat-D hospitals in developing customised books of accounts and other templates for sanctioning and incurring expenditures out of their designated cost centres in five additional districts.
• Provide hands-on mentoring to RHCs and Cat-D in exercising routines and protocols for incurring expenditures.
• Support the DHO office, RHCs, and Cat-D hospitals in generating various financial statements as per the Policy and Guidelines.

Checkpoint 4: DOH validation of Q1 findings.

Sustainability: Capacity Building, Institutionalisation, and/or Transition Planning

• Capacity development is embedded throughout the TA via co-facilitated, hands-on training and mentoring, where PHSA and the FMC will play lead roles in delivering and institutionalising FLB practices, shifting from one-off orientations to embedded mentoring and learning-by-doing approaches.
• A standardised training package on FLB-EMP, developed jointly with PHSA, will be integrated into the STS to ensure continuity and accreditation of training for DHOs, facility in-charges, and PCMCs.
• Budgeting and expenditure tools, including facility-level templates, budget planning formats, and expenditure reporting forms, will be integrated into government-owned systems such as IFMIS and budget development workflows at the provincial level.
• Each phase of the TA includes a structured handover process, enabling DOH staff to lead final-phase activities in the additional districts, with mentoring tapered off as institutional ownership strengthens. By Q2 of FY 2026–27, final implementation (Phase 5) activities in all five districts will be led by FMC and DOH staff with TA team playing a supporting role only.
• The updated province-wide FLB rollout strategy, developed jointly with stakeholders and validated by the TWG, will set the roadmap for sustained expansion beyond the TA. It will include timelines, resource requirements, and accountability mechanisms.
• By embedding tools, skills, and processes into existing institutional platforms and aligning with NHSP, EPHS, and SPEED initiatives, the TA will ensure that FLB implementation is sustained, government-led, and scalable beyond programme closure.