Density versus Quality in Health Care Provision : Using Household Data to Make Budgetary Choices in Ethiopia

Usage of health facilities in Ethiopia is among the lowest in the world; raising usage rates is probably critical for improving health outcomes. The government has diagnosed the principal problem as the lack of primary health facilities and is devoting a large share of the health budget to building more facilities. But household data suggest that usage of health facilities is sensitive not just to the distance to the nearest facility but also to the quality of health care provided. If the quality of weak facilities were raised to that currently provided by the majority of facilities in Ethiopia, usage would rise significantly. National data suggest that given the current density and quality of service provision, additional expenditure on improving the quality of service delivery will be more cost-effective than increasing the density of service provision. The budget allocation rule presented in the article can help local policymakers make decisions about how to allocate funds between improving the quality of care and decreasing the distance to the nearest health care facility.