Ricardo, Bitran & Associates in collaboration with Vincent Turbat, World Bank and Bruno Meessen & Wim Van Damme, Insitutte of Tropical Medicine, Antwerp, Belgium

Introduction Responding to budget shortages, many developing nations around the world have adopted formal or informal systems of user fees for health care in public hospitals and health centers. In most countries user fee proceeds represent a small share of total public health facility recurrent costs, but they tend to account for a significant proportion of the resources required to pay for non-personnel costs.

A main problem with user fees is that the lack of provisions to confer partial or full waivers to the poor often results in inequity in access to health services. The dilemma, then, is how to make a much needed system of user fees compatible with the goal of preserving euitable access to services.

Different countries have tried different arraoches. This paper discusses the experience of Cambodia's health equity funds (HEFs), or the mechanism devised there to compensate providers for the cost recovery revenue forgone from waivers and exemptions provided to indigent patients. It is argued here that in an environment like Cambodia's, where cost recovery proceeds represent a sizable share of health workers' income, unless workers are compensated for the income lost from free care, a system of waivers and exemptions will not work properly. But timely and fair compensation to health care providers for indigent care requires the existence of swift administrative procedures and sufficient funding. As Bitran and Giedion (2002) show in a recent review, these are rare conditions in low-income countries. In Cambodia, however, these conditions are present in a few places, largely thanks to donor support. But can these circumstances be replicated on the larger scale required in Cambodia and elsewhere?