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close this bookBetter Health in Africa: Experience and Lessons Learned (WB, 1994, 260 p.)
close this folderChapter 9 - Costing and paying for the basic package of health services
View the document(introduction...)
View the documentLow-income Africa
View the documentCosts in a country with higher income
View the documentWho should pay for what?
View the documentAffordability
View the documentClosing the financing gap

Low-income Africa

Indicative costs for low-income Africa are presented in Table 9-1. These derive from an input approach-that is, what is needed to provide a package of basic services in terms of salaries, infrastructure, drugs, training, management, and related materials. (Health planners and budget officials find this approach useful because it provides cost estimates for line items that are similar to those found in traditional budget documents.) The total per ca it a cost of $13.22 has three components: health care and facilities (about 60 percent); intersectoral interventions (about 30 percent) and institutional support (about 10 percent).

Health care and facilities. Systems composed of well-functioning health centers and a first-referral hospital are capable of responding to and accommodating more than 90 percent of health demands in an- average rural or periurban district at an annual per capita cost estimated at $7.74. It is assumed that these services are provided within administrative districts., each district having one district (or referral) hospital, fifteen health centers, and an average population of 150,000. Within such districts household members typically make their first contact with modem health care, and this is where equity can be effectively promoted. Health centers and hospitals should collect information on their operating costs, capital costs, and in-service training costs, That will make it possible to determine the staff profile, infrastructure, and equipment, and to assign indicative costs to them.

Table 9-1. Annual Indicative Per Capita Costs for a District-based Health Care System: Input Approach


Cost (U.S. dollars)



Low income

Higher income


Type of service

Africa

African country

Difference (percent)

HEALTH CARE AND FACILITIES

Level 1: Health center

4.60

6.72

46

Operating costs

3.78

4.84

28

Capital costs

0.73

1.75

140

In-service training

0.09

0.13

44

Level 2: District hospital

3.14

4.03

28

Operating costs

1.75

2.24

28

Capital costs

1.35

1.73

28

In-service training

0.04

0.06

50

Subtotal, health care and facilities

7.74

10.75

39

INTERSECTORAL INTERVENTIONS

Water

2.56

2.19

15

Sanitation

1.42

136

4

Subtotal intersectoral interventions

3.98

3.55

11

INSTITUTIONAL SUPPORT

District health care management team

0.29

0.40

38

Operating costs

0.15

0.24

60

Capital costs

0.13

0.16

23

In-service training

0.01

0.01

0

National management structure (15 percent of total health care costs)

0.92

1.15

40

Initial training (5 percent of total health care costs)

0.27

0.38

41

Incremental salary bonus (15 percent of total series)

0.12

0.14

17

Subtotal institutional support

1.50

2.07

39

GRAND TOTAL COSTS

13.22

16.37

24

Total operating cost

7.96

9.50

25

Total capital cost

5.36

6.87

23

Intersectoral interventions: The cost of intersectoral interventions is also presented on an annual per capita basis. This indicative cost was derived from actual costs in several African countries that were then averaged for a prototype district with a catchment population of 150,000. These actual costs were the recurrentandcapitalcostsofsafedrinkingwaterandsanimfionfacilities.The overall cost amounted to $3.98 per capita. Several qualifications involved in making this calculation are noted below.

- The cost of a water system in a rural or periurban area will vary considerably, depending on water source, community size, housing density, hydro-geological conditions, local drilling costs, water consumption, and pumping system (manual, electrical, diesel, or solar). The least expensive pumping alternative (and the one used in this study) in communities of less than 1,000 people will generally be hand-operated pumps. It is assumed that 250 persons are served per hand-operated pump, and that the cost includes drilling a borehole and purchasing and maintaining borehole equipment with an annual life of about twenty years.

- The cost of providing adequate sanitation facilities in rural and periurban areas will also vary considerably, depending on the design of the facility, the type of construction materials used, labor costs, housing density, groundwater and soil conditions, and the size of the families to be served. It is assumed that for a population of 10,000, each family of ten people (on average) would have its own ventilated improved pit (VIP) latrine made from local building materials. Total construction costs would include labor and materials as well as planning and mobilization four years hence, when replacement latrines would have to be constructed.

Institutional support: The district health management team (DHT) Would handle administrative and support functions. These would include monitoring and supervising the district health care system, in-service training of hospital and health center staff, logistical support for the hospital and health centers, and liaison with local, regional, and central authorities. The DHT would have a staff of seven consisting of a medical doctor, a pharmacist, a registered nurse, a financial manager/accountant, a water and sanitation specialist, a sociologist or communication specialist, and a driver. The infrastructure would include one building, the necessary equipment (including furniture), and two vehicles.

The district team would also need support at a higher level that would include health research, planning, program formulation, logistical support, administration, coordination between districts, and initial personnel training. A national management structure would be required to coordinate the activities of the DHTS and prepare national standards. It is assumed that these overhead costs would amount to 15 percent of total operating, capital, and in-service training costs at the district level. Initial training of personnel is considered to be a capital cost amounting to 5 percent of total district costs. Finally, in view of the importance of monetary incentives for staff, as well as the lag in salary structures in most countries, an incremental salary bonus of 15 percent has been provided. The total cost of institutional support would be $1.50.

The indicative costs of these inputs. (Table 9-1.). are equal to the indicative costs of "'outputs" (services to be rendered to households and communities, as well as institutional support) shown in Table 9-2. Maternal services, including predelivery care, delivery care, postdelivery care, and nutrition for pregnant and lactating. women, for example, would be provided as part of the package These maternity services would cost, on average, about $0.47, or 3.5 percent of $13.22.

Although "'outputs" are not very useful for budgeting purposes, assessing outputs is helpful in determining priorities and estimating the cost-effectiveness of various interventions. For example, it is easier to determine the relationship between the cost of providing well-baby services and quantified improvements in the health of babies than it is to relate the capital cost of a health center to the health status of babies.