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close this bookDelivery of Oral Doses of Vitamin A Deficiency and Nutritional Blindness: A State-of-the-art Review - Nutrition policy discussion paper No. 2 (UNSSCN, 1987, 120 p.)
close this folder7. PROGRAMME ECONOMICS
View the documentCOSTS
Open this folder and view contentsCOST-EFFECTIVENESS (CE)
View the documentBENEFIT-COST (BC)

COSTS

A straightforward but comprehensive accounting system which includes both cash and in-kind costs incurred at each operational level is essential for programme budgeting and analysis. The vitamin A programme budget and activity plan should correspond to the same time period (e.g., annual budget for a set of planned activities during the fiscal year), and should employ a standard classification of resources and expenditures(154) (e.g., personnel salaries, training, material, etc.). A distinction should be made between programme start-up costs (e.g., design testing, initial organizational work, equipment purchase) and ongoing, operating costs. In addition, costs of activities which support distribution at each organizational level should be itemized, such as supervision, in-service training, administrative functions,(155) and evaluation components. Capital resources such as vehicles (including bicycles), can be amortized on an annual basis to buffer against cost distortions during years of purchase. Budget items requiring the outlay of foreign exchange (e.g., vitamin A capsules, foreign technical assistance) should be distinguished from local costs, given the usual constraints limited foreign exchange places on health programmes.(155)

A sparsity of cost data has been reported from ongoing vitamin A delivery programmes.(110, 117, 135) Part of the problem may lie in the difficulty with which cost information can be extracted form complex central, state, or provincial health programme budgets.(23) The few programme cost estimates which are available have varied considerably, not because of marked differences in the delivery systems, but because of variation in the selection of programme resources and activities included in the cost estimates.(17) One programme budget may include only cash outlays while another may strive to identify and valuate in-kind resource expenditures. Development of a standard budget schedule has been recommended by WHO as a step toward more efficient programme management.(17) An example of a basic programme budget schedule is sketched in Figure 8.

Each input into the programme must be costed either at its current market price or, preferably, at its adjusted economic cost, which may involve shadow pricing.(20) There are major constraints which often impede the development of adequate costing systems. One involves the need to impute a cost on resources which require no cash disbursement when utilized in the programme, but from which opportunity costs nonetheless exist. In the Haitian programme,(117) examples of such in-kind expenditures included government-provided office space, utilities, and the part-time services of district health commissioners and auxiliary nutritionists whose salaries were not paid directly by the programme. The inclusion of part-time government officers in the vitamin A programme raises the second common problem of allocating shared or joint costs. Here, the “marginality principle” states that costs which would normally occur without vitamin A distribution should not be borne by the programme - that only incremental costs directly attributable to vitamin A delivery should be included in the budget.(20) In Haiti, district health commissioner and auxiliary nutritionist costs for programme assistance were estimated at 5 and 10 percent of their time, respectively. No incremental costs for health worker salaries were allocated since vitamin A distribution was considered a normal job function.(117) Alternatively, distributor salaries form a prominent portion of a budget in a single-purpose universal delivery system.

FIGURE 8

BASIC PROGRAMME BUDGET SCHEDULE

1st year

2nd year

3rd year

Line item

In cash

In kind

In cash

In kind

In cash

In kind

Personnel








Administrator








Supervisors








Field Workers

Personnel Training








Administrator








Supervisors








Field Workers








Others

Material







Vitamin A(1)








Shipping, Handling, Storage

Programme Support








Transport








Miscellaneous Equipment








Report Forms








Nutritional Educational Material








Travel and Per Diem








Technical Assistance (External)








Other

Monitoring and Evaluation







Personnel








Travel and Transportation








Data Analysis








Preparation of Reports








Other

Total

(1) 200,000 IU in liquid or capsule form

(introduction...)

In countries where xerophthalmia prevention programmes are either being planned or are already ongoing, there exists a basic welfare objective to control nutritional blindness among children. The level of xerophthalmia that can be tolerated is largely determined by the numbers and amounts of resources that can be committed to prevention given other societal objectives. The basic economic challenge then becomes the effective control of xerophthalmia in the most efficient manner - that is, at the least cost.

Cost-effectiveness analysis is useful to the programmer for comparing different types of vitamin A intervention since the costs are taken directly from the budget schedule and reduction in xerophthalmia is the common biological goal. Useful cost-effectiveness (CE) measures which can be employed to monitor programme efficiency include indicators of delivery system CE and biological CE.(20)

DELIVERY SYSTEM COST-EFFECTIVENESS

Delivery system cost-effectiveness indicators reflect the costs ($) of achieving target group (TG) coverage. Indicators include, but are not limited to, (a) $/dose recipient and, (b) $/TG recipient.

Limited financial information is available from the Indonesian(110) and Filipino(135) pilot projects to provide some estimates of $/dose recipient. To do this, it is assumed that “capsule recipients” and “capsules distributed” are equivalent terms, which may not be the case.(117) The cost of the UNICEF 200,000 IU vitamin A capsule with 40 IU vitamin E is under US $0.02 delivered to a country's port.(115, 116) Computed $/dose recipient estimates are based solely on the costs of the capsules and delivery system but do not include private costs (e.g., travel and waiting time by the family). In the 1973-75 Filipino three-strategy field study,(42) where assumptions regarding economies of scale were incorporated into the calculations,(135) a single, large dose of vitamin A delivered to a child cost approximately US $0.035.(156) This cost is far below the widely quoted estimate of the same time period from Indonesia of US $0.19 per delivered dose every six months.(17, 23, 110) This five-fold difference is due in part to the computational basis for each estimate. The Filipino study sought to approximate the cost of a mass vitamin A distribution programme from data generated by a relatively small project. The Indonesian cost estimate, on the other hand, was based on budgeted disbursement to provincial offices for a 200,000-child programme which ultimately covered only half of the expected number of children. While adjustments to the cost estimate were attempted, the investigators note that the amounts of allocated funds actually spent on the distribution are unknown since surplus provincial funds were probably redirected into other local programmes at the end of a fiscal year rather than returned to the central treasury. Caution was expressed about generalizing this cost estimate to any universal capsule distribution model.(110) Thus, a closer $/dose recipient approximation for the mid-1970s was likely to have been between these two project estimates.

Given little further information on vitamin A programme finances, some approximations of current $/dose recipient can be made from these data. Assuming a 1975 cost of U.S. $0.10 per dose delivered, and an annual rate of inflation of 8% in real terms since 1975, the approximate cost per dose recipient of a six-monthly universal distribution programme achieving 75-85% coverage in 1985 would be approximately U.S. $0.22 per six months, or U.S. $0.44 per year. Given the tendency for some “over-coverage” among older children,(122) the $/TG recipient would be slightly higher. The economic consequences of “system fatigue” during which overhead costs, at the very least, remain fixed while coverage deteriorates, have not been investigated.

Only a crude comparison can be made between a universal and targeted delivery system. In the Haitian targeted system,(117) the 1978 $/dose recipient ranged from U.S. $0.13 to $0.19. At 8% inflation this is equivalent to U.S. $0.22 to $0.33 in 1985, slightly more than the estimated cost of one distribution in a universal delivery programme. However, the lower “targeted” output is intended to achieve greater specificity with particular emphasis on reaching higher risk children. Comparing targeted with universal delivery using the latter target group definition, the $/TG recipient may be considerably more attractive for a targeted delivery system. This relatively low $/TG recipient must then be viewed against the potential for poorer programme sensitivity and irregularity of dosing intervals.

BIOLOGICAL COST-EFFECTIVENESS

These measures are usually ratios between programme cost and the percent change (%) in vitamin A status (e.g., clinical or biochemical) directly attributable to a programme.(20) Estimates of effectiveness may be generated from serially collected cross-sectional (prevalence) or longitudinal (incidence) data. Indicators include $/% in any clinical stage of xerophthalmia and $/% in mortality. Alternatively, the cost of preventing nutritional blindness in one child can be computed if estimates of change in X2/X3 or XS are available. Because of the large sample size required to assess changes in corneal disease and blindness,(157) most evaluations have assessed programme impact on night blindness and/or Bitot's spots. However, cost-effectiveness evaluations of ongoing programmes have generally not been performed due to the relative neglect of cost analyses in large-dose vitamin A distribution programmes.

BENEFIT-COST (BC)

Benefit-cost analysis in the health sector is a macro-level technique for evaluating the net economic benefits expected to accrue in the future from alternative health programmes. In benefit-cost (BC) analysis, future “streams” of both benefits and programme costs must be enumerated, quantified, and explicitly valuated in terms of present value of a common unit, usually money.(158) An advantage to this approach is that programmes with varying initial costs and short- or long-term benefits can be compared on similar economic terms.

While appealing, BC analysis is fraught with difficulties. In terms of xerophthalmia control programmes, benefits include cost savings from treating fever would be xerophthalmic cases, caring for fever blind adults, and improved future productivity resulting from avoided mortality, blindness, and other associated morbidity.(159, 160) While quantifiable, the accuracy of these imputed estimates is questionable. Furthermore, benefits such as future time saved by the family not having to care for the blind, and personal fulfillment and enjoyment in life as a result of maintained sight are even more difficult to measure.(159) Recently, a benefit-cost study has been carried out on the three pilot vitamin A intervention strategies conducted in the Philippines. The findings concluded that both large-dose vitamin A distribution and fortification of monosodium glutamate with vitamin A displayed ranges of economic benefits far in excess of their costs: 2.4 to 3.4:1 and 5.8 to 21.0:1, respectively.(135, 160) A preliminary analysis of an Indonesian capsule distribution programme has also shown a 68:1 BC ratio in relation to preventing xerophthalmia.(161)

Despite the vast array of assumptions underpinning BC analysis at present, these early results support the notion that xerophthalmia prevention through capsule distribution or fortification may not only be socially correct but economically sound to pursue.