Costs of Publicly Funded Primary Hospitals, Departments, and Exempted Services in Ethiopia
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1 2016 Costs of Publicly Funded Primary Hospitals, Departments, and Exempted Services Resource Tracking and Management Project B.I.C. B.I.C. Breakthrough International Consultancy PLC Breakthrough International Consultancy PLC Primary Health Care Cost Study: Supplement to Paper 1 with expanded sample of primary hospitals
2 Costs of Publicly Funded Primary Care Facilities, Departments, and Exempted Services Acknowledgements The authors would like to acknowledge the support and inputs of many colleagues at the Financing and Resource Mobilization Directorate (FRM) at the Federal Ministry of Health (FMOH). Of particular note are: Dr. Mizan Kiros, Ato Mideksa Adugna, and the Health Economics and Financial Analysis case team at FRM for providing guidance during the supplemental primary hospital unit cost study. We are thankful for the cooperation of the regional health bureaus, zonal and woreda health offices for their assistance in the sample selection. The time commitment provided by the woreda office of finance and economic cooperation and specific health facilities during the data collection process is greatly appreciated. Sarah Hurlburt provided editorial support and design of this report. Grant support from the Bill & Melinda Gates Foundation as part of the Resource Tracking and Management Project at the Harvard T.H. Chan School of Public Health in partnership with Breakthrough International Consultancy, PLC is gratefully acknowledged. All errors remain the responsibility of the authors. Foreword Analyzing the costs of primary care services is one of the three components of the Resource Tracking and Management (RTM) project, carried out in collaboration with the Ethiopian Federal Ministry of Health (FMOH). RTM is a three-year program funded by the Bill & Melinda Gates Foundation (BMGF) and implemented by the Harvard T.H Chan School of Public Health and Breakthrough International Consultancy, PLC (BIC). This paper is the second in a series of papers documenting results of a primary health care (PHC) cost study. The original PHC cost study sample of primary hospitals was small because primary hospital development was relatively new at the time of the original round of data collection and few fully functioning government-run primary hospitals were available within the defined sample framework for Ethiopian fiscal year 2006 (2013/14 Gregorian calendar). See Berman, Alebachew, Mann, Agarwal, and Abdella (2016) for further details on the original primary health care cost study sample and findings. Part of a series, this second paper reports the estimated unit costs for primary health care services and exempted services health services provided free-for-all regardless of socio-economic status provided by 24 primary hospitals (6 primary hospitals in the original PHC cost study and 18 additional primary hospitals to supplement the original PHC cost study). The findings can contribute to the FMOH s 5-year Health Sector and Transformation Plan, be used for improving advocacy towards more domestic resources for health (one of the goals under the new national health care financing strategy), and provide valuable inputs for the implementation and scale-up of social and community-based health insurance schemes. The PHC cost study as a whole is expected to be used to provide timely and relevant evidence on the financing of primary care services; actual costs of providing PHC services and specific exempted services in health facilities; specific revenue sources for each health facility; and the current productivity of resources, with potential for developing policies to promote efficiency gains. Suggested Citation: Berman, P; Alebachew, A; Mann, C; Agarwal, A; Abdella, E Costs of Publicly Funded Primary Hospitals, Departments, and Exempted Services Supplement to Paper 1 with expanded sample of primary hospitals. Harvard T.H. Chan School of Public Health; Breakthrough International Consultancy, PLC: Boston, Massachusetts and Addis Ababa, Ethiopia. 2
3 Costs of Publicly Funded Primary Care Facilities, Departments, and Exempted Services Table of Contents Acknowledgements...2 Foreword...2 Acronyms...5 Terms & Definitions...6 Executive Summary Introduction Background & Rationale Methods Sampling Framework...11 Data and Analysis...11 Costing Framework Sampled Health Facility Characteristics Unit Cost Estimates Unit Costs by Department and Cost Components Regional Distribution of Unit Costs Cost Analysis for Exempted Services Unit Costs for the Expanded Program on Immunization (EPI) Unit Costs for Family Planning Services Unit Costs for Antenatal Care (ANC) and Postnatal care (PNC) Unit Costs for Tuberculosis (TB), Antiretroviral Therapy (ART) and Malaria Limitations...23 Unit Cost for Primary Hospitals and Departments Unit Costs for Exempted Services Discussion References Annex A: Statistical tests to compare primary hospitals for two different fiscal years
4 Costs of Publicly Funded Primary Care Facilities, Departments, and Exempted Services List of Tables Table 1.1 Sampling framework for additional primary hospital data collection Table 3.1: Basic summary statistics for primary hospitals Table 3.2: Basic expenditure data for primary hospitals Table 4.1: Summary of primary hospital unit costs in ETB Table 5.1: Unit cost of providing exempted services in primary hospitals Table A.1 Average and p-values between EFY 2006 and EFY 2007/2008 for primary hospitals List of Figures Figure 3.2 Cost components by department primary hospitals Figure 4.1: Average unit costs for primary hospitals for full sample and outliers excluded...17 Figure 4.2: Unit costs for primary hospital departments by geographic location (ETB)
5 Acronyms ANC ANC4 ART BMGF ETB EPI EFY FMOH HMIS HR HSTP IPD IUD MCH NGO OPD PFSA PHC PHCU PNC RRF RTM SDG SNNPR TB UHC Antenatal Care At least 4 antenatal care visits Antiretroviral Therapy Bill & Melinda Gates Foundation Ethiopian Birr Expanded Program on Immunization Ethiopian Fiscal Year Federal Ministry of Health Health Management Information System Human Resources Health Sector Transformation Plan Inpatient Department Intrauterine Device Maternal and Child Health Non-Governmental Organization Outpatient Department Pharmaceutical Fund and Supply Agency Primary Health Care Primary Health Care Unit Postnatal care Report and Requisition Form Resource Tracking and Management Sustainable Development Goal Southern Nations, Nationalities, and Peoples Region Tuberculosis Universal Health Coverage 5 Acronyms
6 Terms & Definitions Average: The arithmetic average, which is the sum of all values for a specific variable divided by the total number of observations for that variable. This is prone to be influenced by extreme values due to potential outliers (very small or large values in the data that are not within the normal distribution). Median: The true middle observation when all observations of a variable are sorted in sequential order, and less prone to be influenced by extreme values. Per capita contact rate: The total patient volume of a health facility divided by the reported catchment population for that health facility. Outpatient Department: Curative services that do not require admission into a health facility and are provided in the outpatient department. Some outpatient treatments are provided in the Maternal and Child Health (MCH) department, but these were classified under the MCH department. Inpatient Department: Provides procedures that require a patient to be admitted and have close monitoring during and after procedures. Provides nonemergency maternal and child health services (such as immunizations or ante-natal care and some acute treatment), excluding deliveries. Delivery Department: Provides basic obstetric care (health centers) and comprehensive obstetric care (primary hospitals), including pre-and post-delivery care. Cost: In this study, cost is defined as the monetary value of non-capital, recurrent expenditures incurred and resources used to produce a defined set of health service outputs or to operate specific health facilities. The recurrent costs include drugs and supplies, salaries, and other operational costs (e.g., electricity, running water, maintenance, etc.), which are incurred on a regular basis that can be allocated as direct costs or indirect costs. Capital costs were not included in this study. Unit Cost: Total recurrent, non-capital cost or expenditure plus the value of resources used (e.g., in-kind or drugs and supplies consumed), incurred by a health facility or department to provide service for one patient. Exempted Services: Services that are offered for free to everyone regardless of income level, mostly covering maternal and child health services. Primary health care unit (PHCU): Encompasses primary health care facilities and related communitybased activities. One unit is typically a primary hospital with five satellite health centers and each health center forms five satellite health posts, where the health posts are managerially and technically accountable to the health center. Woreda: A district that is the third or fourth administration level that typically encompasses 100,000 people. A PHCU is usually within one woreda. 6 Terms and Definitions
7 Primary Health Care Facilities 1 Primary hospital: A health facility within the primary health care unit (PHCU) that provides inpatient and ambulatory services. This includes all of the same services offered at health centers (listed below), as well as additional emergency surgical services, including Caesarean sections and blood transfusions. It is a referral center for health centers that reside within the primary hospital s catchment area. This health facility typically has an average inpatient capacity of 35 beds and a staff of 53 people. Serves 60, ,000 people in a woreda. Investment in primary hospitals is still ongoing, so not all PHCU s are linked with primary hospitals and some primary hospitals serve several woredas. Health center: A health facility within the PHCU that provides promotive, preventive, curative and rehabilitative outpatient care including basic laboratory and pharmacy services. This health facility typically has the capacity of 10 beds for emergency and delivery services. Health centers serve as a referral center for health posts, and provide supportive supervision for health extension workers (HEWs). Serves 15,000-25,000 people in a woreda. Health post: A health facility within the PHCU that mainly provides promotive and preventive health care services. A typical health post has two HEWs and they provide services in the health facility and in the community (often going house-to-house). Serves 3,000-5,000 people in a woreda. 1 Description of primary health care facilities adapted from FMOH (2012) and Alebachew et al (2014) 7 Terms and Definitions
8 Executive Summary This report provides additional evidence to the initial primary health care (PHC) cost study, and the subsequent unit cost analysis (Berman, Alebachew, Mann, Agarwal, and Abdella, 2016), through an expanded sample size for primary hospitals that provides more robust findings. The findings in this report are based on an analysis of 24 primary hospitals 6 primary hospitals from the initial PHC cost study from Ethiopian fiscal year (EFY) 2006, 2013/14 in the Gregorian calendar, and 18 additional primary hospitals from a supplemental study conducted in EFY 2007/2008, or 2014/15 and 2015/16 (respectively) in the Gregorian calendar. Data collection and analysis was carried out in collaboration with the Ethiopia Federal Ministry of Health s Finance and Resource Mobilization Directorate as part of the Resource Tracking and Management (RTM) Project implemented by Harvard T.H. Chan School of Public Health and Breakthrough International Consulting, Plc. with financial support from the Bill & Melinda Gates Foundation. This report only reviews the findings for primary hospitals. Refer to Berman, Alebachew, Mann, Agarwal, and Abdella (2016) for details on the health center unit cost analysis. Using well-documented service costing methods, the unit cost analysis for primary hospitals estimates the total costs (expenditure) on primary health care services at study facilities, as well as the total costs of services at the level of different service departments in each primary hospital, including outpatient, inpatient, maternal and child health, and delivery services. Total costs are reported in terms of cost per capita in relation to the catchment population area of each hospital, as well as unit costs of service outputs/client contacts for hospitals in total, and by service department. This paper also includes estimates of the costs of specific preventive and curative services currently exempted from user fees (referred to as exempted services ) in government primary hospitals. The study results provide valuable inputs for fiscal planning; for example, to estimate resource needs for program financing, expansion, and development. Unit cost estimates also provide the basis for assessing allocation of funds across the mix of inputs used to deliver health services, as well as analysis of technical efficiency in service delivery. Costing of fee-exempted services can be used to estimate government resource mobilization requirements needed to substitute for externally financed inputs, such as those for drugs and supplies for these priority services. Primary hospitals in our sample spent very little per person per year, on average, within their respective catchment areas. Four primary hospitals reported very high catchment populations since investment in new hospitals in their sub-areas had not yet occurred. Each of these outliers reported over a million people as their catchment population, covering multiple woredas. Excluding these hospitals, the average per capita spending for primary hospitals was 72 ETB per person. When they are included, the expenditure per person drops to 62 Ethiopian birr (ETB). On average, the largest share of primary hospital expenditure is allocated to human resources (51%), while a substantial amount of expenditure is spent on drugs and supplies (35%). Department level analysis also details the relative shares of different inputs in expenditure on different packages of services. Overall, Ethiopian primary hospitals seem to be allocating proportions of spending to human resources and drugs and supplies that are appropriate in relation to international comparisons, whereas some lower income countries underspend on drugs and supplies relative to their expenditures on human resources. Unit cost analysis describes the cost of providing specific bundles of outputs. The average unit cost for primary hospitals was estimated at 310 ETB per visit, once outliers were excluded from the estimates. Unit costs for services range on average from 226 ETB for OPD visits to 2,178 ETB for Inpatient Department (IPD) discharges in primary hospitals (adjusted for outliers). High variation in unit costs among departments across regions was also evident. For example, the highest average unit cost for an Outpatient Department (OPD) visit was in Amhara region at 530 ETB, while in Tigray region the average unit cost was only 41 ETB per OPD visit. Costs per service for a variety of fee-exempted services were also measured, with lower costs for individual immunizations (162 ETB-240 ETB for primary hospitals depending on vaccine type and after adjusting for outliers) and higher costs for service bundles requiring repeated delivery or care over time. For example, primary hospitals spent on 8 Executive Summary
9 average 1,810 ETB (adjusted for outliers) for a standard tuberculosis treatment, with drugs and supplies accounting for 86% of this cost. Similarly, primary hospitals spend 1,917 ETB for one year of antiretroviral treatment for one patient, with 86% of this cost being for the drugs and supplies necessary for this type of treatment. The report concludes with a discussion of limitations and some conclusions from the primary hospital component of the PHC costing work. Almost all data was collected from official government reports and forms. However, in some areas the incompleteness and poor condition of these data sources posed significant problems. Detailed treatment or intervention-specific costs could not be estimated, since the study was unable to do a detailed time allocation study of health workers to attribute time to specific services, or attribute some drugs and supply consumption to specific treatments/interventions. In the current presentation, different outputs are bundled by service departments using simple arithmetic sums. Work is ongoing to estimate output indices, which could capture differences in inputs for different services in the same bundle. Total government health spending was approximately 4.13 billion ETB or per capita spending of 52 ETB as of 2010/11, according to Ethiopia s 5th National Health Accounts (FMOH, 2014). While this number had certainly increased by the time of the data collection for this study, the unit costs for specific service output bundles seem high relative to Ethiopia s relatively low continued level of spending. This may reflect an imbalance between supply side input quantities and the utilization of or demand for services, or could be due to issues of efficiency or quality. Further analysis of these data and subsequent reports in this series will further explore technical efficiency and possible explanations for levels and variability between regions and cost centers. 9 Executive Summary
10 1. Introduction Background & Rationale Ethiopia s primary health care (PHC) system delivers promotive, preventive and essential curative health services at the first tier of health service delivery. This includes the community (health development army), health post, health center, and primary hospital levels, referred to as the primary health care unit (PHCU). The health sector s visioning document ( Envisioning Ethiopia s Path Toward Universal Health Coverage Through Strengthening Primary Care ) emphasizes the goal of universal health coverage (UHC), with primary health care at the forefront. The document recommends sustained investment in health promotion, disease prevention, and basic curative and rehabilitative services within the PHCU. Few representative data on the costs or resources used to provide services at primary health care facilities exist for Ethiopia. One previous costing exercise consisted of a very small sample of health facilities to cost out the potential social health insurance benefits package (FMOH, 2007). Published in 2007, the results of that study do not reflect the significant changes to the health system over the last 10 years. Other costing work includes normative costing exercises for the health sector 5-year plans and the essential health service package (FMOH, 2005). This type of costing is based on standards and norms to provide health care services, but might not reflect the real costs of service provision under field conditions. Health service costing data have a variety of uses such as contributing to service budgeting and planning, pricing, and reimbursement methods for public sector services. They can be valuable inputs in estimating service delivery efficiency, explaining causes of variations in cost/output ratios, identifying the right strategies to improve efficiency and quality, and support efforts to mobilize more domestic resources for health. The measurement of this type of data, and subsequent analyses that it can be used for, will contribute to the transformation agendas in the 5-year Health Sector Transformation Plan (HSTP) of equitable and quality of health care; improving data quality and use for effective decision-making; and woreda transformation (FMOH, 2015). This report is a supplement to Paper 1 of the unit cost analysis for PHC facilities series (Berman, Alebachew, Mann, Agarwal, and Abdella, 2016). The current report presents results from a larger sample of primary hospitals to provide more robust findings compared to the original sample. This work supports efforts by the Federal Ministry of Health (FMOH) to advocate for more domestic resources for health, one of the goals included in draft national health financing strategy and the HSTP from 2015/ /20. The study will also assist the FMOH to develop evidence-based strategy and policy changes for sustainable financing of primary care, and build capacity to mobilize, allocate, utilize, and target primary care resources more efficiently, effectively, and equitably at the federal, regional, and woreda levels Introduction
11 2. Methods Sampling Framework The sampling framework used for the selection of the additional primary hospitals to add to the unit cost analysis, and any future analyses conducted with the data generated from this study, was slightly different from the original PHC cost study (see Berman, Alebachew, Mann, Agarwal, Abdella (2016) for the original sampling framework). The original sampling framework included regions and woredas with very few fully functional primary hospitals at time of the Ethiopian fiscal year (EFY) 2006 data collection. The additional primary hospitals were purposively selected, using a proportional to population size sampling method among the four big regions Tigray, Amhara, Oromia, and Southern Nations, Nationalities, and Peoples Region (SNNPR) where an adequate number of functioning primary hospitals were in existence for at least one year from the time of the supplemental data collection. Table 2.1 presents the sampling framework by region. Both Oromia and Amhara regions were included in the sampling for the original PHC cost study as well as the primary hospital supplement activity, while Tigray and SNNPR regions were not included in the original PHC cost study sample. Table 1.1 Sampling framework for additional primary hospital data collection Region Number of Primary Hospitals Selected Tigray 3 Amhara 5 Oromia 5 SNNPR 5 Total 18 Data and Analysis The tools developed for data collection, recording, analysis and reporting from the original PHC cost study and analysis were used for this analysis. No new methodology was used for this activity. See Berman, Alebachew, Mann, Agarwal, and Abdella (2016) for further details. This study was retrospective. All inputs and outputs for the expanded sample of primary hospitals was measured for one full Ethiopian fiscal year (EFY) in 2007 (Gregorian calendar 2014/15), with the exception for primary hospitals in Oromia (which was EFY 2007/08), to avoid any cost distortions related to seasonal effects. The data collection period was different from the original PHC cost study year (EFY 2006) because there were more fully functioning primary hospitals for at least one year in EFY 2007 compared to EFY During data collection it was discovered that none of the selected primary hospitals in Oromia were fully operational during EFY Therefore, we extracted data for the last quarter of EFY 2007 (when primary hospitals began operations) and the first three quarters of EFY 2008 (2015/16) the most up-to-date data recorded at the time of data collection. We assume that cost differences for primary hospitals from one year to the next is not substantially different. This study does not include the change in unit costs over time due to possible salary increases or changes in human resources, drugs cost increases, or changes service provision. The costing analysis conducted for this supplement used the same approach as the original PHC cost study analysis. Please refer to Berman, Alebachew, Mann, Agarwal, and Abdella (2016) for details. We used statistical tests to compare basic characteristics and service statistics of primary hospitals (e.g., catchment population, total deliveries etc.) to see if there were any statistically significant differences between the original sample of primary hospitals where data was collected in EFY 2006 compared to those in EFY 2007/2008. No statistically significant difference was found between Methods
12 primary hospitals where data was collected in EFY 2006 compared to EFY 2007/2008 among basic characteristics and service statistics. It is likely that the price of hospital inputs increased between the time period of the initial sample and this supplementary study so that service costs should be seen a representing a blend across several years. Annex A provides more details on the statistical tests conducted and the findings that led to this conclusion. Data presented in this report includes the arithmetic average, median, minimum, and maximum values. The arithmetic average is prone to be influenced by extreme values in the outputs due to potential outliers in the data set either inputs into the costing analysis or the final unit cost output. The median minimizes this effect and is the true middle observation, when all observations of a variable or output are sorted in sequential order. The minimum and maximum are sometimes presented to show the range of values for a particular variable or output. Costing Framework Cost is defined in this study as the monetary value of non-capital, recurrent expenditures incurred and resources used to produce a defined set of health service outputs or to operate specific health facilities. The recurrent costs include drugs and supplies, salaries, and other operational costs (e.g., electricity, running water, maintenance, etc.), which are incurred on a regular basis that can be allocated as direct costs (e.g., salaries, drugs and supplies) or indirect costs (e.g., electricity). A primary hospital s recurrent unit costs are based on estimated costs and outputs aggregated at the facilities cost center or department level, such as all outpatient care visits or inpatient discharges, and not for specific diseases or treatments (with the exception of exempted services as a sub-analysis to the unit cost estimates). The existing institutional arrangement was used to identify the cost centers for primary hospitals. The outpatient department (OPD), inpatient department (IPD), maternal and child health (MCH) department, and the delivery department are the four defined cost centers for these health facilities. OPD consists of providing curative services that do not require admission and are provided in the outpatient department. Some outpatient treatments are provided in the MCH department also, but these were classified under the MCH department and cannot be separately identified. IPD is for procedures that require a patient to be admitted and have close monitoring during and after such procedure. MCH department provides non-emergency maternal and child health services (such as immunizations or antenatal care), excluding deliveries. Lastly, the delivery department focuses on comprehensive obstetric care, including pre-and post-delivery care. Detailed unit cost data between complicated and uncomplicated delivery cases was not feasible due the nature of the cost study and data availability. A more detailed explanation of the costing framework is provided in Berman, Alebachew, Mann, Agarwal, and Abdella (2016). One difference between the initial and current analysis for primary hospitals is the price list used to estimate the cost of drugs and supplies for the additional primary hospital analysis. We obtained the EFY 2007 drug price list from the Pharmaceutical Fund and Supply Agency (PFSA) and matched this to the drugs and pharmaceutical supplies consumed data for both primary hospitals where data was collected in EFY 2007 and EFY 2007/2008. Here we had to assume that the prices of drugs and supplies procured at the national level was no different between EFY 2007 and EFY 2008 because the EFY 2008 price list was not available at the time of this study. The original PHC cost study, and thus 6 of the primary hospitals, used the PFSA price list from EFY Methods
13 3. Sampled Health Facility Characteristics Basic characteristics and service statistics for the health facilities included in this study are shown in Table 3.1. Each health facility has a catchment population based on the population figures within the woreda or some other defined area. The standard catchment population defined by the FMOH for primary hospitals is 60, ,000 people. This facility type is a relatively new PHC facility, and the rollout has been gradual, with the aim to have one primary hospital in each woreda across Ethiopia. Since the expansion of primary hospitals is still underway, most primary hospitals currently have a catchment population substantially higher than the standard and typically serve multiple woredas. As a result, the average catchment population in this study is almost 7.5 times more than the standard, with a range between 22,000 to 3.5 million people. The primary hospital with a catchment population of 22,000 is more comparable to a health center catchment population size. This leads us to believe that this facility might be a health center recently upgraded to a primary hospital, although the catchment population should have changed with the upgrade. The average per capita contact rate (the total patient volume divided by catchment population) for the full sample of primary hospitals was very low, at In other words, there was approximately 1 patient contact for every 3 people in the catchment population during the year of data collection. This is due to the higher than standard catchment population relative to those utilizing services from this type of health facility. Furthermore, low utilization rates may be attributable to many of these primary hospitals being relatively new and uptake of patients accessing services from these new facilities taking time, and presumably potential physical accessibility issues if the primary hospital covers multiple woredas. For OPD visits, IPD discharges, MCH visits, and deliveries there is a factor difference of more than 17, 70, 40, and 30 respectively between the minimum and maximum number of patients served by each department indicating a wide range of utilization across primary hospitals, and even between departments. On average, primary hospitals have a total of 161 staff. This is more than double than the standard of 53 personnel (Alebachew et al., 2014), further indicating that the studied primary hospitals are substantially larger than initially planned. Clinical staff account for slightly less than half, at 71. Non-clinical staff, or staff that do not provide direct medical care, is slightly higher than clinical staff at 90. The health facility expenditure information is shown in Table 3.2. On average, primary hospitals spent 14.3 million Ethiopian birr (ETB) over one year, in nominal terms. The maximum expenditure of million ETB is considered to be an outlier among the 24 primary hospitals sampled. The average total health expenditure for primary hospitals reduces to 12.1 million ETB, when the outlier is removed from the estimation. Per capita cost (birr per person that a health facility is spending) is estimated as the ratio of total recurrent costs for a health facility to its catchment population. The average per capita expenditure for primary hospitals (62 ETB) was found to be really low. The per capita expenditure only increases by 10 ETB (72 ETB) when we exclude the 4 primary hospitals with a catchment population of more than 1 million or 10 times more than the standard catchment population Sampled Health Facility Characteristics
14 Table 3.1: Basic summary statistics for primary hospitals Primary Hospitals n Mean Median Minimum Maximum Catchment Population , ,805 22,000 3,500,000 Per capita contact rate Total OPD Visits 24 31,264 35,554 4,386 78,727 Total IPD Discharges 24 1,503 1, ,963 Total MCH Visits 24 7,845 5, ,424 Total Deliveries ,988 Total Staff Clinical Staff Non-Clinical Staff Table 3.2: Basic expenditure data for primary hospitals Primary Hospitals n Average Median Minimum Maximum Total health facility expenditure 24 14,321,778 12,012,302 3,112,913 65,993,484 Drugs and pharmaceutical supplies expenditures Human resource expenditures 24 5,227,624 4,726,543 98,779 22,086, ,215,509 4,483,344 1,406,407 41,871,724 Indirect expenditures 24 1,878,645 1,968, ,465 4,488,840 Per capita expenditure The main cost drivers for primary hospitals are human resources (HR), at 51%, and drugs and supplies, at 35%, while indirect costs account for 14% of costs (Figure 3.1). The proportion of expenditure on drugs and supplies to total costs among these Ethiopian primary care facilities is substantially higher than the proportions documented from some other countries primary care facilities. For example, Indonesia s primary care providers spent only 27% of the total facility s expenditure on drugs and supplies in 2010/11, while 52% went to health care personnel (Ensor and Indradjaya, 2012). Figure 3.1 Average proportions of cost drivers for primary hospitals Human resources Drugs and pharmaceutical supplies Indirect costs I 14% D+S 35% HR 51% Sampled Health Facility Characteristics
15 Figure 3.2 illustrates the cost components of departments for primary hospitals. Human resource costs as a proportion of the departments costs are lowest for MCH departments with an average of 35%, with MCH departments spending a greater proportion on average on drugs and supplies (51%) relative to other departments. IPD has the highest proportion of costs for HR (74%), while Delivery has the second highest (62%). For OPD, HR accounts for 51% of the costs and drugs and supplies account for only 30%, while indirect costs are the highest among this cost component at 20%. Figure 3.2 Cost components by department primary hospitals OPD: Average % Cost Distributions Human resources Drugs and pharmaceutical supplies Indirect costs I 20% D+S 30% HR 50% IPD: Average % Cost Distributions Human resources Drugs and pharmaceutical supplies Indirect costs I 4% D+S 22% HR 74% MCH: Average % Cost Distributions Human resources Drugs and pharmaceutical supplies Indirect costs I 14% D+S 51% HR 35% Delivery: Average % Cost Distributions Human resources Drugs and pharmaceu:cal supplies Indirect costs I 5% D+S 33% HR 62% Sampled Health Facility Characteristics
16 4. Unit Cost Estimates This section presents the unit cost results for primary hospitals, and includes total health facility unit costs, departmentwise unit costs, and the regional distribution of the estimated unit costs. The health facility unit cost is the ratio of the total recurrent costs relative to total number of patient contacts for a given health facility. The department-wise unit cost is the ratio of total recurrent costs estimated for that department relative to the total patient contacts of that department. Patient contacts are measured simply as the sum of all patients served by department or facility as a whole during EFY 2006 and EFY 2007/2008. Unit Costs by Department and Cost Components Table 4.1 shows both the average and median unit cost across all facilities measured by department, as well as the breakdown of average unit cost by component (human resources, drugs and supplies, and indirect). The average unit cost for the 24 primary hospitals is 463 ETB. Two outliers, one primary hospital in Amhara and one in Oromia, are driving up this average unit cost. The average primary hospital unit cost estimate becomes 310 ETB once the two outliers are excluded from the estimate. The main cost driver for the primary hospital unit costs is HR unit costs, at 259 ETB, which is about 100 ETB more than the unit cost for drugs and supplies. The departments with the highest average unit costs are IPD and Delivery. Caution must be taken when interpreting the unit cost findings for these two departments, and other results, when there are substantial differences between the average and median estimates. For IPD the average unit cost was 2,641 ETB while the median was 1,288 ETB. One outlier from a primary hospital in Amhara is influencing the average estimates for this department, with a unit cost estimate of 13,287 ETB. A revised average unit cost estimate for IPD is 2,178 ETB once the outlier is excluded from the estimate (see Figure 4.1). For the Delivery department, the average unit cost is 1,530 ETB per delivery, with a median of 945 ETB. This variability is due to a primary hospital in Amhara that is an outlier. A revised average unit cost for the Delivery department becomes 1,076 ETB per delivery by excluding the outlier from this estimate. Table 4.1: Summary of primary hospital unit costs in ETB Primary Hospitals Cost Type N Average Median Average HR Cost Average Drugs and Supplies Cost Average Indirect Cost Health facility unit cost OPD unit cost IPD unit cost 24 2,641 1,288 2, MCH unit cost Delivery unit cost 24 1, , Outliers also influence the OPD and MCH department average unit costs. The average unit cost for OPD (349 ETB) becomes 226 ETB once two outliers (in Oromia and Amhara) are removed from the estimate. The average unit cost for the MCH department (498 ETB) is 358 ETB once two identified outliers are excluded from the estimates. The outliers identified for all four departments might be due to reporting error or inefficiencies in resource use. Conclusions cannot be determined unless primary hospitals that were found to have outliers are revisited to determine the cause of such issues Unit Cost Estimates
17 The average unit costs for HR is significantly higher for IPD than for other departments, at 2,148 ETB per discharge, which is also substantially higher than the average drugs and supplies unit cost, at 438 ETB per discharge (Table 4.1). Similar to IPD, the Delivery department HR unit costs are higher than drugs and supplies 1,037 ETB compared to 438, respectively. Both of these departments (IPD and Delivery) typically require more HR time for service provision compared to MCH and OPD departments, but the high HR costs might be also attributed to inefficiencies in human resource allocation based on patient load. Such possible inefficiencies are explored in a separate paper. Figure 4.1: Average unit costs for primary hospitals for full sample and outliers excluded 3,000 2,500 2,000 1,500 1, Health facility unit cost OPD unit cost IPD unit cost MCH unit cost Delivery unit cost Average Full Sample , ,530 Average Exclude Outliers Regional Distribution of Unit Costs Average unit costs by department vary significantly by region across the studied primary hospitals (Figure 4.2). Primary hospitals in Tigray have substantially lower average unit costs for OPD, MCH, and Delivery departments (41 ETB, 120 ETB, and 237 ETB respectively), while SNNPR has a significantly lower average unit cost for IPD, relative to the other big regions. These substantially lower unit costs in Tigray region and SNNPR might be due to cost-efficient use of resources, high utilization rates, or even inefficiencies that are not captured by this analysis (such as low expenditures due to high stock-out rates). Further evidence is needed to determine causes of such low unit cost rates. Across departments, OPD and MCH have the lowest average unit costs compared to both IPD and Delivery Unit Cost Estimates
18 Figure 4.2: Unit costs for primary hospital departments by geographic location (ETB) Unit Cost Estimates
19 5. Cost Analysis for Exempted Services This analysis estimates the recurrent unit cost for exempted services, or services provided for free to all people regardless of household income, provided at primary hospitals. Exempted services according to the FMOH standards are: expanded program on immunization (EPI), antenatal care (ANC), treatment for tuberculosis (TB), family planning, post-natal care (PNC), leprosy, delivery, HIV care, and treatment for malaria. The exempted services included in this sub-analysis are: EPI and specific vaccine costs under EPI, family planning, ANC, PNC, deliveries (which was also included in the section above), TB treatment, anti-retroviral treatment (ART), and malaria treatment. The study was not able to estimate unit costs for leprosy due to limitations in record keeping, where the health management information system (HMIS) system does not include reporting on the number of cases for leprosy. The unit cost of providing services to those with leprosy could not be estimated without number of cases as the denominator. Measuring the recurrent unit costs of providing exempted services is important to enable the government to be prepared for future changes in overall health system financing. Today, most commodities for exempted services are funded by external sources, while government pays for the HR and indirect costs. Unit cost estimates for these services can be used to model future demands on government funding if external funding declines. Findings from this analysis will support the FMOH to ensure that sustainable financing mechanisms are in place to continue providing such services for free, as well as to estimate the fiscal implications of revising the exempted services list. Tables 5.1 presents the unit cost estimates for exempted services. Both average and median are shown for the sampled primary hospitals, along with the proportion of unit costs spent by component (HR, drugs and supplies, and indirect costs). More detailed discussion of individual findings is provided Cost Analysis for Exempted Services
20 Table 5.1: Unit cost of providing exempted services in primary hospitals Service Group Costing service unit N Average (birr) Median (birr) Cost Components Expanded Programme on Immunization (EPI) Per vaccination HR:55% D+S: 22% I: 24% Pentavalent (DPT-HepB- Hib) vaccination Per vaccination HR: 45% D+S: 36% I: 20% Pneumococcal vaccination Per vaccination HR: 43% D+S: 38% I: 19% Rotavirus vaccination Per vaccination Measles vaccination Per vaccination BCG vaccination Per vaccination HR: 51% D+S: 26% I: 23% HR: 61% D+S: 10% I: 29% HR: 67% D+S: 4% I: 29% Family Planning Per acceptor/yeara HR: 23% D+S: 71% I: 9% Antenatal care 4 visits/yearb Delivery Per delivery Postnatal care Per visit/yearc Tuberculosis treatment Per cased HR: 68% D+S: 3% I: 30% HR: 62% D+S: 33% I: 5% HR: 62% D+S: 10% I: 27% HR: 15% D+S: 86% I: 5% Anti-Retroviral Therapy (ART) Per case/yeare HR: 10% D+S: 86% I: 4% Malaria treatment Per casef HR: 37% D+S: 43% I: 20% HR = Human Resources D+S = Drugs and Supplies I = Indirect Note: Some primary hospitals are missing from the unit cost estimates for exempted services because data was missing from their HMIS records and data interpolation was not feasible. In the case of malaria, the standard HMIS format changed for EFY 2007/08 from number of new malaria cases to Number of slides or RDT positive for malaria. Two of the primary hospitals, where data was collected in EFY 2007, did not change their HMIS reporting format at the time of data collection. Hence, 7 primary hospitals could only be included in the malaria treatment estimate under a consistent definition of number of new malaria cases. a The first time an individual between years receives a modern contraceptive service in the calendar year (from HMIS) or the average annual cost for family planning per acceptor. b At least four ANC visits during EFY 2006 and EFY 2007/08. c A PNC visit within 24 hours of a newborn s birth during EFY 2006 and EFY 2007/08. d Tuberculosis case (all forms) that was registered at the health center for EFY 2006 and EFY 2007/08 (from HMIS). e A person living with HIV/AIDS (adult or child) that received ART for EFY 2006 and EFY 2007/08 (from HMIS), with assumption that an individual did not stop treatment or miss regimens throughout the year. f New malaria case (complicated or severe) registered at the health center during EFY 2006 and EFY 2007/08 (from HMIS) Cost Analysis for Exempted Services
21 Unit Costs for the Expanded Program on Immunization (EPI) The average unit cost for the EPI vaccines administered at primary hospitals is 264 ETB per vaccination. An outlier is influencing this average estimate. The revised average unit cost estimate per vaccination becomes 190 ETB once the outlier is excluded from the estimate. A majority of this unit cost comes from paying for HR (55%) followed by indirect costs (24%) and drugs and supplies (22%). The HR time spent administering each vaccine and associated indirect costs were assumed to be the same for all vaccines, and therefore any variations in per vaccination cost for immunizations are due to diverging drug costs. The average unit costs of individual vaccines vary, with BCG being the lowest cost to administer, at 236 ETB per vaccination (162 ETB excluding an outlier) and Pneumococcal vaccination being the highest cost to administer, at 318 ETB (240 ETB excluding an outlier). Pentavalent vaccination has the second highest cost to administer among the exempted vaccinations (299 ETB per vaccination), however this vaccine is potentially still more cost-effective because it protects a child against 5 killer diseases (diphtheria, pertussis, tetanus, hepatitis B and Hib). Unit Costs for Family Planning Services Ethiopian public health facilities offer a number of family planning services, including the provision of birth control (pill, injectables, and intrauterine device (IUD)), condoms, and emergency contraception. An acceptor for family planning is a patient of reproductive age (15-49 years) receiving a modern contraceptive method. Each acceptor is counted only once, the first time s/he receives a contraceptive service during the year of data collection. This count includes both the first visit of a new acceptor as well as the first visit in the fiscal year of a repeat acceptor from the previous year. Contraceptive services include provision of contraceptive supplies, as well as routine check-ups for ongoing use of a long-term method such as Norplant, IUD, etc. The average recurrent unit cost for a family planning service is very high for primary hospitals, with an average unit cost of 1181 ETB per acceptor per year. One outlier exists from Amhara, biasing the average upwards. The average unit cost estimate per acceptor for family planning becomes 959 ETB once the observed outlier is excluded from the average estimate. Drugs and supplies is the major cost driver for family planning services, accounting for 71% of the total annual unit cost per acceptor. Unit Costs for Antenatal Care (ANC) and Postnatal care (PNC) The ANC unit costs are based on at least 4 ANC visits (ANC4) and PNC unit costs are based on a typical PNC visit within the first 24 hours a newborn s birth during the data collection year. The methods for these calculations are described in Berman, Alebachew, Mann, Agarwal, and Abdella (2016). ANC services offered vary by need, and may include regular check-ups, tetanus toxoid shots, and/or syphilis detection and treatment. The average recurrent unit cost for an ANC4 visit among primary hospitals is 1,007 ETB. Two outliers are biasing the average unit cost for this service. The average unit cost for ANC4 visits becomes 726 ETB once the two outliers are excluded from the estimate. PNC services offered may consist of a mother or newborn receiving services such as treatments for newborn sepsis, treatment of postpartum hemorrhage, and prescribing Chlorhexidine for treatment of the umbilical cord among newborns, among others. The unit cost of an average PNC service is 262 ETB. The same two primary hospitals that were outliers for ANC4 visit (one in Amhara and one in Oromia), are also biasing the average unit cost upwards for a PNC visit. Once these were excluded from the estimates, the average unit cost becomes 191 ETB for a PNC visit. Unit Costs for Tuberculosis (TB), Antiretroviral Therapy (ART) and Malaria The next three exempted services tuberculosis treatment, ART, and malaria treatment have a unit of measurement on a per case basis. Per case is applicable for service groups where the treatment regimen continues for an extended period of time, with possible multiple visits to the health facility during the duration of treatment or calendar year. This should not be confused with or valued as a proxy (substitute) for per visit cost. Tuberculosis treatment unit cost includes all forms of TB cases. Per case for this service is the number of smear-positive TB cases receiving TB treatment at a health facility during EFY 2006 and EFY 2007/2008. The average unit cost per TB case per year is 9,757 ETB. Two outliers, one primary hospital in Tigray and one in Amhara, are severely biasing the average unit cost upwards. The average unit cost per TB case becomes 1,810 ETB once these outliers are excluded from the estimates. Drugs and supplies are the main cost drivers for this service, accounting for 86% of the unit cost Cost Analysis for Exempted Services
22 ART annual unit cost estimates are based on the number of people living with HIV/AIDS currently receiving ART during the fiscal years of data collection. This means that it does not represent the unit costs for the provision of ART over the individual s lifetime. Furthermore, this does not adjust for a patient stopping treatment or missing a regimen during the data collection period. Such analysis would require further analysis on survival and dropout rates, which is beyond the scope of this study. The average unit cost for providing ART per case per year is 1,917 ETB. No outliers were detected. Similar to family planning and TB costs, a majority of ART costs are for drugs and supplies, consisting of 86% of the costs for primary hospitals to provide this treatment. Malaria treatment includes both complicated or severe cases (infections complicated by organ failure or abnormalities in patient s blood or metabolism) and uncomplicated cases (malaria attack that lasts 6-10 hours) (FMOH, 2005; CDC, 2015). Uncomplicated cases would have a lower unit cost estimate compared to complicated ones, however the distinction between these two types of malaria cases was not possible in this study. Per case for this service is based on new malaria cases recorded as per the standard health management information system (HMIS) format in the fiscal years of data collection. During key informant interviews, some health professionals stated that new malaria cases recorded also included those being treated at the beginning of the fiscal year. This might not be the case for all primary hospitals, say if an individual was diagnosed but refused treatment or somehow failed to receive treatment. Therefore, it is possible that the estimates presented in Tables 5.1 are an underestimation of the average annual unit costs to provide malaria treatment services. A major limitation encountered during the second round of data collection for EFY 2007/2008 was that the format of how HMIS recorded malaria cases changed, with new malaria cases no longer being recorded. Only two primary hospitals, where data was collected for EFY 2007/2008 had not changed from the previous HMIS reporting format and could be included in the per case malaria unit cost estimates. Thus, a majority of primary hospitals (71%) could not be included in this unit cost estimate, and 5 out of the 7 primary hospitals analyzed were from the original PHC cost study from EFY The average recurrent unit cost for malaria treatment is 303 ETB per case. No outliers were detected. Drugs and supplies are the main cost driver for malaria treatment in primary hospitals (43%) Cost Analysis for Exempted Services
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