1. Looking Forward: Costing for Scale Up Kate Rademacher & John Bratt October 5, 2009

2. Introduction Our last session introduced an approach to costing out pilot interventions Phases, activities, resources, costs Identify and cost resources used to carry out activities Cost of phase = sum of costs of activities Cost of pilot intervention = sum of costs of phases

3. Today’s Agenda Introduction to a simple typology of scale-up Incremental vs. full cost analysis review Reasons why scale-up costs differ from costs of pilot projects Practice with Part 2 of the Case

4. ExpandNet Definition: Scaling Up “Deliberate efforts to increase the impact of health service innovations successfully tested in pilot or experimental projects so as to benefit more people and to foster policy and program development on a lasting basis.”

5. Three Types of Scaling Up Adapted from ExpandNet and MSI frameworks 1. 1.Diversification: Adding additional services at existing service delivery points Increase frequency of service (more hours per week) Reach additional beneficiaries in same area Deliver additional services to same beneficiaries

6. Three Types of Scaling Up cont’ 2. Expansion to new service delivery points in same organization Growth by branching out into new locations Franchising the model to organizations operating as clones of the originating organization

7. Three Types of Scaling Up cont’ 3. Replication in Different Organizations and Contexts Can occur between organizations of the same type (e.g., NGO to NGO) or between organizations of different types Involves crossing geographic and/or sectoral boundaries Policy adoption

8. Estimating Costs of Scale-up Can we estimate scale-up costs simply by multiplying per-site costs of the pilot by the number of scale-up sites? For example: assume that a pilot project cost $2500/clinic, and plans are to scale up to 40 clinics. Therefore, can we assume that the cost would be $2500 x 40 clinics = $100,000?

9. Take Away Message …. Scale-up Costs are Not Simple Multipliers of the Costs of Pilot Projects!!

10. Incremental Cost Analysis Approach:Average Cost Calculations Incremental Cost Calculations Main task:Deciding what basis and method of allocation of indirect costs to use Identifying marginal costs of one or more alternatives

11. What costs do we care about? Additional Costs Associated with Interventions Pilot projects often carried out within an existing program so we are concerned about “incremental” costs Existing Program Costs Additional Costs

12. What costs do we care about? During scale up: Additional costs of expanding Existing Pilot Costs Additional Costs of Scale Up Now, if were are taking a program to scale, which costs would be considered “incremental”?

13. Importance of marginal benefit and cost

14. Reasons why Scale-up Costs are not Simple Multipliers of Pilot Costs Pilot components not repeated in scale-up Economies of scale Differences in entity providing inputs Changes in intervention content or program

15. Pilot Components Not Repeated in Scale-up Some planning elements are one-time activities and do not need to be repeated –Curriculum design –Stakeholder buy-in meetings with national health authorities

16. Economies of Scale Definition: Reduction in cost per unit resulting from increased production and operational efficiencies –Example: if you trained 10 individuals per training in the pilot, but can actually train 30 individuals per training, you will have realized economies of scale. Average cost per trained promoter = 1/3 of Pilot cost Diseconomies of scale also possible

17. Differences in Inputs Inputs costs may differ at scale than in the pilot projects – – For example, if pilot used expensive international consultants for TOT, but the MOH will run activities when taken to scale, lower-cost staff are substituted for higher-cost staff – – Non-financial costs in the pilot (‘economic costs’) may become financial costs at scale.

18. Changes in the Intervention Learning from experience Different priorities in new context –Scale-up may choose to emphasize certain activities based on relative effectiveness and/or changes in priorities. –As mix of activities changes, so will the costs of scaling up a modified intervention Some activities are deemed as not financially realistic at scale –Agency implementing scale-up cannot afford intensive supervision during service delivery

19. Review: Costs of a Pilot Project Inputs Outputs Processes (activities) Labor Supplies Capital Planning the intervention Preparing for Service Delivery Carrying out new service delivery Increased or improved provision of services Outcomes Improved health outcomes

20. Review: How to compute costs Phase Activity – Resource » Cost Three phases: Planning the intervention Preparing for Service Delivery Carrying out new service delivery

21. Lessons Learned Remember, we can not calculate costs of scale up simply by multiplying pilot costs at a proportional rate.