1. Current and future costs of Healthcare in Kenya - The Dynamic Costing Model in Action
17th December 2009 – MoPHS and World Bank
By Michael Moeller
Health Finance Advisor
GTZ Health Sector Programme

2. What is the costing model
A model that can:
Provide an estimate of current costs of delivering health services to those seeking care
Provide a projection of the costs of delivering health services to those in need
Estimate the costs of delivering services for the KEPH based on standard treatment guidelines
Reveal differences in productivity across facilities of a similar category
Provide guidance on reimbursement for services at different levels of the system
Provide an estimate of the current costs of delivering health care services to those seeking care

3. Methods
Survey of 204 health facilities at different levels and different types - Purposive sampling method
Complemented by exit survey to learn about spending that is not recorded
Other include medicines list health infrastructure improvement plan
Bottom up and top down approach,
KSPAS and HH survey – what are they
To adjust overall costs by level and function because it is not recorded

4. Sample of facilities

5. Missing data

6. Costing methodology Costing the facilities Dual Costing approach
Supply and demand side costing
Facility Costing - particularly commodity costs are related to number treated – hence the costs of buildings and equipment differs B) Dual Costing 1st building block – patient stay on the ward, 2nd surgical procedures, 3rd X-Ray diagnostic tests – unit costs for each of these unit costs need to be derived
Demand/Supply side costing supply include donor and gov spending and OOP spending
Focuses on health care service provision - demand side focuses on direct household costs i.e transport, opportunity cost

7. Approach to costing Cost of service = Direct costs + Overhead
Direct costs – condition dependent: medical and other supplies plus staff directly involved with patient care
Normative: determined by experts
Actual: determined by actual use
Overhead – facility dependent: other staff, operating costs, capital costs based on actual facility practice

8. Methods of costing services
Direct costs
- Drugs
Indirect costs
- Equipment
- Salaries
- Building (Capital cost)
Service Cost Centres
- Overhead ↓
- Clinical Support Services
- Support Services
Final Cost Centres
- Inpatients - 15
- Outpatients - 12
- Outreach
Assumptions
- Fixed costs
Variable costs
Semivariable costs
Cost allotment
Each is divided my a measure of their workload in each final cost centre
Cost categories – medical Doctors – according to time spend in each department, recorded separately for each member of staff
Functional staff – allocation to wards according to beddays, allocation to OPD according to lab/x-ray statistics
Supplies
Transport depeciation for cars
Vehicle running expenditure
Equipment
Utility bills + postage maintence, post etc
Unit Cost
Cost of KEPH conditions

9. For example

10. Actual Costs

11. COSTS OF ACTUAL SERVICES (2007)

12. Total Actual Costs in 2007

13. Unit costs by provider and level of facility
Unit Costs (K.Sh)
Outpatient visit
Admission
Bed-days
Adjusted Bed-days
CI (% average)
Dispensary (Public)
153 -
763
44%
Health Centre (Public)
219
3,500
1,187
34%
District Hospital (Public)
514
12,970
2,186
2,316
84%
Provincial Hospital (Public)
407
13,195
1,381
1,485
38%
Tertiary Hospital (Public)
1,206
49,744
3,255
3,468 0%
Nursing Home /Enhanced Health Centre (Public)
174
1,713
1,375
947
86%
2/3 Health Centre/Dispensary (FBO/NGO)
435
1,995
3,732
2,245
District Hospital (FBO/NGO)
1,087
14,862
3,685
4,067
56%
Nursing Home/Enhanced Health Centre (FBO/NGO)
18,965
13,807
8,787
12,154
196%
2/3 Health Centre/Dispensary (Private)
769
3,504
7,409
4,002
61%
District Hospital (Private)
1,631
44,659
10,552
9,651
Tertiary Hospital (Private)
2,197
96,857
18,704
16,107
Nursing Home/Enhanced Health Centre (Private)
1,355
14,142
3,943
4,756
The results (Table 3) indicate that as expected the costs of tertiary (level 6) services are considerably higher than at other levels. The cost of private level 6 services is, in addition, roughly twice that of services provided in level 6 public facilities. The costs of services provided in public district and provincial (levels 4 & 5) and FBO/NGO district level hospitals are extremely similar. One reason why the costs in these public facilities are relatively low is that the facilities are often extremely crowded with occupancy rates of more than 100%.
Whilst admission costs in the public and NGO/FBO sector are comparable the bed-day costs are substantially different. Patients in the NGO/FBO sector in general spend a much shorter time in hospital in comparable departments. So whilst the occupancy in FBO/NGO level 4 is around 60% and public hospitals have occupancy of more than 100% the throughput per bed is similar (55 per bed/year in public Level 4 & Level 5 and 54 per bed/year in FBO/NGO Level 4). It is not clear, however, whether the reason for this difference is that patients presenting at public facilities have more complex conditions or that the technology available and protocols utilised in the non-government sector ensure a faster discharge. More exploration of this issue would be beneficial.
Costs can be disaggregated by service level – i.e obstetrics – delivery of child services

14. KEPH Costing – example normal delivery
Health Centre 4,283
District Hospital 3,632
Tertiary Public
District level NGO/FBO 6,289
District level Private 17,169
Show model?

15. Costs of Kenyan Essential Package of Care (2007)
14,600,014, %

16. Scenario Costs of delivering services to more people
Set desired pattern of KEPH service delivery for outpatients and inpatients
Adjust numbers of facilities
Increase numbers where necessary (no facility reductions
Optimise: increase or reduce facilities where possible
Model
Factors for scaling up are entered onto the system for each department and cost-category, staff are fixed for overhead departments and semi variable at service level
The scaling factor is used to project the variable, semi variable and fixe cost for each facility type by department
Revised scenario cost by department are allocated to the final service departments

17. Cost of achieving targets
Why normative costs more in base, then less
Baseline suggest an imbalance of outpatient: inpatients – in baseline normative costs are attributed to the excess outpatients
Scenarios: imbalance corrected (based on need) and the effect of excess length of stays is revealed by the

18. Distribution by KEPH service

19. Limitations
Does not demonstrate whether providers are of adequate quality
Does not guarantee funds will get to facilities (PETs issues)
Does not yet fully capture community health service costs

20. Asante Sana