Free or fee? Should family planning programs charge clients for contraceptives
and services? For decades, programs have expanded access to contraceptives in developing
countries by offering no-cost or low-cost services, often subsidized by government or
international donor agencies. Developing country governments currently pay 75 percent of
the costs of family planning programs, while donors contribute 15 percent and clients pay
10 percent, according to the United Nations Population Fund.1
In recent years, these programs have faced increasing demands, which have boosted
costs. Managers are being asked to broaden services from family planning to other
reproductive health needs, improve quality, serve the poor, and provide a wider array of
contraceptive methods. Meanwhile, the number of women of reproductive age has been
increasing worldwide at the same time that funding from international donor agencies has
been declining.
Programs that depend mostly on international donor funds, typically those that are
operated by nongovernmental organizations (NGOs), have few options for increasing revenue.
Charging a fee to family planning clients is one strategy for recovering costs. Other
approaches include charging clients for related health services, such as laboratory tests,
or selling program services, such as training or education, and using a portion of that
money to subsidize family planning programs.
"One of the issues for family planning programs is how to keep up with the
increasing demand for services," says Dr. Barbara Janowitz, an economist and director
of FHI's Division of Service Delivery Research. "A ministry of health within the
public sector has the potential to replace donor funds with tax revenues, but NGOs do not
have that potential. They have to collect revenues by selling services."
Available to everyone
Many opponents of fees argue that family planning is a basic human right and an
essential health service. "There's a strong belief among NGOs that what they are
doing should be free or low-cost and available to everyone," says Dr. James Foreit,
who has studied financial sustainability in his role as director of the Population
Council's Investigación Operativa y Asistencia Técnica en Planificación Familiar y
Salud Materno-infantil en América Latina y el Caribe (INOPAL) III Project. "There's
a very basic philosophical belief among some that it is wrong to make money."
Charging for services may also further limit access to contraception at a time when so
many people do not have access to the services they need. Fee collection may be too costly
for clinics already struggling to balance resources and demand. Couples who pay for family
planning may have to make other sacrifices within the home -- reduce food consumption or
increase their working hours. Or couples may rely on less-effective traditional
contraceptives.2
However, revenues generated by fees may also lead to improvements in quality of care,
decreased dependence on donor agencies, and increased financial sustainability for
individual family planning programs. Fees can be used to broaden access to services,
proponents say. Within the public sector, fees can guide clients to low-cost service
delivery points (pharmacies instead of clinics, health centers instead of hospitals).
Revenues can give program managers greater flexibility in planning clinic activities and
more control over clinic policies and services. Fees charged to middle-income clients can
subsidize services for the poor and can improve efficiency of services by encouraging
competition between the public and private sector.3
When setting prices for family planning services, program managers must strike a
balance. They must consider the program's need for funds and the client's willingness and
ability to pay. Managers must also take into account "elasticity."
"Elasticity" is an economic concept that relates demand to price changes. If
demand drops sharply following price increases, the relationship is said to be
"elastic." If demand is not greatly affected, the relationship is not very
elastic.
Some social marketing studies suggest that couples are willing to pay about 1 percent
of their income for contraception.4 In establishing a fee
system, Management Sciences for Health (MSH), a U.S.-based organization that provides
technical assistance to developing country health programs, recommends that contraceptive
prices mirror those of other household items. In the Democratic Republic of Congo
(formerly Zaire), a family planning program decided to charge a monthly membership fee
that would not exceed the price of two kilos of soybeans. The Responsible Parenthood
Associate of Suriname based its annual membership fee on the cost of 12 soft drinks.5 Others recommend that a clinic charge an entrance fee that is
equivalent to a bus fare or charge the same price for a cycle of oral contraceptives as
the cost of a liter of soft drink.6
One of the central concerns in implementing a fee system or in raising fees is that
contraceptive use will decline. AVSC International conducted research in Mexico, Brazil
and the Dominican Republic to examine the relationship between price increases and client
use of sterilization.7 In Mexico, family planning clinics in
the cities of Celeya, Juárez and Irapuato raised fees to compensate for a decline in
donor funding. The fee for sterilization increased from U.S. $43 to U.S. $55, then to U.S.
$60 several months later. The average monthly case load fell 10 percent after the first
increase, then dropped 58 percent after the second increase. Some staff members noted that
fewer low-income clients seemed to ask for sterilizations.
To determine the impact of price increases on client use of contraceptives, the Centro
Médico de Orientación y Planificación Familiar (CEMOPLAF) in Ecuador has conducted a
unique study that compared what clients said they would do with what actually happened
when prices were increased. The study was done with assistance from the Population
Council's INOPAL III Project, The Futures Group International and FHI.
Approximately 7,000 clients at 15 CEMOPLAF clinics were questioned about their ability
to pay increased prices through a survey on income, household expenditures and education.
The clients also were asked how they would respond if prices for a service were increased
by a certain percentage. If a woman said she would continue to pay for the services, she
was asked the maximum amount she would pay. If the woman said she could not pay, she was
asked where she would go to seek less expensive family planning services.
Following the interviews, clinics were randomly assigned to one of three groups. For
one group, prices of services such as prenatal care, obstetrical-gynecological care and
follow-up visits for insertion of intrauterine devices were raised 20 percent. In a second
group prices were raised 40 percent, and in a third group prices were raised 60 percent.
For one year, CEMOPLAF monitored visits to its clinics to determine whether increased
prices caused a decline in the number of clients seeking services. In addition, CEMOPLAF
monitored the economic mix of clients to determine how higher prices affected use by
low-income clients.
Preliminary results show there was a decline in the number of clinic visits but no
significant change in the client economic mix. The percentage of decline was relatively
similar for all three groups of clinics. For the group in which fees increased by 20
percent, client visits declined about 20 percent. For the group in which fees increased 40
percent, the decline was only slightly more, about 26 percent. (No information was
collected on women who chose to seek services elsewhere.) The study will be repeated at
Asociación Pro Bienestar de la Familia Ecuatoriana (APROFE), another Ecuadorian NGO.
Previous studies to determine the impact of price changes on contraceptive use have
often yielded mixed results, in part because different research methods have been used,
says Dr. Janowitz.8 However, the Ecuador study comparison of
what clients say and what actually happens in clinics is groundbreaking research that can
provide useful information to program managers and health policy-makers, she says.
How much to charge
Family planning program managers must consider the effect of pricing systems on client
demand. However, managers must also consider the effect of pricing systems on the clinic's
resources.
"There are several important questions when considering client fees," says
Dr. Janowitz of FHI. "First, what is the potential for introducing or raising fees to
generate revenue? How do fees affect the number of clients who get services from you? How
do fees affect the client mix? If you charge fees or raise fees, will you cut out people
at the lower end of the income scale and serve only the middle-class? That's a
concern."
selected methods? Will fees apply to methods, services or both? Should fees vary
throughout the day to encourage use when staff are less busy?
"The first thing to learn when establishing a fee system is how much things
cost," says Alvaro Monroy, director of the Transition Project for the International
Planned Parenthood Federation's (IPPF) Western Hemisphere Region, which helps IPPF
affiliates become less reliant on donor funding. "Even a donated commodity has a
cost. For a [donated] cycle of pills there are administrative costs, staffing costs, the
costs that will come when it is replaced by another commodity. A good accounting system is
essential."
"Program managers need to understand unit costs," says Sallie Craig Huber,
technical director of the Family Planning Management Development Project for MSH, who has
worked helping African NGOs establish pricing systems for health services. "How many
minutes does the staff spend on a service and what is that time worth? What are the
program's fixed costs, its overhead costs? What are the actual costs of contraceptive
commodities? Programs need to understand how much it costs them to deliver a service and
how this equates with what they're charging for a service."
FHI is working with NGOs in several developing countries, helping family planning
programs measure costs. For example, FHI is working with the Asociación Demográfica
Salvadoreña in El Salvador to design a pricing policy based on client ability to pay,
competitors' prices and costs of services. The Population Council, APROFE and FHI have
carried out a similar study in Ecuador.
"Many NGOs are already charging fees, but the prices may have been determined by
unscientific means," says John Bratt, a senior research associate at FHI, who has
worked on costing issues in Latin America. "Prices may have been set originally as a
symbolic effort to cover some of the costs of services. In many cases, NGOs do not know
what it actually costs to provide services."
For programs thinking of implementing a fee system, The Futures Group International
recommends considering the political, regulatory and institutional constraints of charging
fees (for example, laws or regulations may prohibit selling donated supplies to clients);
setting priorities for how revenues will be used; designing a means to protect poor
clients who may not be able to afford even a small charge; and carefully monitoring how
money is collected and spent.9
MSH recommends that program managers ask themselves a variety of questions as they
consider a pricing system, including the objective of fees (to expand services, for
example, or to become less reliant on donor or government funds). Whether clients can
afford to pay and clients' perceptions about the quality of services are among other
important considerations.10
Announcement that client fees will be implemented or that price increases will take
effect should be made months in advance, MSH recommends. Also, programs should explain to
clients how the fees will improve services. For example, a program might use fees to
reduce waiting times or to offer more convenient hours, and a list of these improvements
could be posted in waiting areas.
After user fees have been implemented or increased, program managers should determine
how changes have affected client use, recommends the U.S.-based John Snow, Inc.
Comparisons of levels of client use of services should be made six months prior to
implementation of the fee system, then several months after the fee system has been in
place, to determine the impact of price on demand.11 Such
before-after comparisons were made in the CEMOPLAF study on clients' ability to pay versus
willingness to pay.
Another concern for program managers is how to subsidize services for clients who
cannot afford to pay. In Peru, the Instituto Peruano de Paternidad Responsable (INPPARES)
implemented a sliding scale to waive or reduce fees for low-income clients. Marie
Stopes/Population Health Services Program in Kenya developed a checklist to help program
managers determine whether clients should be exempt from paying. Poor mothers who were
unemployed or working for very low wages were exempt, as were high parity women who could
not afford to pay, clients who owned less than an acre of land, school or college
students, and workers at tea and coffee estates.12
But Dr. Janowitz cautions that establishing exemptions has its problems. "It's not
easy to make them work," she says. "If criteria are too strict, people who
should get services do not. If criteria are too lenient, you cover people you do not want
to." In addition, the approach can be expensive to administer, and can lead to
problems if clients discover that different fees are charged for the same service.
One strategy for ensuring that poor people continue to have access to family planning
is "cross-subsidization." Charges for other health services, such as lab tests,
are used to subsidize family planning services. Since 1991, CEMOPLAF has established 20
laboratories, which provide 35 different services, including Pap smears, tests to diagnose
sexually transmitted diseases, pregnancy tests, tests to measure cholesterol levels in the
blood, and tests to determine the presence of parasites in the digestive system. The
average profit made from lab services is 47 percent, and revenues help finance family
planning services.13
Pricing for sustainability
Fees can help ensure a steady source of revenue, thus enabling a program to become
sustainable as international donor support diminishes. But there is a difference between
sustainability of an institution and sustainability of a nation's entire family planning
effort, notes Dr. Janowitz. At the country level, policy-makers will be concerned with
making sure all citizens have access to family planning and may not fund one institution's
operations if clients have easy access to family planning elsewhere.
Also, an institution concerned about survival may be willing to eliminate family
planning services if they become too costly. The Kumar Warmi (Healthy Woman) program
administered by the Centro de Información y Desarrollo de la Mujer (CIDEM) in El Alto,
Bolivia, which educates women about healthcare and human rights, is one example. The
program continues family planning education, but a Kumar Warmi family planning clinic that
opened in 1986 recently transferred services to another clinic to improve CIDEM's
long-term financial sustainability.14
Creative strategies have also been used to help subsidize the costs of services and
improve program sustainability. In Bangladesh, the Concerned Women for Family Planning
(CWFP) established a maternal-child health and family planning clinic, which required
income in order to match donor support. CWFP began charging fees for clinic services on a
sliding scale, based on clients' ability to pay, although no client was denied services.
CWFP also opened a restaurant and catering service, a laundry and a beauty parlor. These
activities served the dual purpose of providing jobs for local women and generating income
for the organization.15
The Fundación Mexicana para la Planificación Familiar (MEXFAM) in Mexico has
increased fees for family planning and has begun selling training materials as part of
IPPF's Transition Project. MEXFAM officials predict that this year the clinic will be 34
percent self-sufficient, compared with 13 percent five years ago.
PROFAMILIA in Colombia began as a single clinic in Sante Fe de Bogotá but has expanded
to 48 clinics in urban and rural areas, recovering 50 percent of its total costs through
the sale of medical and surgical services and a social marketing program. Income is used
to help subsidize family planning programs.16
One of the advantages of charging fees is that it can lead to improvements in quality
of services, says Dr. Foreit of the Population Council. "At the moment you start
charging people, the client becomes the primary user of the service. You have to please
him or her, and your quality becomes the quality that person demands. Services that are
offered become the services users want, not the services other people think the clients
should have. One of the 'side effects' of sustainability is that it empowers the
user."
Improvements in quality were one of the benefits observed in IPPF's Transition Project.
The project was completed earlier this year, and one of the changes is that programs are
more client-oriented, says Monroy of IPPF. "There is more sensitivity about the needs
of the clients. Providers now ask people what they want, how they feel, if all their
questions have been answered. In the past, providers used to call people by a number, but
those days are gone."
-- Barbara Barnett
References
- Janowitz B. Why do projections of the cost of family planning differ so
widely? Stud Fam Plann 1993;24(1)62-65.
- Watkins K. Cost-recovery and equity in the health sector: issues for
developing countries. Presentation at WIDER Project on Provision and Financing of Public
Goods in Developing Countries, London, February 27, 1997.
- Janowitz B, Measham D, West C. Family planning costs and financing in
sub-Saharan Africa. Unpublished paper. Family Health International, 1997.
- Lande RE, Geller JS. Paying for family planning. Popul Rep 1991;J(39).
- Musau S. Charging for family planning services. Fam Plann Manager 1992;1(3)1-12.
- Foreit K, Levine RE. Cost Recovery and User Fees in Family Planning.
Policy Paper Series # 5. Washington: The Futures Group, 1993.
- Haws J, Bakamjian L, Williams T, et al. Impact of sustainability
policies on sterilization services in Latin America. Stud Fam Plann 1992;23(2);85-95.
- Janowitz B, Bratt J. What do we really know about the impact of price
changes on contraceptive use? Viewpoint. Int Fam Plann Perspect 1996;22(1):38-40.
- Foreit.
- Musau.
- Day LM. Designing a Family Planning User Fee System: A Handbook for
Program Managers, Revised Edition. Arlington: John Snow, Inc., 1993.
- Musau.
- Bratt J, Foreit J, de Vargas T. Laboratory Study Examines Costs,
Quality and Safety. Population Council -- Latin American Sustainability Operations
Research Summaries #4. Unpublished paper. Population Council, 1997.
- Paulson S, Gisbert ME, Quitón M. Case Studies of Two Women's Health
Projects in Bolivia. La Casa de la Mujer, Santa Cruz, CIDEM/Kumar Warmi, El Alto. Research
Triangle Park: Family Health International, 1996.
- Khan M. Family Planning Program Sustainability Experience of
Concerned Women for Family Planning. Sustainability of Family Planning NGOs in Bangladesh:
Workshop Report. August 27-28, 1991, Bangladesh Academy for Rural Development, Comilla,
Bangladesh. Dhaka: Pathfinder International, 1991.
- Trias M. Fees for services in PROFAMILIA, Colombia. Family planning
programme sustainability: a review of cost recovery approaches. Presentation at Seminar on
Programme Sustainability through Cost Recovery, London, 1992.
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