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Family planning programs in developing countries face formidable challenges
in providing quality care with limited resources, making it essential for
managers to evaluate how they can use resources in more productive ways. To
make programs sustainable, managers must also become increasingly innovative
in exploring new ways to operate their programs and generate revenue.
"Good leadership in programs is crucial," says John Bratt, FHI
senior associate for health economics. "To be successful, programs must
be implemented by someone with vision and courage. It is certainly not easy,
and there is rarely one quick-fix solution that guarantees sustainability.
But having good information can make a big difference."
Economic analysis of programs can provide managers with information that
can improve both the productivity of programs and the quality of care, Bratt
says. Among other things, economic analysis can help program managers:
- identify any high revenue-producing services
that can subsidize a program’s low revenue-producing services,
- evaluate clients’ ability to pay for services,
- ascertain if certain services or products offered
by a program are draining resources and threatening program
sustainability,
- determine if clinics in different regions should
charge different prices, and
- evaluate staff productivity.
"Too few organizations routinely use cost data for decision-making
in their programs," Bratt says, although there can be a number of
benefits when they do. For example, an economic analysis by FHI of programs
of the Asociación Demográfica Salvadoreña (ADS) in El Salvador in 1996
and 1997 produced some essential information about subsidizing and pricing
services. The organization operates 10 clinics throughout the country,
offering family planning and other reproductive health services. It also
operates laboratories, social marketing programs, community-based
distribution programs in rural areas, and a hospital in San Salvador. All
clients in ADS clinics are charged nominal fees for services.1
ADS program managers thought they had established fees so that family
planning services would be subsidized by other services. However, the cost
analysis found that four of ADS’ six most highly subsidized services were
services other than family planning, such as Papanicolaou (Pap) smears, and
pediatric and prenatal services. Gynecology consultations received subsidies
of nearly U.S. $23,000 a month, making them more heavily subsidized than all
the family planning services combined. Not only were program managers not
achieving their goal of subsidizing family planning services by other
services, but they were draining resources to support those other services.
Those resources could be used to serve more family planning clients or
provide other family planning services.
"ADS is not the only organization with this problem," says
Bratt. "When family planning programs decide to diversify into other
services, they need to understand that relative costs of services can change
over time due to fluctuations in demand and in the prices programs pay for
labor, supplies, and capital, among other factors. One lesson from this
experience is that programs periodically need to measure their costs per
service to ensure that intended subsidy patterns are intact."
ADS program managers took the economic analysis a step further in 1997 by
conducting a survey of client ability to pay. Clients were asked about their
income; discretionary spending; and ownership of houses, vehicles, and
appliances.
Not surprisingly, clients living in larger cities were found to have
higher levels of income than those living in rural areas. In fact, median
incomes of clients at rural clinics were less than half of those of clients
at larger city clinics. For this reason, the researchers recommended that
ADS clinics in metropolitan areas charge more than those in rural areas.
The study also determined that even the poorest of clients used only one
percent of their annual income to pay for one year of gynecology services.
Such pricing information led the researchers to recommend that gynecology
services, along with other highly subsidized non-family planning services
offered by ADS, be priced closer to their actual cost.
Family planning services were priced needlessly low, as well. "I
think one lesson of the ability-to-pay study is that it challenges the
perception that the developing world is very homogenous in that no one is
able to pay anything," Bratt says. "Through the ability-to-pay
surveys, we have shown that people in some populations do have the resources
needed to purchase family planning, either outright or in place of other
goods or services that might be considered discretionary."
This knowledge is important to programs for many reasons. It can promote
sustainability, for example, and can encourage program managers to increase
access to people they had believed could not afford services.
Measuring productivity and profits
A recent economic analysis gave program managers at the Centro Médico de
Orientación y Planificación Familiar (CEMOPLAF) in Ecuador information
that could help them operate more profitably and potentially serve more
clients.2
As a nongovernmental organization operating numerous reproductive health
programs throughout Ecuador, CEMOPLAF began its first social marketing
project in 1996 selling family planning and reproductive health products to
physicians, pharmacies, and other nontraditional distribution outlets such
as liquor stores, brothels, hotels, and motels. By 1998, the project had
become such a success that it was earning approximately U.S. $67,000 a month
– a figure that represented a third of the entire organization’s gross
revenue. That year, CEMOPLAF expanded the project by employing sales agents
in 14 cities throughout Ecuador to sell reproductive health and family
planning products.
But the project’s rapid growth left it with an inadequate
infrastructure for analyzing the contribution of specific products and sales
efforts to profitability. Working with FHI and the Population Council
through the Frontiers in Reproductive Health (FRONTIERS) project, CEMOPLAF
program managers in 1998 established a financial analysis system to help
monitor sales trends, financial performance of regions, productivity of
sales agents and specific product brands, and overall profitability of the
project.
"The financial analysis provided information essential for sound
decision-making and program management," Bratt says. First, the
analysis showed that while the project was profitable, not all of its agents
were equally profitable. Seven of 25 sales agents lost money that year.
Agents working in the larger cities of Quito and Guayaquil were the most
profitable. In fact, while half of the agents lived in these cities, they
generated 80 percent of the program’s profits.
These results led researchers to recommend that project managers consider
new ways to compensate sales agents. Also, in areas where sales volumes were
too low to be profitable, they recommended consolidating sales areas,
eliminating sales agent positions, or both.
In addition, the analysis showed that inexpensive products could
contribute substantial revenues and profits if they are sold in large
quantities. CEMOPLAF’s most profitable social marketing product –
Protektor condoms – was one of the least expensive items sold by the
program, yet it generated one-third of program profits.
Labor management
Labor costs comprise the majority of fixed expenses incurred by programs.
Thus, determining staff productivity is essential.
Research conducted in three urban nongovernmental clinics in Ecuador in
1995, and four urban Ministry of Health maternal and child health clinics in
Jamaica in 1999, found that direct observation of day-to-day activities of
providers was the best way to evaluate how they spend their time. Other
measurement approaches, such as conducting provider interviews, having
providers chronicle their activities throughout the day, or interviewing
supervisors about providers’ performance, were found to be highly
subjective and to yield inaccurate information.3
An analysis conducted by FHI of the studies in Ecuador and Jamaica, as
well as studies in Bangladesh and Zimbabwe, found that many family planning
providers have unproductive time that could be harnessed to increase service
provision.4
The analysis found that the average time providers spent with clients in
the four studies varied from 30 percent in Bangladesh to 56 percent in
Ecuador. Unproductive time was found to vary from 19 percent in Zimbabwe for
an average clinic day to 46 percent in Bangladesh.
"We found that providers have substantial amounts of unproductive
time that can be used to increase the number of clients they see, but that
this time is not evenly distributed throughout the day," says Dr.
Barbara Janowitz, an FHI senior economist who analyzed data from the four
studies.
Jamaican clinics were especially busy from 10 a.m. until 1 p.m. During
this time, over 60 percent of provider time was spent with clients. But
before 9 a.m. and after 2 p.m., the percent of time spent with clients never
exceeded 25 percent. Similarly, in Zimbabwe, client contact time exceeded 40
percent only between the hours of 9 a.m. and noon.
 |
| Waiting for services at a family planning clinic in
the Dominican Republic. Studies show that clinics may be able to
serve more clients by encouraging visits when clinics are less busy. |
Making use of the time when clinics are less busy may involve changing
clinic operations. "Clients may be resistant to coming to the clinic at
different times if they are used to getting services at particular
times," Dr. Janowitz says. "So program managers may need to think
of ways to encourage them to come in earlier or later in the day.
"Providers may also be resistant to changing how they spend their
day unless incentives are offered to encourage them to work harder. In the
public sector, many of the salaries are very low. Providers may accept low
pay in return for a light workload, or they may reduce their work hours by
taking unauthorized leave so that they can augment their incomes with a
private practice in the afternoon. We can not ignore the fact that people
have to support their families."
Higher salaries, higher productivity?
Additional training and supervision of providers can improve the quality
of reproductive health services.5 In some cases, however,
programs might improve provider productivity by spending more on salaries
and less on training or supervision, Dr. Janowitz says. An analysis of three
Tanzanian community-based distribution (CBD) programs found that CBD workers
with higher salaries were more productive.6 "We found that
those workers who were paid higher salaries made more visits to
clients," says Dr. Janowitz, the study’s principal investigator.
CBD workers in the Tanzanian programs provided family planning services
to women in their homes. These included supplying and resupplying oral
contraceptive pills, spermicides, and condoms, and making referrals for
clinical family planning methods and maternal and child health care
services.
The study tallied training costs, benefits, travel allowances, salaries
and other forms of compensation to CBD workers and supervisors for each of
the three programs for 1995. By dividing these costs by the number of client
visits made by workers that year, the researchers were able to calculate the
average cost per visit incurred by each program.
While one program had low salaries, the study found that it also had the
highest "cost per visit" of the three CBD programs analyzed. This
was because the program’s training and supervision costs were high, while
the number of visits CBD workers made to clients was low. Conversely, the
program with the highest salaries maintained a low cost per visit by
distributing its high salary, training, and supervision costs over a greater
number of client visits.
"In deciding how to allocate funding for programs, managers also
need to consider the benefits of training and supervision in motivating
workers and increasing productivity," Dr. Janowitz says.
Research in Mali, for example, suggests that refresher training courses
may improve the family planning knowledge of CBD workers, which might lead
to higher productivity.7 "The extra training seemed to give
the workers more confidence and motivate them to work harder," says
Karen Katz, an FHI health services delivery researcher and principal author
of the Mali study. Spending more on supervisory visits is another measure
that some programs have implemented to improve productivity, although
research suggests that reducing the number of supervisory visits may not
affect the performance of CBD workers.8
"More research is needed to clarify such issues," Dr. Janowitz
says. Meanwhile, it is important for managers to take a broad approach in
making decisions about their program budgets and to consider all the
options."
– Emily Smith
References
- Bratt J, Araya J, Salguero J, et
al. Research to Support the Development of a Pricing Policy for Clinical
Reproductive Health Services Provided by ADS. Final Report. Research
Triangle Park, NC: Family Health International and Asociación Demográfica
Salvadoreña, 1998.
- Bratt J, Foreit J, Pinto E, et al. A
Financial Analysis of the CEMOPLAF Social Marketing Program. Final
Report. Washington: Frontiers in Reproductive Health, CEMOPLAF, Family
Health International, 2000.
- Bratt J, Foreit J, Pai-Lien C, et al. A
comparison of four approaches for measuring clinician time use. Health
Policy Plann 1999;14(4): 374-81; West C, Condon S, Janowitz B, et
al. Measuring Staff Time Use in Public Family Planning Clinics in
Kingston, Jamaica: A Comparison of Four Methods. Final Report. Research
Triangle Park, NC: Family Health International, 2001.
- Janowitz B. Issues of sustainability:
reproductive health services in developing countries. The International
Health Economics Association Third International Conference, York,
England, July 22-25, 2001; Janowitz B, Holtman M, Hubacher D, et al. Can
the Bangladeshi family planning program meet rising needs without
raising costs? Int Fam Plann Perspect 1997;23(3): 116-21; Bratt,
Foreit, Pai-Lien, et al; West.
- Stanback J, Brechin SG, Lynam P, et al.
The Effectiveness of National Dissemination of Updated Reproductive
Health/Family Planning Guidelines in Kenya. Research Triangle Park, NC:
Family Health International, 2001.
- Janowitz B, Chege J, Thompson A, et al.
Community-based distribution in Tanzania: costs and impacts of
alternative strategies to improve worker performance. Int Fam Plann
Perspect 2000;26(4):158-60,193-95.
- Katz K, West C, Doumbia F, et al.
Increasing access to family planning services in rural Mali through
community-based distribution. Int Fam Plann Perspect
1998;24(3):104-10.
- Foreit JR, Foreit KG. Quarterly versus
monthly supervision of CBD family planning programs: an experimental
study in Northeast Brazil. Stud Fam Plann 1984;15(3):112-20.
Managers Learn
to Analyze Costs
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Learning to analyze the costs of providing
specific services is one way family planning program managers have
responded to declining international donor funding.
In July 2001, for example, 13 program managers
and Ministry of Health financial officers from Uganda, Kenya,
Tanzania, and Zambia participated in a workshop on financial
management and economic evaluation led by FHI researchers at
Makerere University in Kampala, Uganda. Workshop participants
learned how to develop and interpret a "cost-effectiveness
analysis" and then to examine the costs of providing specific
program services. A similar workshop was held in Kampala in
September 1999. Makerere University has now incorporated the
workshop curriculum into its public health graduate program.
The Ugandan workshops are part of an ongoing
series of training sessions in selected countries worldwide that
are provided as a means to help program managers identify and
solve program problems. They are sponsored by the Frontiers in
Reproductive Health (FRONTIERS) project, of which the Population
Council is the prime partner, and the Regional Economic
Development Services Office for Eastern Southern Africa. FHI is
providing the economic analysis training.
"One reason why we offered the workshops
was that we realized program managers did not have experience
using economic concepts to improve services," says Rick
Homan, FHI senior associate for health economics and a workshop
trainer. "For example, a key concept that program managers
need to fully understand is the difference between ‘fixed’ and
‘variable’ expenses. Fixed expenses are not affected by small
changes in the level of program activity. They include things such
as rent and salaries. No matter how many clients visit a clinic,
programs still must cover such fixed expenses."
In contrast, variable expenses fluctuate
depending on program activity. The cost of supplies is a key
variable expense. More clients require more supplies; fewer
clients require fewer supplies. "It is important for program
managers to understand how fees compare to variable expenses so
that programs do not become victims of their own success,"
cautions Homan. "If they charge fees for services, they
should at least charge enough to cover the cost of supplies.
"Unless the fees are sufficiently high to
offset the variable expenses, each additional client will add more
to costs than to revenues," Homan adds. "This can
threaten the long-term sustainability of the program."
– Emily Smith
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