Health Economics Workshop: Costing exercise Monisha Sharma, PhD International Clinical Research Center (ICRC) University of Washington

Goals of costing exercise: To familiarize yourself with using excel costing tools To practice placing intervention costs into appropriate categories, annualizing, and discounting costs. To think about how to adapt costs collected from an RCT to estimate intervention costs.

Inflating costs to current value You are looking for the yearly cost of administering ART in Kenya. You find an estimate in the literature of $350 per year, but this is in 2014 dollars. Your cost analysis is in 2015 dollars Need to account for inflation. How do you adjust the ART cost for use in your analysis? Adjust for inflation using the consumer price index (CPI) Current cost ($) = (base year cost) * (Current CPI) / (Base year CPI)

Consumer price index (CPI) table (ie GDP deflator): Kenya Year CPI 2015 153.7 2014 140.8 … 2011 113.1 2010 102.1 2009 100 Obtain CPIs online from World Bank (online) Obtain 2014 and 2016 Kenya to US exchange rates (also from World Bank) Year Exchange rate 2015 92.0 2014 87.7

Convert to 2015 US dollars using 2015 exchange rate (94.0) Converting 2014 costs to 2015 Convert $350 US dollars to Kenyan Schillings using 2014 Kenyan to US exchange rate: 87.7 Current cost ($) = (base year cost) * (Current CPI) / (Base year CPI) 2014 CPI = 140.8 2015 CPI = 153.7 2014 ART cost= 350*87.7 =30,765 KSH 2015 ART Cost = 30,765 x (153.7/ 140.8) = 33,507 KSH Inflation-adjustment factor Convert to 2015 US dollars using 2015 exchange rate (94.0) =33,507/94 =$356 (2015 dollars) $350 in 2014 in Kenya=$356 in 2015

Costing exercise: Instructions You are conducting a microcosting of an HIV testing intervention run as an RCT in Kenya. Results will be used for a cost-effectiveness analysis Fill in the Excel spreadsheet provided to generate estimates of the total cost of the intervention if it were implemented by the Kenya Ministry of Health The sheets are linked and will populate the summary sheet automatically. Some boxes have formulas already written in (eg anniuty factor) and will fill in automatically.

Costing exercise: Instructions cont’d Boxes in blue can be filled in with words (description of items included in costing) Boxes in yellow can be filled in with numbers Boxes in green populate automatically and should not be altered Assumptions: Vehicles have 5 years of useful life Furniture has 10 years of useful life Discount rate: 3% Costs are in 2015 US dollars

COSTING EXERCISE

Start up costs: Staff hiring Interview HR and managers (and others involved in hiring) Ask about time and money spent advertising positions, interviewing, shortlisting, and offering positions. Assess time spent by each staff member How would this process be different in government intervention? Would staff structure be different? Interviewing   Panel interviews Time costs (Kenyan Shillings) Position Time for interviews (hours) Staff responsible # positions field coordinator HR Upper management total cost cost/position hired Health advisors 28 HR, field coordinator, senior nurse 12 290,326 $34,838 $20,709 $84,580 $7,048 7 HR, upper management 1 7,258 $8,709 $5,177 $21,145 data manager HR, field coordinator, upper management office assistant HR, field coordinator, upper management, accountant $7,258

Start up costs: Staff training How many staff were trained? Assess time costs of staff responsible for training Supplies Per diem External speakers Remove research costs Training on human subjects, research practices TRAINING (assuming 5 years of useful life) Time costs: Kenyan shillings Position Training type Staff responsible # days # hours # new staff trained Employee salaries Project manager field coordinator Employee cost total cost Health Advisor In office 10 80 12 744,000 $44,239 $69,124 $411,428 $524,792 In field senior health advisor 1 8   $41,142 Observation 4 32 $164,571 Field coordinator senior admin 1,464,000 $99,539 $67,465 $167,004 Office assistant 5 40 1,044,000 $49,769 $24,055 $73,824

My actual costing sheets

My actual costing sheets

Thank You! Email: msharma1@uw.edu