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 Email: michael.moeller@gtz.de

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

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

Sample of facilities

Missing data

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

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

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

For example

Actual Costs

COSTS OF ACTUAL SERVICES (2007)

Total Actual Costs in 2007

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

KEPH Costing – example normal delivery Health Centre 4,283 District Hospital 3,632 Tertiary Public 5795 District level NGO/FBO 6,289 District level Private 17,169 Show model?

Costs of Kenyan Essential Package of Care (2007) 14,600,014,704 35.2%

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

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

Distribution by KEPH service

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

Asante Sana