6059.pdf
Media
- extracted text
-
5
c
£
■
COSTS AND FINANCING OF
PARIVAR SEVA SANSTHA
- A CASE STUDY -
February 1989
■ '?''av I
5’' •
1
ACKNOWLEDGEMENTS
>
This case study was sponsored by The Ford Foundation, New
Delhi office, under the supervision of Dr. Peter Berman.
The staff at Parivar Seva Sanstha gave generously of their
time and data in support of the study.
The report was prepared by Ms. Priti Dave, Research
Associate, The Ford Foundation, New Delhi.
I
CONTENTS
PAGE
INTRODUCTION
1
PART 1 BACKGROUND
3
PART 2 CONSOLIDATED STRUCTURE OF REVENUE AND COSTS
6
PART 3 COMPARATIVE COST RECOVERY OF TWO CLINICS
9
PART 4 COSTS AND FINANCES OF THE MOBILE SERVICE - MEWAT
13
PART 5 ISSUES IN FINANCING
16
Charts
Tables 1-7
INTRODUCTION
This study forms part of a wider research study of the
costs and finances of selected voluntary health projects from the
"Anubhav" series (1). The study has the broad objective of
reviewing the different experiences of voluntary organizations in
the costs and financing of health programs. It aims:
to describe the sources of financing of programs and in
particular any innovative efforts at self-financing.
to develop cost estimates of certain service programs.
to highlight any financial constraints within which
voluntary agencies operate.
to share the varied experiences of voluntary agencies in
health costs and financing, and to discuss the wider
implications of financing issues arising from the research
findings.
PARIVAR SEVA SANSTHA: Case study No.3
Parivar Seva Sanstha (PSS) is a voluntary organization
which caters almost exclusively to the health needs of women. Its
focus is the provision of family planning and reproductive health
services. Services are delivered through clinics, the two main
clinic services are "Medical Termination of Pregnancy" (MTP) and
sterilization operation. The organization is currently managing 22
clinics located in 8 different states and a union territory, all of
which are urban based. In addition to the clinics PSS is also
operating a number of independent projects, one of which is a rural
mobile service providing maternal and child health care.
The hallmark of PSS is its managerial style of program
administration. An extensive information system has been instituted
which allows the New Delhi based Head Office to plan, monitor and
evaluate clinic services and projects. Amongst the management
indices are a number of financial indicators which help both
maintain clinic accountability and help monitor clinic
performance.
. 1. "Anubhav", experiences in community health, series of case
studies documenting the experiences of voluntary agencies in
community health service provision. The Ford Foundation,
1987-88
2
This study:
(1)
Examines the consolidated structure of finances and costs,
and assesses the current overall financial position of the
organization.
(2)
Analyses the cost distribution of clinics and the level of
cost recovery achieved.
(3)
Looks at the financial indicators used to monitor costs
and clinic performance, and explores the possible reasons
for differential performances.
(4)
Calculates the total and average costs of mobile service
programs.
The report is divided into five parts. Part 1 provides the
background to the study. It outlines the main services provided at
the clinics and by. the mobile service. The management indices
constructed to help monitor clinic performance are described.
Finally, the philosophical beliefs on which the project is based
are discussed and some study interests stated. Part 2 examines the
consolidated structure of revenue and costs. The total income from
all sources is reconciled with total expenditure, and the
financial position of the organization is assessed. Part 3 analyzes
and compares cost recovery experience in two Delhi based clinics.
The factors affecting their capacity to generate fee revenue are
explored. Part 4 examines the costs of the mobile service in the
state of Haryana. Total costs of individual service programs are
estimated by cost allocation, and average costs calculated. Part 5
pulls together the main research findings and discusses the
financing issues arising from the study.
•A
3
PART 1
BACKGROUND
PSS was established with the main objective of providing
easily accessible and safe family planning and women's reproductive
health services. Services are rendered through a network of
clinics. In 1988 there were 22 clinics located in 8 states and one
union territory. All the clinics are urban based, they have a
similar pattern of staffing and offer identical services. The first
point of contact is with the clinic counsellor who takes a detailed
case history of the patient and identifies the possible course of
treatment. Doctors and paramedics conduct the medical procedure.
Community based volunteers are employed by the organization to
identify and motivate potential clients to come to the clinic for
family planning services. The community worker is paid a monthly
honorarium by the project, and in addition receives incentive
related payments per client motivated.
Services available at the clinic are:
Medical Termination of Pregnancy (MTP) - abortions are
conducted on the clinic premises, where there is a fully equipped
operating theatre. Patients are transferred from the theatre to a
post operative room and discharged a few hours later. Women who
undergo an MTP are motivated to adopt either a temporary or
permanent method of contraception.
Family Planning Services - (a) sterilization operations,
(both tubectomy and vasectomy) are conducted at the clinic,
although the latter are relatively few in number, (b) IUD
insertions.
Obstetrics - ante natal, intra-natal and post natal
services are amongst the obstetric services available.
Gynecological services - eg. menstrual regulation and
other.
In addition to the clinics, the organization also operates
a number of independent projects, for example, social marketing of
contraceptives and a mobile health project. Other projects such as
the birth and marriage registration scheme are actually managed
through the clinics. In May 1987, PSS extended it's services via a
mobile van to a rural area in the state of Haryana. However, due to
the absence of basic health facilities in the locality and a great
resistance to family planning services, a more broad based health
strategy was provided. The van, staffed by a doctor and auxiliary
workers, delivers curative and maternal and child health care. Each
day, the van leaves the service head quarters in "Gurgaon" and
visits one village. The service covers 30 villages, a total
population of 50,000. Villages are visited in blocks of ten per
month, therefore one village is initially visited intensively
(approximately twice a month).
!
4
Financial Management
Due to the wide geographical dispersal of the clinics (in 8
states and a union territory), PSS has been forced to delegate a
considerable degree of financial responsibility to individual
clinics. Financial accountability is maintained through an
extensive reporting and monitoring system. There is an upward flow
of information from the clinics to the Head Office. The information
is consolidated at the Head Office and management indicators are
constructed. Feedback is then provided on clinic performance, and
management decisions taken on the basis of these indices.
Budget estimates are submitted by the clinics each month
indicating the funds required for the period. The expected income
and expenditure during the month, and the expected level of
subsidized care are forecast. Deficit funds required from the Head
Office are then calculated. At the end of the month the clinics
submit a monthly report outlining the actual number of procedures
undertaken, eg. number of MTPs, sterilizations, etc. A financial
statement containing information on actual monthly income and
expenditure is also prepared by the clinics. Receipts, bills and
cash memos provide substantiating evidence of income and
expenditure. On the basis of the two reports a number of management
indices are constructed. Firstly, MTP procedures and sterilizations
are converted to MTP equivalents (MTP eqs), where one sterilization
is equated to two MTPs. The surplus or deficit per MTP equivalent
is then calculated, this represents the fee revenue minus total
cost, divided by MTP equivalent. Other management indices
constructed are:
the ratio of salary cost to fee income
the % drug cost to fee income
annual productivity indicators:- the full time staff
equivalents (FTSE) of clinics are estimated by apportioning joint
clinic staff according to the number of clinics served. For
example, if a doctor visits 4 clinics with equal service time then
each clinic is assigned 0.25 FTSEs. From this measure two
indicators are constructed: (i) the fee income per year per FTSE,
and (ii) the number of MTP eqs. per year per FTSE.
Couple years protected (CYP): are estimated for each family
planning procedure. The number of MTPs, tubectomies, IUDs inserted,
etc, are all multiplied by an arbitrarily set factor to calculate
the total number of CYP during the month. The cumulative or Year to
date (YTD) cost per CYP is then estimated, and the cumulative YTD
fee revenue minus total YTD cost per CYP.
5
On the basis of the above indicators the performance of
the organization over a period of time can be monitored, (e.g.
seasonal fluctuations). The comparative performances of clinics at
one point in time can also be assessed. Reasons for fluctuations in
performance are ascertained, and if possible corrective action
taken. The Head Office consolidates clinic/project information and
constructs monthly financial statements, so that at any one time
the exact financial situation of the organization can be assessed.
Philosophy
PSS believes that a social welfare program can be run
in much the same way as a private business. Corporate management
techniques can be used to help ensure that scarce resources are
utilized in the most efficient manner. The use of these management
indicators to monitor performance is of research interest.
•
PSS provides a mix of services, some of which carry a
charge and others which are provided free of charge. Implicit is
the belief that consumers are able and willing to pay for certain
health services, while for other services there should be no price
barrier. For a third category of service, "sterilization", patients
should be actually paid financial incentives for service uptake.
The level of cost recovery is of interest, and particularly if the
revenue generated through fee services is sufficient to cover the
costs of both the fee and non-fee services.
6
PART 2
CONSOLIDATED STRUCTURE OF REVENUE AND COSTS
This part of the report examines the overall pattern of
income and expenditure of the organization. On the income side, the
sources and levels of revenue are analyzed and the structure of fee
revenue investigated. On the expenditure side, the total costs and
the distribution of cost components are examined. The financial
performance of the organization is then assessed. The percentage of
costs recovered through fees is calculated and the financial
indicators used to monitor costs examined.
1.
REVENUE STRUCTURE
The total revenue in 1987 was Rs.126.94 lakhs. There were
three main sources of income: (a) fee-revenue, (b) donations and
(c) government grants. Pie chart 1 displays the consolidated
revenue structure of PSS in 1987. Fee-revenue accounts for the
single largest source at 55% of total income, donations 28%, (of
which overseas donors contributed 27% and domestic donors 1%) and
government grants 16%. Each source is examined in turn.
(a) Fees
Fees are levied for some clinic services. For example,
abortion, delivery and gynecological services all carry charges.
Immunizations and sterilization operations are provided free of
charge. Pie chart 2 displays the percentage composition of fee
collections by service item in 1987. It shows that charges for
Medical Termination of Pregnancy (MTP) account for the main source
of- fee revenue at 82%. Drug sales represent 7% of total fee income,
consultancy charges 6% and other 6%.
The charge for an MTP varies according to the stage of the
pregnancy, the fee progressively increases in each trimester. Fees
are not otticialiy
officially graaea
graded to tne
the paying capacity or
of the
ine client, out
but
if the patient is unable to meet the full amount then financial aid
from a special subsidy fund is provided. Eligibility for subsidized
care is judged by the clinic counsellor on a discretionary basis.
The appearance of the client together with informal questioning
form the basis of assessment. The subsidy provided may vary from 5%
of the total cost of care to almost 100% subsidy.
Sterilization operations are provided free of charge, and
. clients receive government incentive payments to undergo the
operation. Those patients undergoing an MTP followed by a tubectomy
are not charged for the MTP, with the exception of a few clinics in
Delhi and Calcutta where there is a nominal MTP fee (currently Rs
45.00). The balance of the full MTP charge is met by the subsidized
fund.
7
Pricing strategy
Service fees vary from clinic to clinic. The price of an
MTP is dependent primarily on the location of the clinic. The
socio-economic status and conseguent paying capacity of the client
population is firstly determined. A market survey of private
practitioners offering similar services is also undertaken, and the
prices charged by them are considered when the fee level is set.
(b) Donations
PSS receives assistance from overseas donors. Population
Services Europe, Population Crisis Committee and the European
Economic Community are the current funding donors. In India,
private companies, trusts and individuals provide additional
assistance.
(c) Government Grants
The central government provides assistance towards the
start up costs of clinics. Under NGO/Government collaborative
funding the pattern of contribution is 25%:75% respectively. The
recurrent costs of clinics are met by the government on a declining
scale over a period of five years, whereafter PSS inherits full
financial responsibility. A government grant is also provided for
the maintenance of family planning beds, as well as cash incentives
for FP motivation. In addition to the cash grant the government
provides assistance in-kind, in the form of supplies of condoms,
oral contraceptives, IUDs, vaccines and folic iron tablets.
The Government of India (GDI) is currently meeting 100% of
the costs of the mobile service in the state of Haryana.
2.
COST STRUCTURE
The total cost of all clinics and projects in 1987 was
Rs.119.6 lakhs. Table 1 shows the cost breakdown of the PSS
clinics, GOI aided clinics, projects and the start up costs of two
new GOI aided clinics. As explained earlier GOI provides financial
assistance on a declining scale for a period of five years, after
which PSS inherits full financial responsibility. For the clinics,
salaries represent the largest cost item at 46%. Clinic rent
accounts for 12% of total expenditure. This is a reflection of the
high rents faced by urban based clinics. Drugs and supplies account
for 11% of the expenditure, this excludes the cost of supplies
donated in kind by the government.
3
3.
FINANCIAL PERFORMANCE
Reconciling total revenue in 1987 (Rs.126.94 lakhs), with
the total recurrent cost (Rs.119.6 lakhs), results in an
operational surplus in the previous year of Rs.7.34 lakhs. Annual
depreciation of PSS clinics is valued at Rs.6.65 lakhs. This
represents depreciation on clinic equipment and furniture.
Including the depreciation cost results in a surplus of Rs.0.69
lakhs. Thus, all funds combined in the previous year covered, with
a substantial margin, all program costs.
Clinic cost recovery
This section investigates the proportion of total costs
recovered through fees^. The total fee revenue in 1987 was
Rs 70 42,332, and the total clinic expenditure (excluding project
costs) Rs.74,67,000. Thus, 94% of clinic costs were recovered
through fees. The clinics are, therefore, almost 100% self
financing.
Table 2 analyses the cost recovery in the 16 PSS clinics
and 5 GOI aided clinics for a sample month (May 1988). The total
fee income of all clinics in the month was Rs.7,87,332, and the
cost Rs.10,27,143. Thus, percentage cost recovery for the month
equals 76.65%. This is in fact lower than the actual overall cost
recovery achieved by the clinics in 1987. There is a marked
difference in the levels of cost recovery of PSS and GOI clinics,
83% of costs were recovered at the PSS clinics and only 48% at GOI
clinics. The lower performance of the GOI clinics is explained by
the fact that these clinics are relatively new, all are less than
one year old. The potential for cost recovery at the climes, as
shown by the more well established clinics, is considerable.
Table 2 also shows the distribution of cost components for
the clinics. It is slightly different to the distribution in table
1. Firstly, because table 1 shows annual costs, whereas table 2
shows costs for a sample month. Secondly, because the other cost
head has been separated out (staff incentives, promotion, and
travel), as have the head office support expenses. Staff incentives
account for 8% of total expenditure and represent the incentives
paid to workers for successfully motivating a client to undergo
sterilization.
The cost per MTP equivalent is estimated. For all clinics
it is Rs.270 per MTP eq. [separately, PSS (Rs.251) and GOI (Rs.400)
per MTP eq ]. The deficit per MTP eq. represents the net deficit
(ie. fee revenue minus total cost), divided by the number of MTP
eqs. The deficit for all clinics is Rs.63.10 per MTP eq.
1. At present there is no cost recovery from the individual
projects.
9
PART 3
COMPARATIVE COST RECOVERY OF TWO CLINICS
This part of the report compares the levels of cost
recovery achieved by two Delhi based PSS clinics, Karol Bagh (KB)
and Nangloi (NG). The possible reasons for their differential
performances are explored.
THE CLINICS
Karol Bagh is the oldest of the PSS clinics. Established
in 1978, it is located in a busy, commercial area of Delhi. Nangloi
is a newer clinic. It was opened in 1984 in a comparatively poorer
suburb of south Delhi. Both clinics provide the same services,
however, KB has a higher number of personnel or full time staff
equivalents.
COST RECOVERY
Table 3 analyses the percentage cost recovery of each
clinic in a sample month (May 1988). The total monthly fee revenue
in KB and NG clinics were, Rs.1,02,167 and Rs.33,505 respect!vely.
The total monthly expenditure in KB was Rs.79,502, and in NG
Rs.53,633. Thus, the percentage of costs recovered through fees in
the two clinics were, KB (128.5%) and NG (62.47%). KB clinic
covered in excess of its total recurrent costs, and as a result the
surplus revenue generated at this clinic helped subsidize the
costs of care in other clinics which failed to recover their costs
fully, such as NG clinic. The possible reasons for this large
difference in fee performance is investigated below.
Fee structures
The structure of fee revenue of each clinic is shown below.
Fee-item
MTP
Preg.test
Drugs
Multi load
Other
Total
Clinic
Nangloi
(%)
Karol Bagh
(Rs)
(Rs)
28,795
(90.49)
92,452
870
(2.69)
2,750
530
(2.73)
2,790
(1.00)
1,020
(3.090) 3,310
3,155
33,505
(100)
1,02,167
(%)
(85.94)
(2.60)
(1.58)
(
- )
(9.88)
(100)
The fee structures of the two clinics are not markedly
_
______
different. Income from MTPs comprise the largest percentage in
both clinics. Charges for an MTP at KB, however, are higher than
NG at each stage of pregnancy and this may explain, in part, why
the fee generation is higher in KB. For example, for up to 8 weeks
gestation the MTP fee at KB is Rs.380.00 and in NG Rs.220.00, a
difference of Rs.160.00. As explained earlier the fee level is
10
dependent on the clinic location and paying capacity of the
catchment population.
Socio-economic status of clients
Table 4 shows the socio-economic profile of clients for MTP
and sterilization services in the two clinics. Comparing the socio
economic composition of MTP clients in KB and NG with the overall
composition in all clinics, KB exhibits a higher then average
number of patients from the higher income groups, (43% of clients
earn in excess of Rs.1500 a month, compared to 24% in all clinics).
In contrast, only 7% of NG MTP clients come from this income
category, the majority of patients fall in the Rs.151-500 or
Rs.501- 1000 income groups.
The socio-economic status of sterilization clients do not
vary substantially between the two clinics. The majority of
patients in both clinics earn between Rs.150 - 1000 a month.
Although again, KB shows a higher than average number of clients in
the top income group (14% compared to 3% in NG, and 5.55% in all
clinics).
Volume of subsidised care
The total volume of subsidized care provided in the two
clinics during the month varied. In KB, Rs.12,418 worth of care was
provided free, (or 12.15% of total income), and in NG, Rs.10,970,
(or 32.74% of total income). Therefore, a higher level of
subsidized care was given at NG relative to income. It was not
possible to establish from the records the number of people in each
clinic who received subsidised care, only the overall volume. Part
of the subsidy represents the cost difference in cases where an MTP
procedure and a sterilization have been performed.
Service mix
There were 52 MTP/sterilizations at NG during the month out
of a total 109 sterilizations. This compares to 20
MTP/sterilizations at KB out of a total of 36 sterilizations. Thus,
NG is conducting comparatively more sterilizations and a large
number of MTPs with sterilization. This feature of NG clinic limits
the scope for cost recovery.
Cost structure
Table 3 shows the cost breakdown of the two clinics
separated into operating (or direct service) costs and overhead (or
support service) costs. The two clinics show roughly equal
proportions of operating to over head costs. They, however, exhibit
markedly different cost distributions, see bar chart 1. The
proportionate cost of salaries in KB is higher then in NG, 40% of
total cost compared to 29%. This reflects the greater number of
11
personnel in KB clinic. There is also a proportionate cost
difference in rent between the two clinics. KB rent takes a larger
slice of total expenditure due to the expensive locality of the
clinic. The largest cost difference is in the volume of incentive
payments given in the two clinics. Incentives at NG represent 13%
of total cost, while in KB they account for only 4%. NG undertook a
higher number of sterilizations during the month, 109 operations
compared to only 36 in KB.
FINANCIAL INDICATORS
The cost per MTP eq. is calculated in table 5. The number
of MTP eqs are, KB (306) and NG (382), giving a cost per MTP eq. of
Rs.259.80 and Rs.140.40 respectively. The lower unit cost in NG is
a result of the higher number of sterilizations in the clinic, (2
sterilizations are equal to 1 MTP procedure). In KB there is an
overall surplus per MTP eq.( fee revenue minus cost) of Rs.74.07, a
reflection of the excess of fee revenue to cost in KB. In
I", contrast,
in NG there is a deficit per MTP eq of Rs.52.00.
Other indicators
Nangloi
Karol Baqh
(1) deficit/surplus per MTP eq.(Rs)
(2) ratio fee income to payroll
(3) % drug cost to fee income
- Productivity
(4) fee income/year/employees
(5) MTP eq./year/employees
7.7%
-52.69
2.19:1
16.46%
92,528
277
39,225
447
+74.07
3.28:1
Variations in the first three indicators are a reflection
of the differences in fee generation between the two clinics. The
fourth indicator is a reflection of the difference in fee revenue
and number of staff in each clinic. Variation in indicator number
five is explained by the higher number of sterilizations in NG, and
again the difference in the number of staff.
Summary
A number of factors were found to affect the capacity of a
clinic to raise fee revenue. The differential fee performances of
the two Delhi based clinics, Karol Bagh and Nangloi, were related
to the following characteristics:
the age of the clinic: Karol Bagh, the older and well
established clinic demonstrated a higher service utilization rate
than Nangloi.
clinic location and the consequent socio-economic status of
the catchment population: The price of an MTP procedure is fixed
with reference to the paying capacity of clients. The fee^at KB is
Z w
06051
0<>C'
' v*" A ,Z
12
higher then at NG, and as a result more revenue is generated at
this clinic per MTP procedure. Furthermore, a higher proportion of
MTP clients in NG receive subsidized care, again reflecting the
lower paying capacity of NG. This was confirmed by the socio
economic profile of clients from the two clinics. KB clinic has
proportionately more patients from the higher income groups,
whereas the majority of NG clients are from the lower income
groups.
the "mix of services" provided: The clinics provide two
main services, MTP and sterilization. The former procedure carries
a charge, and for the latter clients actually receive an incentive
payment. In some cases an MTP procedure is followed by a
sterilization operation. Clearly, the proportionate numbers of each
type of procedure undertaken will have a direct bearing on a
clinic's financial performance. There were a higher number of
sterilization operations at NG during the sample month and also a
high number of MTPs followed by a sterilization. This limits the
ability of the clinic to raise fee revenue and increases the volume
of incentive payments.
13
PART 4
COSTS AND FINANCES OF THE MOBILE SERVICE - MEWAT
The cost of the mobile service is met in full by the
Government of India (GOI). In addition to the grant GOI also
provides the project with donations "in-kind", (such as, vaccines,
vitamin A solution and contraceptive supplies).
Table 5 shows the total cost and the distribution of cost
components of the mobile service for a period of six months (April
1988-September 1988). The total cost for the period was Rs.2.14
lakhs. Salaries and honoraria payments account for the largest cost
component at 51% of total costs. Drugs/supplies represent 17% of
expenditure. This amount excludes the cost of drugs/supplies
donated in-kind by the government. The cost of petrol, oil and
lubricants (POL) accounts for only 5.56% of cost, this is usually a
fairly large component of a mobile strategy. The van was newly
purchased in September 1987 at project inception, and as a result
there were no significant repair and maintenance costs during the
period. The line item "IEC" (Information, Education and
Communication) represents the cost of materials for family planning
and health education. The rent is for the head office located in
Gurgaon. Bar chart 2 displays the cost structure of the mobile
service.
The catchment population of the project is 50,000, the per
capita cost for six months is therefore, Rs.4.28 (or annual per
capita cost, Rs.8.56).
Total costs of service programs
The total costs of individual mobile service programs were
estimated. The main service categories of the mobile are:
Curative Care (CC); this includes all personal services to
cure illness, including curative care given to pregnant
women and children under five.
Maternal and Child Health/Family Planning (MCH/FP);
includes all pre-natal and post natal care, plus tetanus
toxoid vaccine, iron supplementation. Immunization and
weighing of children, Vitamin A and iron supplementation.
All FP services.
Other; this category includes health education activities,
drugs maintenance, record keeping, etc.
The method of cost estimation is described.
Methodology
All costs are estimated for a period of one month. Table 6
shows the monthly total cost estimates and distribution of cost
components of the mobile service programs. Line item costs were
14
apportioned to service categories in the following way:
(i)
Salaries - staff salaries were apportioned to service
categories in relation to their service time distribution.
For example, if the doctor spends 50% of her time on CC,
40% on MCH/FP and 10% on "other" activities, then her
monthly salary is apportioned accordingly. The distribution
of staff service time was determined by questioning the
project manager. The salary costs of the support staff
(driver, security guard and manager) were allocated in
proportion to the service time distribution of the direct
'mobile service staff. The service time distribution of the
community based volunteer was also determined and her
honoraria payment allocated proportionately to services.
(ii)
Drugs/supplies - the cost of curative drugs used by the
mobile in a month was estimated by averaging the actual
expenditure on drugs for six months, (see table 5). This
amount was allocated directly to the curative care
category. The "drug/supply" cost head in the MCH/FP program
represents the imputed cost of vaccines and drugs supplied
"in-kind" by the government. The average number of, DPT,
Polio, BCG, measles and tetanus toxoid doses, and the
number of iron folic tablets distributed in a month were
estimated by taking the average number of actual contacts
in a six month period. The cost of this quantity of vaccine
and iron tablets was allocated to the MCH/FP "drug supply"
cost head.
(iii)
Petrol., oil, lubricants (POL) - the average monthly cost of
POL was estimated from the actual expenditure for six
months. This cost was apportioned between the services
according to the service time distribution of the mobile
staff.
(iv)
IEC - the average monthly cost was allocated to the ’’other"
category.
(v)
Office expenses - the average monthly cost was allocated to
services in proportion to staff service time distribution.
The costs omitted in the analysis were head office support
costs, rent, staff training and capital expenses.
Data
The largest program in terms of cost is the CC program, it
accounts for 42.1% of total costs (this category includes curative
care administered to pregnant women and children under five years).
The "other" service category represents 36.5% of the expenditure,
and the MCH/FP program 21.4%. The service programs exhibit
different cost distributions. For example, salaries represent the
largest cost component in the MCH/FP category (70.32%) and the
15
"other" category (68%), while in the CC program the largest cost
item is drugs/supply (53%). Salaries account for only 37% of CC
cost.
Average costs
Table 7 shows the average cost estimates for CC and MCH/FP
services. Average cost represents the cost per service output, it
is calculated by dividing the total cost by the service output. The
measures of output used were the average number of monthly service
contacts, estimated from actual contacts over a six month period.
Contacts were categorized into either curative contacts or MCH/FP
contacts. The latter category includes all immunizations given,
iron tablets distributed and ante-natal check ups. The project does
not keep a record of the number of children weighed or post-natal
check ups, and therefore these contacts could not be included in
the calculation. An average cost for the category "other" is not
estimated as there is no meaningful output indicator.
The average cost of a CC contact is estimated to be
Rs.4.05 and that of a MCH/FP contact Rs.6.78.
16
PART 5
ISSUES IN FINANCING
This part of the report draws together the main findings of
the study and discusses the financing issues arising from the
research. The use of management indices to monitor and evaluate the
performances of clinics is discussed, and the factors affecting the
financial performance of clinics summarized. Finally, the costs and
finances of the mobile service are discussed.
MANAGEMENT INDICATORS
Despite the wide geographical dispersal of PSS clinics, the
organization is able to maintain clinic accountability and monitor
performance through an extensive management reporting system.
Financial indicators such as cost of an MTP equivalent, are
constructed and used to help monitor changes in clinic performance
over time, or to compare the performance of several clinics at the
same point in time. Such measures can help gain substantial
increases in productivity and lead to increased efficiency in
resource use. For example, to monitor the volume of fee income, or
expenditure on drugs relative to the number of procedures
undertaken, etc.
There are no indicators at present that address the equity
concerns of service provision, ie to ensure that services are also
reaching the poor. For example, clinics are set two goals: to (1)
maximize the number of MTP eqs. and (2) maximize costrecovery.
These two objectives can conflict in the case of sterilizations,
since the operation is conducted free of charge (affecting the 2nd
objective) and the fact that one sterilization is equated to two
MTP eqs (affecting the 1st objective). Clinics tend to give more
importance to the second goal, that of cost recovery. To counteract
this tendency and also help monitor service provision to the poor,
an MTP eq. given to a poor person could be given more weightage
than that given to an affording patient.
COST RECOVERY
The potential of a clinic to recover costs by levying fees
is considerable. The percentage of clinic costs that were
recovered through fees in 1987 was 94%. Overall, the organization
(clinics and projects combined) achieved 59% cost recovery in the
year. Within clinics, however, there is a large variation in fee
performance. Some clinics, eg. Karol Bagh actually cover in excess
of their costs (130%), and other clinics cover barely 50% of costs.
Therefore, clinics with high cost recovery are cross subsidizing
those with lower cost recovery. A number of factors were found to
affect the capacity of a clinic to raise fee income. The two main
were, (1) the socio-economic composition of clients and (2) the
"mix of services" provided.
17
(1) Clinic fee levels are set in relation to the paying
capacity of patients. Charges for an MTP, as a result, vary from
clinic to clinic. In addition, each clinic has a subsidized fund
from which patients judged unable to meet the full costs of care
receive assistance. Clearly, the lower the socio-economic status of
clients, the higher the expected volume of subsidized care
provided.
(2) The two main clinic services are, MTP and
sterilization. The former procedure carries a charge and for the
latter the project pays the client a financial incentive to undergo
the operation. The proportionate numbers of each type of procedure
undertaken in a month directly affects the financial status of the
clinic.
In fact, the comparative study of the cost recovery of two
Delhi based clinics showed that the clinic serving patients largely
from lower socio-economic classes also undertook more
sterilizations relative to the number of MTPs. It is not possible,
with the existing data, to deduce a conclusive link between the two
factors, ie lower income status with sterilization acceptance, or
lower income status with less MTPs. For example, is there a
correlation between being poor and the decision to undergo a
sterilization operation? or conversely, does the prospect of a
charge for an MTP deter the poor from taking up the service,
(albeit a reduced charge)? To disentangle such a connection would
require a comparative study of a cross section of clinics with both
differing socio-economic composition and service mix.
MOBILE SERVICE
The mobile project is funded entirely by a government
grant. The capacity for fee recovery at this level is limited.
Patients appear unwilling to contribute to service costs,
especially for preventive services. In addition, the project found
great resistance to family planning acceptance in the area.
The cost estimation of mobile services indicated that the
curative care program component is the largest in cost terms. The
drug cost of this service accounted for 53% of total cost. It is
likely that patients may be more willing to pay a nominal
contribution towards drug costs, as the benefits are more tangible.
The average cost of a curative care contact is estimated to be
Rs.4.05, of which the drug cost comprises approximately Rs.2.15. In
contrast, the MCH/FP cost is composed largely of salary costs,
approximately 70% of total service expenditure. Salary cost can be
viewed a semi-fixed cost, therefore average costs will decline with
increased service output. In fact, the average cost estimate of the
18
MCH/FP program (Rs. 6.78) is an overestimate as certain service
contacts, eg. number of children weighed and post-natal contacts
are not maintained by the project, and they are therefore omitted
in the calculation.
Average costs are useful indicators of service efficiency.
If estimated regularly, (as in the clinic services), they can serve
as a valuable management indicator.
Pie Chart 1
Revenue structure
Parivar Seva Sanstha (1987)
Fees 55%
(Rs. 70,42,337)
Other conation 1%
(Rs.1,72,018)
Govt grants 15%
(Rs.19,99,952)
O'seas donations 27%
(Rs.34,79,646)
Pic Chart 2
Structure of fee revenue
Parivar Seva Sanstha (1987)
MTP 82%
(Rs.57,73,245)
j
Other 6%
^/(Rs3,96,092)
Drugs/i eject's 7%
(Rs. 4,73,491)
Consultancy 6%
(Rs. 3,99,509)
Ikir Chart 1
Comparative cost structure
Karol Bhag and Nangloi clinics
(%)
50
40
30 20 10 0
Salaries
Drugs
Incentives
Travel Rent/ratesPromotion Admin. Head Office
E■ Karol Bhag
Nangloi
Bar Chart 2
Cost structure of mobile service
Mewat Project (April to Sept. 1988)
100%
75% -
VXXXXXXXXXXXX\XXXXXXXXXXXXXXXXXXVXXXXKX\XXXX>
50% -
25%
0%
PSS
% cost
■B Salaries
Drugs
Htl Office Exp.
Rent
E3 POL
Head Office
TABLE 1
CONSOLIDATED COST STRUCTURE
OF PARIVAR SEVA SANSTHA (1987)
PROJECT AND CLINICS (Rs. Lakhs)
Expense Item
PSS
Cl inics
GOI
Clinics
Total
%
Drugs/supplies
7.10
0.9
8.00
(10.74)
Salaries
29.93
4.14
34.07
(45.74)
Rent
7.30
1.66
8.96
(12.04)
Repair & Maint.
1.96
2.39
4.35
( 5.84)
Laundry
0.43
0.07
0.50
( 0.67)
Administration
4.15
1.11
5.26
( 7.06)
Other
8.55
4.79
13.34
(17.91)
Total
59.42
15.06
74.48
(100.0)
Total (%)
(49.68) (12.59)
Projects
New GOI
Clinics
44.93
0.19
Grand
Total
119.6
(37.57) (0.16) (100.00)
TABLE 2
MONTHLY COST RECOVERY OF CLINICS
(Rs.)
Total all
Clinics
Expense Item
PSS
Clinics
(16)
GO I
(5)
Fee Income
6,96,422
90,910
7,87,332
2,89,696
66,067
3,52,763
34.34
Drugs/supplies
82,132
12,661
94,793
9.23
Staff incentives
71,344
10,313
81,657
7.95
Travel
32,664
7,427
40,091
3.90
Rent
94,104
26,635
1,20,739
11.75
Promotion
95,388
20,675
1,16,063
11.30
Office/Admin.
86,784
22,974
1,09,758
10.69
Head office
84,784
26,495
1,11,279
10.83
Total Cost
8,36,896
1 90,247
10,27,143
(100.00)
(%)
(81.48)
(18.52)
(100.0)
% Cost recovery
83.21
47.78
76.65
No. of MTPS*
3331
475
3806
Cost per MTP
251.24
400.52
269.87
Deficit per MTP
-42.17
-209.13
-63.01
(%)
COSTS
Salaries
*
Sterilizations converted to MTP equivalents
Source: Consolidated monthly financial report
TABLE 3
MONTHLY COST RECOVERY AT
KAROL BAGH AND NANGLOI CLINICS
(Rs.)
Karol Bagh
Fee Income
(%)
Nangloi
(%)
33,505
1,02,167
COST
a) Operating expenses
Medical salaries
Drugs/supplies
Incentives
21,925
7,957
3,062
Sub-Total
32,944
(41.44)
%
(27.58)
(10.01)
( 3.85)
7,313
5,515
6,999
(13.64)
(10.28)
(13.05)
19,827
(36.97)
2. Overhead expenses
Non-med. salaries
Travel
Rent/rates
Promotion
Office Admin.
Head office
9,233
2,081
9,000
16,497
3,565
6,182
Sub-Total
46,558
(58.56)
%
(11.61)
( 2.62)
(11.32)
(20.75)
( 4.48)
( 7-77)
7,979
1,486
2,880
9,906
5,373
6,182
33,806
(63.30)
53,633
(100)
(%)
79,502
(100)
% Cost recovery
128.5
62.47
No. of MTP equivalents
306
382
Cost per MTP
259.8
140.4
Surplus/deficit per MTP
+74.07
-52.69
Grand Total
(14.87)
( 2.77)
( 5.37)
(18.47)
(10.02)
(11.53)
(100.0)
Source: Clinic Monthly Financial Statement
(100.0)
TABLE 4
SOCIO-ECONOMIC PROFILE OF CLIENTS AT KAROL BAGH AND
NANGLOI CLINICS FOR STERILIZATION AND MTP SERVICES
% MTP
Monthly Income
(Rs.)
% Sterilizations
All
Clinics
KB
NG
KB
NG
All
Cl inics
< 150
0.00
1.39
1.40
0.65
0.00
3.60
151
500
8.93
19.79
18.70
29.87
27.24
49.70
501
1000
32.55
59.03
35.80
39.61
54.22
33.00
1000
1500
15.53
12.85
20.10
16.23
15.26
8.20
1500 >
42.99
6.94
24.00
13.64
3.28
5.50
Total %
100
100
100
100
100
100
TABLE 5
COST STRUCTURE OF MEWAT PROJECT - MOBILE SERVICE
(April 1988 - September 1988)
Expense Head
Rs.
1,09,692
(51.28)
Drugs/Supplies
37,123
(17.36)
POL
11,890
( 5.56)
IEC
8,750
( 4.09)
Office Expenses
26,224
(12.26)
Rent
7,710
( 3.60)
Head Office support
12,508
( 5.85)
2,13,897
(100.0)
Salaries/Honoraria
Total
TABLE 6
TOTAL COSTS OF MOBILE SERVICE PROGRAMS
SERVICE PROGRAM (Rs.)
Cost item
CC
MCH/FP
%
Others
%
Total
%
%
Salaries/Honoraria
4,349 (37.22)
4,179 (70.32)
6,862 (67.71)
15,390 (55.43)
Drugs/Supplies
6,187 (52.95)
660 (11.11)
(
)
6,847 (24.66)
560 ( 4.79)
538 ( 9.05)
884 ( 8.72)
1,982 ( 7.14)
)
1,458 (14.39)
1,458 ( 5.26)
P.O.L.
(
I EC
(
)
Admin/Office
. 589 ( 5.04)
566 ( 9.52)
930 ( 9.18)
2,085 ( 7.51)
Total Cost
11,685 (100.0)
5,943 (100.0)
10,134 (100.0)
27,762 (100.0)
(42.10)
(21.40)
(36.50)
(100.0)
(%)
Note: CC category includes care given to pregnant
mothers and children under 5 years.
TABLE 7
AVERAGE COSTS OF MOBILE SERVICES
Mobile Service
(Rs)
Curative Care
MCH/FP
Total cost
11,685
5,943
No. service contacts
2,886
876*
Average cost
4.05
*
6.78
excludes number of children weighed and PNC examinations.
Position: 753 (6 views)