Costing of the Health Sector
NGPES
I. Background to Health Care
Financing in Lao PDR
Health NGPES
• Twelve strategic programmes
• None of them are perfectly implemented
today
• All probably need more resource, both
financial and human
• To understand future financing, you need to
know the current situation
Health Financing in Laos
• Total health spending is about 120,000
kip per year per person
– 56% from households
– 9% from Lao government
• 80% of this goes to salaries
– 35% from donors and NGO’s
Household Expenditure
• 60% is completely private – private
pharmacies and private services
• 40% is for paying fees in public
institutions – cost sharing
Recurrent Budgets of Hospitals
Depend on User Fees
• Central hospitals – 74-83%
• Provincial Hospitals – 48-75%
• District Hospitals – more variation –
but if busy – 52-68%
Exemptions from fees are few
compared to the poverty rates
• Central – 6.1-7.5% exempted
• Provincial – 0.1 – 11.9% exempted
• District - 0.5% - 67% exempted
Summary of Health Care
Financing
• Total health spending is highly dependent on
household expenditure
• Public expenditure is highly donor dependent
• Public institutions are highly dependent on user
fees
• Exemptions from user fees are less than the
prevailing poverty rates
• Result is Lao people use health care late and less
than what is ideal
Costing of Health Sector NGPES
II. Methods and Issues
Whose perspective or point of
view?
• Government
• Donors
• Households
Suggest
• Government and Donor Together
But
• Always evaluate what the effect will be
on household expenditure also
What is the scope?
•
•
•
•
•
National – entire health system, or
47 poorest districts, or
74 poor districts, or
10 highest priority districts?
Separate services for poor not efficient or
desirable
• Difficult to cost services only for the poor
Costing Methods
• Ground up - it is appealing, but a very large
exercise to go to each district/province and
do an individual costing
• International norms • Individual programme costs - usually from
smaller areas than whole nation, but take
these and multiply for national coverage
Programmes
• I. Information
Education and
Communication
Data Sources
• Many programmes
have a small IEC
budget, no single
comprehensive
programme
Programmes
• II. Expansion of the
service network and
health promotion in
remote areas
Data Sources
• Costing studies on
health centres and
hospitals MOH/WHO and SSO,
costs of new and
renovated health
centres and hospitals
from ADB/WB
projects
Programmes
Data Sources
• III. Upgrade skills of
health staff and
increase the number of
staff from ethnic
minorities
• WB study on medical
(doctor) education
• Nursing school
projects - JICA
• PHC Worker Project ADB/PHC project
• VHV training costs
• Refresher course costs
- MOH/JICA database
Programmes
• IV. Promotion of
maternal and child
health
Data Sources
• RH projects UNFPA/MOH
• (Is upgrading of
facility included in
Programme II?)
Programmes
• V. Immunization for
women and children
Data Sources
• Financial
sustainability plan GAVI
Programmes
Data Sources
• VI. Water supply and
environmental health
• Average costs per
borehole, protected
well, gravity scheme Naam Saat (SIDA,
UNICEF, WB)
Programmes
• VII. Communicable
disease control
–
–
–
–
–
–
Malaria
Dengue
ADD-Cholera
TB
Intestinal parasites
Surveillance - general
Data Sources
• Malaria projects - EU,
Global Fund
• Dengue proposals WHO
• TB - Global Fund
• Parasites - WHO
proposal
• Surveillance - MBDS,
WHO,
Programmes
Data Sources
• VIII. HIV/AIDS/STD
Control
• HIV/AIDS/STD
Action Plan
• Global Fund proposals
Programmes
• IX. Drug revolving
fund expansion
Data Sources
• FDD of MOH average start-up costs
for DRF, also
available from
PHC/ADB project
Programmes
Data Sources
• X. Improved food and
drug safety
• Drug - SIDA and
WHO projects
• Food - FAO and WHO
projects
– Drug safety
– Food safety
Programmes
• XI. Promotion of
traditional medicine
Data Sources
• ?
Programmes
Data Sources
• XII. Strengthened
financing,
management, quality
assurance, and legal
framework
• Cost of community
insurance pilots, mgmt
training costs from
PHC/ADB and other
projects
Costing of Health Sector NGPES
III. Example – “National
Immunization Programme
Financial Sustainability
Plan’ – Nov. 2002
Background
• Immunization – known to be efficacious
and cost-effective
• Coverage rates in Lao PDR are not ideal –
around 50% when 85% is desired
• Immunization is highly donor dependent
• GAVI – Global Alliance for Vaccines
Initiative – new money, new vaccines, new
methods – but how to sustain?
Summary of Costs (US$)
Item
1999
2001
Operational Costs
Supplemental Activity
Capital Costs
956,856
196,927
211,292
Total Nat. Imm. Prog.
1,365,075 1,568,166
1,020,932
386,539
160,696
Availability of Cost Information
• Partly available, but difficult and time
consuming to find
• Problems
– Accounting systems vary depending on the
source of the funds
– Donor and in-kind contributions often not
known to implementers
Financing of Immunization
Source
1999
2001
Government
UNICEF
WHO/AusAid
JICA
Other
GAVI
5.5%
42.1%
7.7%
43.0%
1.8%
0%
4.9%
23.3%
13.8%
34.4%
2.6%
21.0%
Projections Done
• Assuming that the new and more vaccine is
introduced nationwide
• Assuming that certain costs go up to
increase coverage from 50% to required
85% (mainly per diems for outreach)
• Modest capital investment – new fridges
• Eventually supplemental activities stop
Projections of Requirements
2003
2004
2005
2006
2007
3,157,462
3,604,082
4,310,624
3,593,540
3,772,383
Total
18,438,091
Why are costs going up rapidly?
• New vaccine to prevent Hepatitis B (a
major cause of liver cancer) has been
introduced and it is expensive. It is cost
effective, but the benefit comes in cancers
prevented 20-30 years from now. Who
pays?
• It is more expensive to reach remote
populations than semi-urban pops.
Projection Assumptions
• Economic growth and government budget
grows – 6-8%
• Major donors continue support at same
level with growth for inflation
• In most optimistic projection – HIPC is
assumed, which is not a safe assumption
Projections of Funding Gap
2003
2004
2005
2006
2007
724,988
1,274,307
1,342,411
1,229,889
2,143,129
Total
6,714,523
Summary – Secured funds and
funding gap
Million $
Needs
Secured
Gap
Total
$ 17.9
$ 11.2
$ 6.7
Ann. Ave.
$ 3.6
$ 2.2
$ 1.3
Total
$ 11.8
$ 0.9
$ 10.9
Ann.Ave.
$ 2.4
$ 0.2
$
2003-07
2008-10
2.2
Funding and Gap- Optimistic on
future donors
Millions Probable Gap
Possible
Gap
2003-07
Total
$ 13.9
$ 4.0
$ 14.0
$ 3.9
Ann.Ave $ 2.8
$ 0.8
$ 2.8
$ 0.6
$ 5.2
$ 6.5
$ 7.5
$ 4.3
Ann.Ave $ 1.0
$ 1.3
$1.5
$0.7
2008-10
Total
Summary - EPI
• 2003-07, even with optimistic projections
has a $600,000 gap per year in funding
• As time lengthens, there is more insecurity
about EPI funding
Issues
• A projection done looking at EPI only – could
efficiencies be made by reorganization?
• Is it sensible to fund vital programmes, one at a
time, separately?
• Poorest districts – hardest to reach, most
expensive to immunize – how much to concentrate
effort there when easier to reach areas have not yet
reached acceptable immunization rates?
Thank You