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.
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."
