Free or fee? Should family planning programs charge clients for contraceptives and services? For decades, programs have expanded access to contraceptives in developing countries by offering no-cost or low-cost services, often subsidized by government or international donor agencies. Developing country governments currently pay 75 percent of the costs of family planning programs, while donors contribute 15 percent and clients pay 10 percent, according to the United Nations Population Fund.1
In recent years, these programs have faced increasing demands, which have boosted costs. Managers are being asked to broaden services from family planning to other reproductive health needs, improve quality, serve the poor, and provide a wider array of contraceptive methods. Meanwhile, the number of women of reproductive age has been increasing worldwide at the same time that funding from international donor agencies has been declining.
Programs that depend mostly on international donor funds, typically those that are operated by nongovernmental organizations (NGOs), have few options for increasing revenue. Charging a fee to family planning clients is one strategy for recovering costs. Other approaches include charging clients for related health services, such as laboratory tests, or selling program services, such as training or education, and using a portion of that money to subsidize family planning programs.
"One of the issues for family planning programs is how to keep up with the increasing demand for services," says Dr. Barbara Janowitz, an economist and director of FHI's Division of Service Delivery Research. "A ministry of health within the public sector has the potential to replace donor funds with tax revenues, but NGOs do not have that potential. They have to collect revenues by selling services."
Available to everyone
Many opponents of fees argue that family planning is a basic human right and an essential health service. "There's a strong belief among NGOs that what they are doing should be free or low-cost and available to everyone," says Dr. James Foreit, who has studied financial sustainability in his role as director of the Population Council's Investigación Operativa y Asistencia Técnica en Planificación Familiar y Salud Materno-infantil en América Latina y el Caribe (INOPAL) III Project. "There's a very basic philosophical belief among some that it is wrong to make money."
Charging for services may also further limit access to contraception at a time when so many people do not have access to the services they need. Fee collection may be too costly for clinics already struggling to balance resources and demand. Couples who pay for family planning may have to make other sacrifices within the home -- reduce food consumption or increase their working hours. Or couples may rely on less-effective traditional contraceptives.2
However, revenues generated by fees may also lead to improvements in quality of care, decreased dependence on donor agencies, and increased financial sustainability for individual family planning programs. Fees can be used to broaden access to services, proponents say. Within the public sector, fees can guide clients to low-cost service delivery points (pharmacies instead of clinics, health centers instead of hospitals). Revenues can give program managers greater flexibility in planning clinic activities and more control over clinic policies and services. Fees charged to middle-income clients can subsidize services for the poor and can improve efficiency of services by encouraging competition between the public and private sector.3
When setting prices for family planning services, program managers must strike a balance. They must consider the program's need for funds and the client's willingness and ability to pay. Managers must also take into account "elasticity." "Elasticity" is an economic concept that relates demand to price changes. If demand drops sharply following price increases, the relationship is said to be "elastic." If demand is not greatly affected, the relationship is not very elastic.
Some social marketing studies suggest that couples are willing to pay about 1 percent of their income for contraception.4 In establishing a fee system, Management Sciences for Health (MSH), a U.S.-based organization that provides technical assistance to developing country health programs, recommends that contraceptive prices mirror those of other household items. In the Democratic Republic of Congo (formerly Zaire), a family planning program decided to charge a monthly membership fee that would not exceed the price of two kilos of soybeans. The Responsible Parenthood Associate of Suriname based its annual membership fee on the cost of 12 soft drinks.5 Others recommend that a clinic charge an entrance fee that is equivalent to a bus fare or charge the same price for a cycle of oral contraceptives as the cost of a liter of soft drink.6
One of the central concerns in implementing a fee system or in raising fees is that contraceptive use will decline. AVSC International conducted research in Mexico, Brazil and the Dominican Republic to examine the relationship between price increases and client use of sterilization.7 In Mexico, family planning clinics in the cities of Celeya, Juárez and Irapuato raised fees to compensate for a decline in donor funding. The fee for sterilization increased from U.S. $43 to U.S. $55, then to U.S. $60 several months later. The average monthly case load fell 10 percent after the first increase, then dropped 58 percent after the second increase. Some staff members noted that fewer low-income clients seemed to ask for sterilizations.
To determine the impact of price increases on client use of contraceptives, the Centro Médico de Orientación y Planificación Familiar (CEMOPLAF) in Ecuador has conducted a unique study that compared what clients said they would do with what actually happened when prices were increased. The study was done with assistance from the Population Council's INOPAL III Project, The Futures Group International and FHI.
Approximately 7,000 clients at 15 CEMOPLAF clinics were questioned about their ability to pay increased prices through a survey on income, household expenditures and education. The clients also were asked how they would respond if prices for a service were increased by a certain percentage. If a woman said she would continue to pay for the services, she was asked the maximum amount she would pay. If the woman said she could not pay, she was asked where she would go to seek less expensive family planning services.
Following the interviews, clinics were randomly assigned to one of three groups. For one group, prices of services such as prenatal care, obstetrical-gynecological care and follow-up visits for insertion of intrauterine devices were raised 20 percent. In a second group prices were raised 40 percent, and in a third group prices were raised 60 percent.
For one year, CEMOPLAF monitored visits to its clinics to determine whether increased prices caused a decline in the number of clients seeking services. In addition, CEMOPLAF monitored the economic mix of clients to determine how higher prices affected use by low-income clients.
Preliminary results show there was a decline in the number of clinic visits but no significant change in the client economic mix. The percentage of decline was relatively similar for all three groups of clinics. For the group in which fees increased by 20 percent, client visits declined about 20 percent. For the group in which fees increased 40 percent, the decline was only slightly more, about 26 percent. (No information was collected on women who chose to seek services elsewhere.) The study will be repeated at Asociación Pro Bienestar de la Familia Ecuatoriana (APROFE), another Ecuadorian NGO.
Previous studies to determine the impact of price changes on contraceptive use have often yielded mixed results, in part because different research methods have been used, says Dr. Janowitz.8 However, the Ecuador study comparison of what clients say and what actually happens in clinics is groundbreaking research that can provide useful information to program managers and health policy-makers, she says.
How much to charge
Family planning program managers must consider the effect of pricing systems on client demand. However, managers must also consider the effect of pricing systems on the clinic's resources.
"There are several important questions when considering client fees," says Dr. Janowitz of FHI. "First, what is the potential for introducing or raising fees to generate revenue? How do fees affect the number of clients who get services from you? How do fees affect the client mix? If you charge fees or raise fees, will you cut out people at the lower end of the income scale and serve only the middle-class? That's a concern."
selected methods? Will fees apply to methods, services or both? Should fees vary throughout the day to encourage use when staff are less busy?
"The first thing to learn when establishing a fee system is how much things cost," says Alvaro Monroy, director of the Transition Project for the International Planned Parenthood Federation's (IPPF) Western Hemisphere Region, which helps IPPF affiliates become less reliant on donor funding. "Even a donated commodity has a cost. For a [donated] cycle of pills there are administrative costs, staffing costs, the costs that will come when it is replaced by another commodity. A good accounting system is essential."
"Program managers need to understand unit costs," says Sallie Craig Huber, technical director of the Family Planning Management Development Project for MSH, who has worked helping African NGOs establish pricing systems for health services. "How many minutes does the staff spend on a service and what is that time worth? What are the program's fixed costs, its overhead costs? What are the actual costs of contraceptive commodities? Programs need to understand how much it costs them to deliver a service and how this equates with what they're charging for a service."
FHI is working with NGOs in several developing countries, helping family planning programs measure costs. For example, FHI is working with the Asociación Demográfica Salvadoreña in El Salvador to design a pricing policy based on client ability to pay, competitors' prices and costs of services. The Population Council, APROFE and FHI have carried out a similar study in Ecuador.
"Many NGOs are already charging fees, but the prices may have been determined by unscientific means," says John Bratt, a senior research associate at FHI, who has worked on costing issues in Latin America. "Prices may have been set originally as a symbolic effort to cover some of the costs of services. In many cases, NGOs do not know what it actually costs to provide services."
For programs thinking of implementing a fee system, The Futures Group International recommends considering the political, regulatory and institutional constraints of charging fees (for example, laws or regulations may prohibit selling donated supplies to clients); setting priorities for how revenues will be used; designing a means to protect poor clients who may not be able to afford even a small charge; and carefully monitoring how money is collected and spent.9
MSH recommends that program managers ask themselves a variety of questions as they consider a pricing system, including the objective of fees (to expand services, for example, or to become less reliant on donor or government funds). Whether clients can afford to pay and clients' perceptions about the quality of services are among other important considerations.10
Announcement that client fees will be implemented or that price increases will take effect should be made months in advance, MSH recommends. Also, programs should explain to clients how the fees will improve services. For example, a program might use fees to reduce waiting times or to offer more convenient hours, and a list of these improvements could be posted in waiting areas.
After user fees have been implemented or increased, program managers should determine how changes have affected client use, recommends the U.S.-based John Snow, Inc. Comparisons of levels of client use of services should be made six months prior to implementation of the fee system, then several months after the fee system has been in place, to determine the impact of price on demand.11 Such before-after comparisons were made in the CEMOPLAF study on clients' ability to pay versus willingness to pay.
Another concern for program managers is how to subsidize services for clients who cannot afford to pay. In Peru, the Instituto Peruano de Paternidad Responsable (INPPARES) implemented a sliding scale to waive or reduce fees for low-income clients. Marie Stopes/Population Health Services Program in Kenya developed a checklist to help program managers determine whether clients should be exempt from paying. Poor mothers who were unemployed or working for very low wages were exempt, as were high parity women who could not afford to pay, clients who owned less than an acre of land, school or college students, and workers at tea and coffee estates.12
But Dr. Janowitz cautions that establishing exemptions has its problems. "It's not easy to make them work," she says. "If criteria are too strict, people who should get services do not. If criteria are too lenient, you cover people you do not want to." In addition, the approach can be expensive to administer, and can lead to problems if clients discover that different fees are charged for the same service.
One strategy for ensuring that poor people continue to have access to family planning is "cross-subsidization." Charges for other health services, such as lab tests, are used to subsidize family planning services. Since 1991, CEMOPLAF has established 20 laboratories, which provide 35 different services, including Pap smears, tests to diagnose sexually transmitted diseases, pregnancy tests, tests to measure cholesterol levels in the blood, and tests to determine the presence of parasites in the digestive system. The average profit made from lab services is 47 percent, and revenues help finance family planning services.13
Pricing for sustainability
Fees can help ensure a steady source of revenue, thus enabling a program to become sustainable as international donor support diminishes. But there is a difference between sustainability of an institution and sustainability of a nation's entire family planning effort, notes Dr. Janowitz. At the country level, policy-makers will be concerned with making sure all citizens have access to family planning and may not fund one institution's operations if clients have easy access to family planning elsewhere.
Also, an institution concerned about survival may be willing to eliminate family planning services if they become too costly. The Kumar Warmi (Healthy Woman) program administered by the Centro de Información y Desarrollo de la Mujer (CIDEM) in El Alto, Bolivia, which educates women about health care and human rights, is one example. The program continues family planning education, but a Kumar Warmi family planning clinic that opened in 1986 recently transferred services to another clinic to improve CIDEM's long-term financial sustainability.14
Creative strategies have also been used to help subsidize the costs of services and improve program sustainability. In Bangladesh, the Concerned Women for Family Planning (CWFP) established a maternal-child health and family planning clinic, which required income in order to match donor support. CWFP began charging fees for clinic services on a sliding scale, based on clients' ability to pay, although no client was denied services. CWFP also opened a restaurant and catering service, a laundry and a beauty parlor. These activities served the dual purpose of providing jobs for local women and generating income for the organization.15
The Fundación Mexicana para la Planificación Familiar (MEXFAM) in Mexico has increased fees for family planning and has begun selling training materials as part of IPPF's Transition Project. MEXFAM officials predict that this year the clinic will be 34 percent self-sufficient, compared with 13 percent five years ago.
PROFAMILIA in Colombia began as a single clinic in Sante Fe de Bogotá but has expanded to 48 clinics in urban and rural areas, recovering 50 percent of its total costs through the sale of medical and surgical services and a social marketing program. Income is used to help subsidize family planning programs.16
One of the advantages of charging fees is that it can lead to improvements in quality of services, says Dr. Foreit of the Population Council. "At the moment you start charging people, the client becomes the primary user of the service. You have to please him or her, and your quality becomes the quality that person demands. Services that are offered become the services users want, not the services other people think the clients should have. One of the 'side effects' of sustainability is that it empowers the user."
Improvements in quality were one of the benefits observed in IPPF's Transition Project. The project was completed earlier this year, and one of the changes is that programs are more client-oriented, says Monroy of IPPF. "There is more sensitivity about the needs of the clients. Providers now ask people what they want, how they feel, if all their questions have been answered. In the past, providers used to call people by a number, but those days are gone."
-- Barbara Barnett
References
- Janowitz B. Why do projections of the cost of family planning differ so widely? Stud Fam Plann 1993;24(1)62-65.
- Watkins K. Cost-recovery and equity in the health sector: issues for developing countries. Presentation at WIDER Project on Provision and Financing of Public Goods in Developing Countries, London, February 27, 1997.
- Janowitz B, Measham D, West C. Family planning costs and financing in sub-Saharan Africa. Unpublished paper. Family Health International, 1997.
- Lande RE, Geller JS. Paying for family planning. Popul Rep 1991;J(39).
- Musau S. Charging for family planning services. Fam Plann Manager 1992;1(3)1-12.
- Foreit K, Levine RE. Cost Recovery and User Fees in Family Planning. Policy Paper Series # 5. Washington: The Futures Group, 1993.
- Haws J, Bakamjian L, Williams T, et al. Impact of sustainability policies on sterilization services in Latin America. Stud Fam Plann 1992;23(2);85-95.
- Janowitz B, Bratt J. What do we really know about the impact of price changes on contraceptive use? Viewpoint. Int Fam Plann Perspect 1996;22(1):38-40.
- Foreit.
- Musau.
- Day LM. Designing a Family Planning User Fee System: A Handbook for Program Managers, Revised Edition. Arlington: John Snow, Inc., 1993.
- Musau.
- Bratt J, Foreit J, de Vargas T. Laboratory Study Examines Costs, Quality and Safety. Population Council -- Latin American Sustainability Operations Research Summaries #4. Unpublished paper. Population Council, 1997.
- Paulson S, Gisbert ME, Quitón M. Case Studies of Two Women's Health Projects in Bolivia. La Casa de la Mujer, Santa Cruz, CIDEM/Kumar Warmi, El Alto. Research Triangle Park: Family Health International, 1996.
- Khan M. Family Planning Program Sustainability Experience of Concerned Women for Family Planning. Sustainability of Family Planning NGOs in Bangladesh: Workshop Report. August 27-28, 1991, Bangladesh Academy for Rural Development, Comilla, Bangladesh. Dhaka: Pathfinder International, 1991.
- Trias M. Fees for services in PROFAMILIA, Colombia. Family planning programme sustainability: a review of cost recovery approaches. Presentation at Seminar on Programme Sustainability through Cost Recovery, London, 1992.
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