Cost Estimation - UNSCN · 2016-11-17 · • Cost estimation –Program planning (specific to needs of the program) –Country budgeting (adapted to the budget process) –External

Cost Estimation UNICEF-SUN Workshop on Costing and Tracking Investments

November 2013

Outline • Using costs as a planning tool

– WHAT is the scope? • nutrition-specific/sensitive/governance

– HOW will we estimate cost per child/household? • rough estimates (from other studies); “ingredients” method

– WHEN will spending occur? • scale-up

– WHICH costs occur regularly/one-time only? – WHICH resources do we need?

• personnel, imported medications, space, training, etc.

– WHO will pay for each inputs? • donor/domestic

– WHAT costing tools are available?

• Plans reflect national commitments

– inclusive consultation process between the government and in-country partners

• Plans reflect sector involvement

• Plans are used as reference for implementation

– this implies (need for) more detailed planning and budgeting at sub-national levels

Key Plan Considerations

Applied Classification of Interventions in Country Plans

Nutrition-sensitive Approaches

• Food Security and Agriculture

• Care Environment

• Public Health and Water and Sanitation

Specific Nutrition Actions

• Good Nutrition Practices

• Vitamin and Mineral Intake

• Acute Malnutrition Management

• Enrichment of diet nutrient density for pregnant and lactating women and children 6-23 months

Governance • Coordination and Information Management

• Policy and Legislation Development

• Advocacy and Communication

• System Capacity Building

Countries in Analysis

Green = countries participating

Bangladesh (2011 – 2015)

Benin (2012 – 2015)

Burkina Faso (2010-2015)

The Gambia (2011 – 2015)

Guatemala (2013-2014)

Haiti (2013-2017)

Indonesia (2011-2017)

Kenya (2013- 2017)

Madagascar (2012 – 2015)

Malawi (2012-2016)

Mozambique (2011 – 2016)

Nepal (2013 – 2017)

Niger (2012-2015)

Peru (2012-2013)

Rwanda (2012)

Senegal (2013-2017)

Sierra Leone (2013 – 2017)

Tanzania (2012 – 2016)

Uganda (2012 – 2016)

Yemen (2013)

Overview - Plan Variety

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Specific Sensitive Governance

Plan Variety

Specific Nutrition Actions

61% 21%

18%

5%

Good nutrition practices

Acute malnutritionmanagement

Vitamin & Mineral intake

Nutrient-dense diet

Nutrition-sensitive Food Systems

51%

46%

Improving availability

Improving accessibility

Diversified production Post-harvest activities Quality and safety of foods Promotion of school gardening

Food or cash for work Income generating activities School feeding Food provision for vulnerable people

Nutrition-sensitive Public Health

11%

15% 74%

Public Health Services Reproductive Health Water and Sanitation

Management and control of NCD Management of malaria Nutrition counseling of PLWHA

Household water treatment Water schemes maintenance Community-led total sanitation Sanitation campaigns WASH in schools

Nutrition Governance

28%

66%

6%

Coordination & Information Management

System-capacity building

Policy, advocacy & communication

Capacity to plan, implement and monitor Capacity for intra-ministerial coordination Capacity for sub-national planning

Multi-sectoral coordination at different levels Quarterly monitoring meetings Stakeholder mapping and other planning exercises

Key Decisions in Costing • Inclusions/exclusions

– Existing government inputs (labor, infrastructure) – New versus existing interventions – Stakeholder and sector involvement

• Cost methodologies – Program unit costs (rough estimates) – Total intervention costs (ingredients) – Marginal budgeting (additional resources needed)

• Cost estimation – Program planning (specific to needs of the program) – Country budgeting (adapted to the budget process) – External budgets (incorporating donor information)

• Assumptions for scale-up – Estimation of existing cost – Percentage increase (target population) – District rollout – National coverage

Calculating Plan Costs Program estimation (rough estimate)

• Take estimates from similar countries with similar interventions

• Adjust for: – Population in need (target group)

– Inflation

– Specific situation/need

• Example: estimate of per child cost of SAM – SUN study found cost ranged from $59 (Bangladesh)

to $283/child (Malawi)

– Use $200/child as a global estimate

Calculating Plan Costs Program estimation (rough estimate)

• Benefits – Quick approach

– Relatively easy to calculate

– Can provide initial estimates on which to build

• Limitations – Program costs are only rough estimates

• If it cost $120/child in Ethiopia, we don’t know how much more/less will it cost in Nigeria

• Scale-up can only be calculated at the level of estimation (e.g., per person) and does not account for variable input costs/structures

Calculating Plan Costs

“Ingredients” approach (cost of program inputs)

• Example: Inputs involved in SAM treatment without complications

– 8 weekly visits for outpatients, 10 minutes of time per visit of a community health nurse

– 15 kg of RUTF* over 8 weeks per child (based on average child weight)

– 5-day course of amoxicillin (1.5 x 250 mg/day)

*RUTF is Ready-to-Use Therapeutic Food



• Example: Inputs involved in SAM treatment with complications

– Inpatient day costs

– Doctor costs

– Additional medication

– Specialized milks

• Don’t forget indirect (“invisible”) costs – labs, gasoline for vehicles, paper, administration



• Calculating program costs involve

– Calculating costs of each input

– Balancing ingredient ratios

• To calculate the “invisible” costs often we use a percentage (“overhead”)

• The 2013 Lancet paper used 7% markup for “other direct” costs, and 40% for indirect costs, based on a study from Africa

60 62 53 45 19

38 50

2 17

0 19 30

46

7 7 14 22 48

29 17

65 49

67 47 37

21

Legend

Indirect

Other direct

Personnel

Consumables

Calculating Plan Costs “Ingredients” approach (cost of program inputs) • Benefits

– Provides detailed cost information – Allows for better estimation of scale-up – Ability to better monitor program implementation (based

on inputs rather than expenditures) – Allows for differences in program implementation vs.

program maintenance

• Limitations – Can be difficult to estimate costs for all inputs – Input ratios may be difficult to determine for new

programs – Time-intensive

Estimating Input Costs

• Methods for estimating costs of inputs

– Cost data collection (surveys)

– Use costs for inputs in similar programs within the country

• Labor costs, supplies, meetings

– Use costs for inputs in similar programs in other countries

• RUTF can be produced in Africa and costs the same (plus transport cost) throughout

Estimating Input Costs • Methods for estimating costs of inputs

– Use information from available databases • WHO CHOICE database

– CHOICE (CHOosing Interventions which are Cost-Effective) database has a variety of costs from may countries from previous years

– Example (2005)

» Health workers were paid $9306/year in AFRO E (e.g. Ethiopia)

» Health workers were paid $9399/year in AFRO D (e.g. Niger)

• Databases of essential drugs – Costs of medication


SIMPLE approach to estimating costs

• Total program cost estimates

– Total Cost =𝑝𝑟𝑜𝑔𝑟𝑎𝑚 𝑢𝑛𝑖𝑡 𝑐𝑜𝑠𝑡 × 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑢𝑛𝑖𝑡𝑠

• Program unit cost is cost per child/household/school estimated from (for example): – May be rough estimate

» similar program in country

» similar program in another country

» global estimate

– May be calculated from inputs (ingredient approach)


SIMPLE approach to estimating costs

• Total program cost estimates

– Total Cost =𝑝𝑟𝑜𝑔𝑟𝑎𝑚 𝑢𝑛𝑖𝑡 𝑐𝑜𝑠𝑡 × 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑢𝑛𝑖𝑡𝑠

• Number of units (population in need) is roughly determined by calculating the target population to be served – This could be the entire population receiving the intervention

– This may be new individuals being served

» Those who have already received the intervention may no longer need it, or have a reduced (maintenance) unit cost, which must be calculated separately

Calculating Plan Costs Other considerations when estimating costs • Unit costs assume constant and recurring costs

across the target population • Unit costs may vary over time or across

populations – Interventions may include start-up costs – Costs may decrease over time (intervention vs.

maintenance) – Some costs may recur in cycles that do not match unit

cost calculations • Example – fortification

– Every Kg of fortified flour needs a fixed amount of premix – But every mill needs a feeder and quality control equipment

Calculating Plan Costs Other considerations when estimating costs

• Cost efficiencies – Combining interventions

• 2 programs each require a CHW for 5 minutes (10 minutes total)

• Performing the two interventions together requires only 7 minutes

– Learning by doing • In the 1st year of the program, a CHW takes 10 minutes to perform

a task

• In the 2nd year, program refinements allow the task to be completed in 5 minutes

• Regional differences – Personnel differentials

– Transportation costs

Estimating Costs of Scale up

• Set plan goals

– Estimate total target population affected

– Estimate target population currently receiving the intervention

– Set goals for additional target population to receive intervention

• By end of plan

• In each plan year


• Example -SAM – Estimate the prevalence of SAM in the age group

concerned (6 months to 6 years) • Existing surveys and estimates

– Estimate current coverage • From surveys • Existing information from current interventions • Current RUTF purchases

– Set goals • Realistic achievements

– Available resources – Achievable resources


• Example : SAM – Assumptions

• Unit Costs – $200 per child for new intervention (SUN global estimate)

• Target population – SAM prevalence in ages 6 months to 6 years = 10,000

– Estimate of current coverage = 10% = 1,000

– Goals

» Year 1: 25% = 2,500

• Additional children served in Year 1 = 2,500 - 1,000 = 1,500

• Children treated in previous years = 1,000

» Year 2: 50% = 5,000

• Additional children served in Year 2 = 5,000 - 2,500 = 2,500

• Children treated in previous years = 2,500

Estimating Costs of Scale up Example: treatment of SAM

Target Population

(N)

Baseline Year 1 Target

Year 2 Target

Baseline Cost

Year 1 Scale up Cost


Children 6 months – 6

years (10,000)

10% 25% 50% (1,000 x $200) = $200,000

(1,500 x $200) = $300,000

(2,500 x $200) = $500,000

• In Year 1, total annual spending is baseline cost (for 1,000 children) PLUS scale up cost (for 1,500 additional children) = $200,000 + $300,000 = $500,000

• In Year 2, total annual spending is Year 1 cost (for 2,500 children) PLUS scale up cost (for 2,500 additional children) = $500,000 + $500,000 = $1,000,000

WHEN will spending occur?

0

1,000

2,000

3,000

4,000

5,000

6,000

Baseline Year 1 Year 2

Number of children

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0


$ T

ho

usa

nd

s

Costs by Plan Year

Scale up Cost

Current Cost

Example: scaling up SAM treatment in Kenya (NOT real data): baseline

Coverage

50%

25%

10%

We might scale up uniformly in all regions

Year 1 Year 2

Or scale up first in target provinces, and then scale up nationally

Year 1 Year 2

Identifying Start up and Recurrent Costs

• Which of the following costs occur regularly and which occur at start up (or infrequently)?

– RUTF

– Community health worker salary

– Vehicle (or bicycle) for supervisors

– Initial training for health workers

– Refresher training for health workers

• Recurrent

– RUTF

– Community health worker salary

– Refresher training for health workers

• Start-up

– Vehicle (or bicycle) for supervisors

– Initial training for health workers

Identifying Start up and Recurrent Costs

Estimating Costs of Start up

• Example : SAM

– To reach 10,000 malnourished children

• Train 100 community health workers at 5 days each in Year 1 – Cost of trainer

– Trainer travel

– Trainer’s per diems

• Total cost of start up = $350,000

Estimating Costs of Scale up, including Start up costs: SAM

Target Population

(N)


Year 2 Target

Baseline Cost

Year 1 Scale up + Start up Cost



years (10,000)

10% 25% 50% (1,000 x $200) = $200,000

(1,500 x $200) + $350,000 = $650,000

(2,500 x $200) = $500,000

• In Year 1, total annual spending is baseline cost (for 1,000 children) PLUS scale up cost (for 1,500 additional children) PLUS start up cost

= $200,000 + $300,000 + $350,000 = $850,000 • In Year 2, total annual spending is Year 1 cost (for 2,500 children) PLUS scale up cost

(for 2,500 additional children) = $500,000 + $500,000 = $1,000,000 • No training of new workers is done in Year 2

Start up and Scale up Costs of Intervention (Annual Totals)

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0


$ T

ho

usa

nd

s

Total Costs by Plan Year

Start Up

Intervention

Start up Costs: another example

• Example: Fortification

– One-time cost in the previous example (training costs for community health workers for SAM) is proportionate to recurring project costs

– But how about fortification of flour?

• Initial costs (social marketing, legislation, buying feeders for mills) might be very large in comparison to recurrent costs

Fortification costs over time

0

0.5

1

1.5

2

2.5

Year 1 Year 2 Year 3 Year 4 Year 5

One-time cost

Recurrent costs

WHICH resources do we need?

• Careful costing can help estimate actual resources needed

• Example – 10,000 children each require CHW time in a year

• 8 weeks x 10 mins = 80 minutes

– Calculating the total personnel need results in: • 10,000 * 80 = 800,000 minutes = 13,333 hours = 6-1/2

FTE CHWs

• If we assume CHW works 2000 hours/year (i.e. 40 hours/week, 50 weeks/year)


• Careful costing reveals more specific personnel estimates

– Suppose a community health worker can see children only half of all work time

• 1,000 hours/year (20 hours/week, 50 weeks/year)

• Remaining time is used for non-patient work (e.g., travel, paperwork, meetings)

• Then 13 FTE CHWs are needed to achieve sufficient patient time


• 13 CHWs are only a portion of the personnel need

– There is an additional need for doctors and nurses for treating complicated cases diagnosed by CHWs

– Hiring additional CHW may also require additional administrative or personnel needs

• For example, if there is an 8:1 ratio of health workers: supervisor, then almost 2 additional supervisors must be hired with the CHWs

WHO will pay these costs? SAM example

• Cost breakdown – about 1/3 of costs are personnel – 1/3 costs are consumables (RUTF, drugs) – 1/3 are other direct and indirect costs

• Funding sources – International donors might pay for consumables – Government would typically pay for its own personnel – Government might need to cover indirect costs

• Costs should be estimated for all necessary inputs • Regardless of the inputs • Regardless of the funding source

WHO will pay these costs?

• Need to account for all costs to adequately estimate scale up

– Donors might also pay for one-time costs (e.g. initial training costs) but not recurrent costs (refresher training)

– Hence for treating SAM, donors might pay for 1/3 of recurrent cost, but governments need to budget the other 2/3 (except in emergency situations)

WHO will pay? SAM example

Target Population

(N)


Year 2 Target

Baseline Cost

Year 1 Additional Cost

Year 2 Additional

Cost


years (10,000)

10% 25% 50% (1,000 x $200) = $200,000

(1,500 x $200) + $350,000 = $650,000

(2,500 x $200) = $500,000

Government share:

2/3 of annual cost (personnel, indirect costs)

2/3 of additional recurrent cost

2/3 of additional

recurrent cost

Donor share:

1/3 of annual cost (RUTF)

1/3 of additional recurrent cost

plus ALL of initial training cost

1/3 of additional

recurrent cost

WHO will pay? SAM example (omitting training costs)

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0


$ T

ho

usa

nd

s


Donor

Government

WHO will pay? SAM example (now including training costs)

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0


$ T

ho

usa

nd

s


Donor

Government

WHO will pay?

• Government contribution may be smaller for those programs which involve less personnel (e.g. fortification)

• Government contribution likely to be much larger for those programs with heavy personnel needs (education on hygiene or breastfeeding)

• SAM is intermediate (intensive in personnel and consumables – RUTF and drugs)

Review: Cost Estimation Needs

• Scope – Interventions

• Nutrition-specific • Nutrition-sensitive • Governance

• Unit costs – Unit

• per child, household, person

– Estimates • program costs (rough estimates) • Ingredient approach (inputs)

• Target setting – Identify population in need – Baseline values – Feasible targets

Review: Cost Estimation Process

• WHEN will scale-up occur?

• WHICH resources do we need? (especially, approximate additional personnel needs)

• WHICH costs are one-time, and which occur regularly?

• WHO will pay costs (donors/government)?

Review: Key Decisions in Costing • Inclusions/exclusions

– Existing government inputs (labor, infrastructure) – New versus existing interventions – Stakeholder and sector involvement

• Cost methodologies – Program unit costs (rough estimates) – Total intervention costs (ingredients) – Marginal budgeting (additional resources needed)

• Cost estimation – Program planning (specific to needs of the program) – Country budgeting (adapted to the budget process) – External budgets (incorporating donor information)

• Assumptions for scale-up – Estimation of existing cost – Percentage increase (target population) – District rollout – National coverage

Tools/approaches to help with costing

• Some of these tools include:

– OneHealth

– REACH dashboard

– Marginal Budgeting for Bottlenecks

– FANTA approach (PROFILES tool is used for advocacy but not costing per se)

– Others (eg CORE plus, etc.)

National

Hospital

Health Centre

Outreach

Community

Strengthening Health Systems

Lives saved;

healthier

populations

Supply

chain Infrastructure

Human

Resources Increasing coverage

of effective

interventions

OneHealth tool for costing, budgeting, financing and national strategy development

Health Financing Health Information Governance

Financial affordability

Malaria

TB

HIV

Repro

ductive

Health

Wate

r & S

anitatio

n

Imm

unizatio

n

Child

Health

Nutritio

n

Oth

ers

Non co

mm

unicab

le

Agencies supporting OneHealth tool

– Developed by the United Nations Inter-Agency Working Group on Costing (IAWG-COSTING) incl. WHO, UNICEF, WB, UNAIDS, UNFPA, UNDP.

– Partner support incl. GFATM, the Global Health Workforce Alliance, IHP+, UNWomen.

– Health Planners in Country Reference Group provide technical and user related inputs into model development.

Available from:

• http://www.internationalhealthpartnership.net/en/ working_groups/working_group_on_costing

• http://www.futuresinstitute.org/onehealth.aspx

• See presentation by Kaia Engesveen later today

http://www.futuresinstitute.org/onehealth.aspx

REACH “dashboard” approach

• Example is from behavior/care area (one of key determinants of nutrition, from poor IYCF practices. Data are from one SUN country

• REACH uses dashboard to summarize their evidence-based analysis: http://www.reachpartnership.org/implementing-reach

http://www.reachpartnership.org/implementing-reach




Marginal Budgeting for Bottlenecks

• Excel supported by UNICEF, World Bank and African Development Bank

• Primarily designed for health but includes three nutrition interventions

• http://www.devinfolive.info/mbb/mbbsupport/

• Has been overtaken by OneHealth, but MBB can still be used for analysis at local level

http://www.devinfolive.info/mbb/mbbsupport/




FANTA uses a systematic approach

• Uses excel-based PROFILES tool, which can be used for advocacy, to estimate cost-benefit and cost-effectiveness of interventions (for iron, iodine, vitamin A and stunting) in individual countries

• Costing for Bangladesh study done using detailed ingredients approach

• See David Doledec’s presentation later today

CORE Plus

• CORE Plus is a spreadsheet-based tool developed by MSH with USAID and other funding to help determine projected and actual costs of integrated primary health care services broken down by individual interventions.

• It is a “bottom-up” costing tool that allows the user to estimate a standard cost for each intervention, broken down by drugs, tests, medical supplies and staff

• http://www.msh.org/resources/cost-revenue-analysis-tool-plus

http://www.msh.org/resources/cost-revenue-analysis-tool-plus










Activity-based costing methods

• Activity-based costing (ABC) is often used in healthcare in North America. It can be a tool for improving efficiency

• It is NOT recommended here as a tool for planning new activities

• Reference: Time-Driven Activity-Based Costing, Robert S. Kaplan and Steven R. Anderson, 2007, Harvard Business School Press

References

• Bhutta, Z. A., J. K. Das, A. Rizvi, M. F. Gaffey, N. Walker, S. Horton, P. Webb, A. Lartey, R. E. Black for Lancet Maternal and Child Nutrition & Interventions Review Groups Evidence based interventions for improving maternal and child nutrition: what can be done and at what cost? Lancet, June 9 2013 (ingredients approach)

• S. Horton, M. Shekar, C. McDonald and A. Mahal. Scaling-up nutrition: what will it cost? Washington DC: World Bank Directions in Development, 2009 (uses rough estimates)

Documents

Cost Estimation - UNSCN · 2016-11-17 · • Cost estimation –Program planning (specific to needs of the program) –Country budgeting (adapted to the budget process) –External