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The cost of the district hospital: a case study in Malawi
A J Mills1, J Kapalamula, S Chisimbi
1London School of Hygiene and Tropical Medicine, England.
Insights
District health services in Malawi show high spending on medical supplies (24-37%) and pharmacy costs. Resources allocated to secondary care services and hospital operations significantly impact overall health expenditure.
Area of Science:
- Health economics
- Public health policy
- Resource allocation in healthcare
Background:
- District health services are crucial for public health delivery in low-income countries.
- Understanding cost structures is vital for efficient resource management within Ministries of Health.
- District hospitals play a central role in providing secondary care services.
Purpose of the Study:
- To analyze the cost of district health services in Malawi, focusing on district hospitals.
- To assess district resource allocation patterns by disaggregating costs.
- To identify key cost drivers and variations within district healthcare provision.
Main Methods:
- Analysis of recurrent costs for district health services.
- Disaggregation of costs by level of care and hospital department.
- Calculation of unit costs for hospital departments and patient care.
Main Results:
- Salaries and wages constituted a low proportion (27-39%) of recurrent costs, while medical supplies represented a high proportion (24-37%).
- The pharmacy was identified as the most expensive cost center within hospitals.
- Secondary care services absorbed a significant portion (40-58%) of district recurrent costs, with substantial inter-district variations in unit costs.
Conclusions:
- Healthcare spending in Malawi districts is heavily influenced by medical supply costs and pharmacy operations.
- Significant resources are directed towards secondary care, with notable inefficiencies and cost variations across hospitals.
- Findings suggest potential for resource redistribution and improved operational efficiency within district health systems.
Abstract:
Described in an analysis of the cost to the Ministry of Health of providing district health services in Malawi, with particular emphasis on the district hospital. District resource allocation patterns were assessed by carefully disaggregating district costs by level of care and hospital department. A strikingly low proportion of district recurrent costs was absorbed by salaries and wages (27-39%, depending on the district) and a surprisingly high proportion by medical supplies (24-37%). The most expensive cost centre in the hospital was the pharmacy. A total of 27-39% of total recurrent costs were spent outside the hospital and 61-73% on hospital services. The secondary care services absorbed 40-58% of district recurrent costs. Unit costs by hospital department varied considerably by district, with one hospital being consistently the most expensive and another the cheapest. A total of 3-10 new outpatients could be treated for the average cost of 1 inpatient-day, while 34-55 could be treated for the average cost of 1 inpatient. The efficiency of hospital operations, the scope for redistributing resources districtwide, and the costing methodology are discussed.