Academic journal article Bulletin of the World Health Organization

The Cost of the District Hospital: A Case Study in Malawi

Academic journal article Bulletin of the World Health Organization

The Cost of the District Hospital: A Case Study in Malawi

Article excerpt


Very few in-depth investigations have been carried out on the economics of hospitals in developing countries, despite their significance in terms of sector expenditure (1, 2). The present study reviewed the allocation of Ministry of Health resources within six districts in Malawi, with particular emphasis on the proportion absorbed by the hospital and on the unit costs for hospital departments. The objectives were to develop policies and guidelines to increase the efficiency of hospital operations and to improve the intrasectoral allocation of health sector resources.

Health care in the study districts was the responsibility of a district health officer (DHO), who held a budget that covered the non-salary expenditure of all government facilities. Ministry of Health services were largely provided free. The responsibility for the day-to-day running of the hospital was usually delegated to a chief or senior clinical officer and to the sister-in-charge and hospital secretary. A district health inspector was responsible for preventive activity, reporting both to the DHO and the regional health inspector. A number of staff based at the district hospital had districtwide responsibilities, most notably the DHO, district health inspector, maternal and child health (MCH) coordinators, and tuberculosis, leprosy and ophthalmic assistants. The Ministry of Health services in all districts were complemented by mission facilities, ranging from general hospitals similar to the ministry's own district hospitals to simple dispensaries, and by district council units. These facilities were not examined in the present study but clearly are important in planning the overall provision of district health services.

Materials and methods

Because of physical constraints, districts had to be purposively rather than randomly selected. The main aim of the selection process was to choose a group of districts containing hospitals that reflected the range of types of district hospital in Malawi in terms of size, services offered, staffing, age of buildings, and geographical location.

Total district costs were compiled from several sources, as described below.

Expenditure controlled at the district level

With the exception of salary costs, most of the recurrent expenditure of districts was identifiable at the level of the individual districts. A particular difficulty arose in calculating the costs of drugs and medical supplies, since annual expenditure was not necessarily a good reflection of the value of the drugs used (due to changes in stock levels and donated items). To overcome this and to estimate the cost of drugs according to hospital department, we examined a selection of both the duplicate books used by hospital wards and departments to order drugs (usually daily) from the pharmacy and the monthly requisition forms from health centres. The prices charged by the central medical store were applied to the quantities of drugs used to obtain the total cost; this was then converted to a cost per day and hence an annual cost. Donated drugs were therefore costed at the prices charged by the medical store for equivalent drugs. Vaccine costs were estimated on the basis of the quantities used and price CIF (cost-insurance-freight) Malawi.

The annual amount of X-ray film used (by film size) was noted from departmental records and its cost allocated to the wards and outpatient department, according to the origin of patients X-rayed and the film size (both these were routinely noted in the X-ray department ledger). Vehicle logbooks were analysed for 1 month in order to allocate vehicle costs to user departments.

Costs of salaries

Salaries were paid centrally; district salary costs could only be calculated for two broad groupings: senior staff and junior staff. Since the cost apportionment required more detailed data, salary costs were estimated from staff numbers by type and grade and average salaries (mid-point of the salary scale). …

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