Legacy Series: FINANCIAL SUSTAINABILITY OF REPRODUCTIVE HEALTH SERVICES pptx

Legacy Series:

FINANCIAL SUSTAINABILITY
OF REPRODUCTIVE HEALTH SERVICES


UnderstandingCosts:AnEssentialSkillin
ReproductiveHealthPrograms


Evidenceaboutcostofinterventioniscritical
forprogramdecision‐making,becauseitprovides
evidenceaboutpotentialforsustainability.
Reproductivehealthservicesremainalow
priorityformostdevelopingcountryhealth
programsandfacecontinuingreductionsin
donorfundingandcompetitionfromother
priorities,suchasHIVandmalaria.Itismore
importantthanevertounderstandcostsof
interventionswhenconsideringscale‐upand
sustainability(Box1)—especiallycomparabilityof
thesecostswithexistingoralternativeservice
deliverystrategies.FRONTIERSaddressedthe
needtoincreasesustainabilityintwoways:i)
routinelymonitoringcostsofimplementingnew
approachesthroughoperationsresearch;andii)
capacitybuildingtoenablepartneragencies
themselvestoassessprogramcostsand
determinepotentialeconomicimpactofchanges
associatedwithadaptingneworrevisedwaysof

providingservices.FRONTIERScostingstudies
provideimportantlessonsaboutwaysof
measuringthecostsandeffectivenessofpublic
andnon‐governmentalprograms,systematically
planningforcostingduringscale‐up,and
improvingunderstandingofissuesinfluencing
financialsustainability.

This paper is part of a series of eight
Legacy Papers synthesizing major
lessons learned through research
conducted under the Frontiers in
Reproductive Health Program
(FRONTIERS).

The full set of Legacy Papers includes:

Capacity Building
Family Planning
Female Genital Mutilation/Cutting
Gender
Integration of Services
Sustainability of Services
Utilization of Research Findings
Youth Reproductive Health

The complete reports referenced in
these papers are available online:

www.popcouncil.org/frontiers

Box 1. What Is Financial Sustainability?

Financial sustainability can be
considered a state in which a program
can cover its costs by some
combination of revenue generated from
service charges as well as dependable
long-term support to cover routine
costs. Thus, a program need not
necessarily be self-sustaining if
sufficient long-term funding is available
from other sources.

FRONTIERSLegacyDocumentsFinancialSustainabilityofRHServices

DetermineCostsEarlytoEnhanceSustainability

Asexternalsupportforinnovativeinterventionscontinuestodecline,programmanagers
needtoconsiderlong‐termusefulnessandsustainabilityofanyneworrevised
interventionsbeingpilot‐tested;thereislittlepointintestinginterventionsthatarenot
affordable.Somestrategiesprogramscanusetoassesscostoftestingandexpanding
reproductivehealthprojects,aswellaswaysofassessingpotentialincome‐generating
strategies,follow.

Considercostsofimplementingandscalingupinterventionsfromearliestplanning
stages.
Implementinginterventionsandinstitutionalizingeffectivepracticesinvolvecosts—
includinglabor,capitol,materials,technicalassistance,andopportunitycosts—allofwhich

needtobebornebygovernment,NGOs,donors,orserviceusers.Thus,whendesigninga
pilotproject,plannersshouldattempttoestimatecostsofinstitutionalizingandscalingup
interventionsbeforeembarkingonimplementation.Suchplanningcanhelptoavoid
pilotingunsustainableinterventions.Thiscanbedonebyidentifyingandcostingresource
requirementsaccordingtothethreemainphasesofapilot–test:planning;introductionof
intervention;andongoingservicedelivery(Janowitzetal.2007).Thisreducescomplexityof
costingbybreakingprojectimplementationdownintocomponentpartsandfocusingon
costsassociatedwitheachphase.Scaling‐upcostscanthenbeestimatedonthebasisofthe
secondtwophases,whicharelikelytorepresentcostsofexpandingintonewsites
(introductionofintervention)andsustainingservicesonaroutinebasis(ongoingservice
delivery).

Calculatefirst‐phaseandscale‐upcostsseparately.Costsofroutinelyimplementing
scaled‐upinterventionsarenotsimplemultipliersofcostsofpilotprojects,butusuallyare
lowerthanthepilotprojectonaper‐sitebasisbecauseofeconomiesofscale,streamlining
ofactivitiesandsubstitutionoflower‐costresources(Boatengetal.2006;Birungietal.2008).
Numerousfactorsaffectthecostofscalingupasuccessfulpilotinterventiontomultiple
servicedeliverypoints(SDPs)—includingnumberandsizeofSDPs,whoprovidesresources
andatwhatprices,andchangesininterventionalteringcostcalculationsinscale‐up.

Modelingthescale‐upofapilotprojecttoimproveFPclient‐providerinteractionsin
Egyptianclinicsshowscostperclinicforimplementationwoulddropsignificantlyfrompilot
toscale‐up,inpartbecausemanyplanningmeetingsandpreparatoryactivities—about25
percentofcostofthepilotproject—canbereduced,orcancoveralargernumberofclinics.
Economiesofscalealsoreducecostofotheractivities,suchastraining,becauselarger
numbersofproviderscanbetrainedtogether.Forexample,modelingscale‐upfrom24to
567clinicsreducesprojectedcostsofplanningfrom$1,018perclinicto$40perclinic
becauselittleadditionalworkisneededtoplanfor567comparedwith24clinics.By
contrast,supervisioncostsmightnotchangeafterscale‐upascontinualsupervisionis
usuallynecessarytoensurecorrectimplementationofintervention(Janowitzetal.2007).



FRONTIERSLegacyDocumentsFinancialSustainabilityofRHServices

Useexistinginstitutionstopilot‐testactivitiesthatcouldbescaledup.InKenyaand
Senegal,multisectoralapproachesforimprovingyouthreproductivehealthwere
introducedthroughpublic‐sectorministriesbecauseexistingstructuresaresustainableand
alreadyreachthevastpopulationmajority.Stafffromthreeministriesineachcountry
plannedandimplementedinterventions;communityleadersandexistingyouth
organizationsparticipatedinplanningandplayedmajorrolesinoutreachandeducation.
Thisapproachnotonlycontainedcostspilot‐testingdonorsthroughenormousresource
contributionsofministrystafftime,infrastructureandfacilities,butalsoenabledexpansion
andscale‐upcoststobeinstitutionalizedwithinannualbudgetsandministryworkplans
(Joyceetal.2008).

CapacityBuildingtoHelpNGOsAchieveFinancialSustainability

Itisdifficulttofindtrainedprofessionalsinnongovernmentalorganizations(NGOs)with
experiencecollectingandanalyzinginformationonservicedeliverycosts.Moreover,few
healthNGOspossessessentialbusinessskillsincosting,break‐evenanalysisandmarket
research,skillsnecessaryforplanningandevaluatinginterventionstocontrolcostsand
increaseincome.FRONTIERSpartner,
FamilyHealthInternational,implemented
the“FinancialSustainabilityCapacity
BuildingInitiative”(FSCBI)from1999to
2008tobuildskillsineconomicanalysisto
helpNGOsimprovesustainability.Staff
andmanagersfromparticipatingNGOsin
Africa,Asia,andLatinAmericaattended
week‐longregionalworkshopscombining

trainingoneconomicanalyseswith
researchproposaldevelopment(Box2);
thosewhoseproposalswereaccepted
receivedfinancialandtechnicalassistance
toconductcapacitybuildingandresearch
(Bratt,Janowitz,Homan,andForeit2008).
Box 2. Four Types of Cost Studies Undertaken
During FSCBI

Cost diagnostic studies focused on measuring
the average costs of services provided through
clinics and hospitals; sustainability diagnostic
studies looked at costs and also collected
information on competing providers and
measured a client’s willingness to pay; break-
even analysis examined the question of how
many units of service or product needed to be
sold in order to cover fixed and variable costs;
and income generation studies measured the
impact on revenues and costs of a variety of
interventions designed to improve financial
sustainability.

One‐weekworkshopscombiningdidactictrainingineconomics‐relatedoperations
researchwithproposaldevelopmentandsubsequenttechnicalsupportcanbuild
economicscapacityinNGOs.
Institutionalizationofskillslearnedinworkshopsrequires
repeatedpracticethroughsubsequentapplications.Practicerequiresnotonlyresources,
butalsocommitmentfromseniormanagerswhomustbeconvincedconductingORto
developandtestwaysofimprovingfinancialsustainabilityisappropriateuseofscarce

resources.Asupportiveenvironmentisessentialtonurturenewly‐formedtechnical
capacitybuiltinaweek‐longworkshop;thisenvironmentismorelikelywhenanNGOhas
strongandsupportiveleadershipandminimalstaffturnover.OnlytwoFSCBIparticipants
(ProsaludinBoliviaandCHAGinGhana)movedbeyondthefirstroundtocarryoutsecond‐
generationprojects.Inbothcases,substantialtechnicalandfinancialassistancewasstill
requiredtodevelopandimplementthesestudies.Thissuggestsneedforlong‐term
commitmenttofinancialcapacitybuildinginitiatives(Boatengetal.2006;Meridaetal.2006).
FRONTIERSLegacyDocumentsFinancialSustainabilityofRHServices

Managementsupportandcommitmentarecritical.Ultimately,organizationalcapacity
residesinindividualsfreetoleaveforbetteropportunities.ThusitiscriticalNGOmanagers
participateinandsupportfinancialanalysiscapacitybuildingsowhentrainedstaffleave,
skillsareretained.SomeNGOsinFSCBIlostkeystaffduringimplementation,whichstopped
projectsorreducedlikelihoodofresultuse.InBolivia,Prosalud’schampionoftesting
alternativemarketingplansleftandwasreplacedbystaffwhoassignedlowerpriorityto
developingnewmarketingstrategies.Asaresult,oneoftwosecond‐generationORprojects
wasdropped,andanotherwascompletedwithlittledirectinvolvementofProsaludsenior
management(Meridaetal.2006;Bratt,Janowitz,Homan,andForeit2008).

NGOsattemptingtogenerateadditionalincomehadlittlesuccess.Costcontroland
incomegenerationarethetwomainpathstofinancialsustainabilityavailabletoNGOs.
OrganizationsworkingwithFSCBItendedtoshowmoreinterestingeneratingincomethan
controllingcosts,butincome‐generationinterventionsfailedtoproducemuchadditional
revenuefromRHservices.ASHONPLAFAinstitutedsystematicscreening
1
inHonduras,for
example,butidentifiedonlysmalldemandforadditionalfamilyplanningandRHservices;
income‐generationeffortsshouldfocusonothertypesofservices,suchasdentalcare,
optometryservices,andinternalmedicine.InstudieswithChildInNeedInstitute(CINI)and
ChhetrapatiFamilyWelfareCenter(CFWC)NGOsinIndiaandNepalrespectively,additions

torevenuewereverysmall,indicatinglargeincreasesinvolumewouldbeneededtomake
substantialimpactonsustainability
(Dasetal.2007;Shresthaetal.2007).

DonorexpectationsforNGOfinancialsustainabilityarenotalwaysrealistic.Donors
encouragefinancialsustainabilitywhilesimultaneouslyexpectingincreasednumberof
servicestothepoor.However,servingthepoormayinhibitanNGO’sself‐sustainingefforts,
becausethepoorareoftenunabletocontributetocostsofservices.Consequently,NGOs
needtocross‐subsidizesomeservicesforthepoorthroughrevenuesearnedfromprofitable
servicesorfromexternaldonorsupport.OrganizationsattendingFSCBIworkshopsfrom
Bangladesh,GhanaandNepalwereseverelyconstrainedbygovernmentanddonor
requirementstheyreducedependenceonexternalgrantswhilekeepingfeeslowand/or
increasingnumberofservicesprovidedtothepoor(Bratt,Janowitz,Homan,andForeit2008).

NGOsmaycontinuetosupportineffectiveinterventionsdespitenegativefindings.Itis
commonlyassumedutilizationfollowsnaturallyfromsuccessfulintervention,butinFSCBI,
thiswasnotalwaysthecase.InoneNGO,complementary(paired)productssalesdidnot
increaserevenues,buttrainingwascontinuedbecauseitcouldwithoutcost,andsenior
managementcontinuedtobelieveinit,despitenegativeresults
(Bruceetal.2006).A
systematicscreeninginHonduraswasscaledupalthoughonly11percentofclientswere
screened
(Vernonetal.2005).Traininginfinancialresearchandanalysiscannotresultin
sustainabilityunlessseniormanagershavestrongunderstandingoftheirpurposeandvalue.

1
Systematicscreeningisatechniqueforidentifyingandmeetingunmetclientneedforhealthcareservices.Providersusea
standardizedinstrument,generallyachecklistorsetofquestionstodeterminewhetheraclientneedsservicesotherthanthe
oneforwhichshecame—suchasreproductivehealthservices,immunization,orotherservices.Providersthenofferadditional
servicesduringthesamevisitormakeanappointmentorreferralforservicesthatcannotbeprovidedimmediately(Foreit

2006,onlineatwww.popcouncil.org/pdfs/frontiers/pbriefs/Sys_Scrn_brf.pdf
).


FRONTIERSLegacyDocumentsFinancialSustainabilityofRHServices

NGOsshouldbealertforopportunitiesarisingfromchanginggovernmenthealthcare
strategies.
Organizationscantakeadvantageofsectorwideapproaches(SWAp)and
decentralizationprocessestoenhancefinancialsustainability,buttheyneedtorecognize
opportunitiesinpublic‐privatepartnershipsandbecomemoreentrepreneurialinnature.A
surveyof16RHNGOsinUgandaanalyzedtheirabilitytosurviveinthecontextofthe
MinistryofHealth’sSWAp.NGOshavemanyopportunitiesofferedbytheSWAptoenhance
sustainabilityandeffectivenessbyreducingcurrentdependencyondonorfundingifthey
addresssystemicweaknesses,suchasnothavingstrategicplansorbytranslatingplansinto
concretewaysofimprovingfinancialsustainability(Mugisha,Birungi,andAskew2005).

ClassifyingNGOsonafour‐category
continuumofpreparednessforactive
engagementintheSWAp(“limping,”
“surviving,”“transitory,”and“thriving”)
showednoneof16NGOscouldqualify
as“thriving”(Box3),showingneedfor
considerablecapacitybuildinginNGOs
astheymakethetransitionfromdonor
dependencytobecomingintegral
componentsoftheoverallhealthsector
(Mugisha,Birungi,andAskew2005).
FRONTIERSLegacyDocumentsFinancialSustainabilityofRHServices


008)
.
Do

are
d
g
s

,
ces
f
integratedservicesaddedmoretoprogramrevenuesthantocosts(Dasetal.2007).

InGhanaanassessmentonRHpriority
settinginhealthsectorreformsatthe
districtlevelhighlightedacomparative
advantagemanyNGOshavedelivering
certainRHcomponentsatdistrict
levels,afactorNGOscouldtakeadvantageofinstrengtheningsustainability(Birungietal.
2
Box 3. Factors influencing Potential NGO Success

To compete in the changing health care environment, an
NGO should have the following characteristics:
• A strategic plan and ability to implement the plan;
• A manageable human resource development plan and
management information systems plus other institutional
management systems;
• A marketing strategy based on analysis of its potential to

offer or sell services to specific clientele;
• A customer oriented and participatory philosophy;
• Ability to combine goal of serving poor with schemes to
serve wealthier customers for cross-subsidization;
• A strategy enabling transition from existing donor
relationships into other approaches of generating income;
and
• Capacity to generate funds from a variety of sources.

Mugisha, Birungi, and Askew 2005

esintegrationofservicesleadtocostbenefits?Theevidenceisstillunclear.
Integrationofservicesispromotedbasedontwoassumptions:First,itwillimprovehealth
status,andsecond,itmayreduceaveragecostsandincreaseincome.Clientbenefits
clear.WhenprovidersinBolivia,Honduras,India,andSenegalintegratedsystematic
screeningformultipleclientneeds,servicesperclientincreasedby9to35percent(Foreit
2006)
.IntegrationofHIVinformationandservicesintoFPinKenyaandSouthAfricaresulte
inimprovedqualityofcareandincreasedaccesstoanduseofHIVcounselingandtestin
(Mullicketal.2008;Liambilaetal.2008).TheKenyastudyshowedintegrationincurredan
incrementalyetaffordablecostforadditionalprovidertimeforboth.Aprojectionofcost
fornationalscale‐upofthisintegrationmodelshowedincrementalcostsforintegrating
onsiteHIVtestingintoFPrangedfrom$5.60(forhospitals)to$9.53(fordispensaries)per
client;thiscomparesfavorablywithestimated$27perclientforVCTservicesofferedby
stand‐alonetestingcenters
(Liambilaetal.2008;Sweatetal.2000).Inanotherstudy,inIndia
integratingRHwithHIVtesting,provisionofRHservicesincreasedfrom12to25servi
perdayandfrom4to22forVCT.Whenincomefromservicefeeswerecomparedto
provisioncosts,asmallpositivemarginwasearned(US$0.07),indicatingprovisiono