Cost-recovery strategies in the health and population programmes of Bangladesh: issues for the application of users fees

Abstract

The paper is a review of the cost recovery experiences accumulated by several of the major Rural Service Delivery Partnership (RSDP) and Urban Family Health Partnership (UFHP), the Social Marketing Company (SMC), and other non-NIPHP NGOs namely, Marie Stopes, Radda MCH-FP Clinic, Gonoshasthya Kendra and Grameen Health Programme. The main purpose of the review was to guide the design of an operations research intervention on cost recovery strategies for the delivery of the essential serveces package (ESP). This paper included a review of the literature, a review of the formar MCH-FP Extension Projects' experiences with cost recovery, an analysis of the Operations Research Project(ORP)'s surveillance data, visits to related government and NGO programmes, and discussion with programme managers and supervisors. Although it was found that various cost-recovery strategies, such as charging of user fees, insurance schemes and drug-revolving funds, were adopted by the above programmes, pricing (charging user fees for services and commodities) has been the most commonly used cost-recovery strategy. In the GoB sector, services are generally free at the Thana Health Complex (THC) and below, except for the nominal charges placed on condoms-currently Tk. 1.20 per dozen. The Thana Functional Improvement Pilot Project (TFIPP), which is working in 55 thanas, however, has adopted some cost-recovery measures. This project charges a registration fee of Tk. 2.00 for outpatient services at its THCs. These THCs also charge fees for blood transfusion and the use of an ambulance. District Hospitals and tertiary facilities also levy nominal fees. These fees are placed, not with the purpose of recovering costs, but primarily to prevent unnecessary use of the services and wastage. In the public sector, payments made for many of the services offered are higher than the "official" rates set by the government. Among other things, this indicates that the expenditures people make in health and family planning exceed the costs involved in delivering them. Studies on willingness and ability to pay showed that most of the people are paying for services, and for some services, such as immunization and ANC, people are wiling to pay more than what they are currently paying. As a measure of attaining improved sustainability, most NGOs began to charge nominal fees/services charges for a range of MCH-FP services in the early nineties. SMC has attained considerable success in cost recovery and recovers around 70 percent of the programme's cost. The University Research Centre (URC) study suggest that cost recovery currently rages from 0.7 percent to 12.4 percent of recurrent costs. In most of the NGOs, however, the fees have been set arbitrarily. This reflects the overall absence of a clear-cut guideline regarding pricing and utilization of the revenues at the local level for quality improvement. The structural adjustment agenda that are being adopted in developing countries have led to a heavy reliance on user fees for cost recovery in the health and famely planning sector. Experiences of many countries with user fees show that pricing can potentially contribute to the improvement of the financial base of the health sector. Unfortunately, it can also deter those people whose health needs are greatest. Therefore, carefully discriminating fee systems, need to be designed to ensure that revenue is provided only by those who can afford to pay, and that the resulting income improves the quality and accessibility of health care targeted to the poor. ICDDR,B's MCH-FP Extension Project experiences with charging for pills, condoms and injectables at a differential fee structure in Mirsarai and Abhoynagar thanas within the GoB programme showed that the introduction of user fees had no adverse effect on CPR or utilization of services. In fact,utilization of fixed sites increased and pill wastage was significantly reduced following the introduction of a charge levied on pills. Several studies suggest that Bangladesh's national programme could potential charge prices to recover costs without adversely affecting utilization of services. Besides the income generated from such a scheme, the simultaneous reduction in commodity wastage would help to enhance the programme's sustainability. Differential pricing facilitited higher utilization of services at statis sites and acted as a 'safety-net' for the poor. However, a strong economic approach toward pricing (especially with regard to a multi-service delivery management procedures have yet to be developed. Likewise, possibilities with regard to cross subsidization for the provision of services need to be examined. Achievement of equity, efficiency and, in particular, sustainability will require the implementation of complementary interventions which result in the development of skills and the application of mechanisms to ensure accountability. Thus, the process of policy development and implementation, itself, will play an important role in the development of an effective user fee system. The programme will need to adopt a systematic approach to the introduction or revision of prices that considers demand and supply factors such as the cost of providing the services, clients' willingness and ability to pay for particular services, customer health care expenditure, and market prices. The strategy will need to consider all of the services of the package offered, with necessary cross-subsidization and 'safety-net' measures for vulnerable groups. Similarly, a clear-cut guideline will need to be developed for the management of resulting revenues. This guideline will need to take into consideration the billing, revenue collection, accounting, and use of revenue generated at the local level for quality improvements.