Through a system of cost accounting, the manager can determine the actual costs
of a particular service, service facility, or program. Family planning
managers often find it a challenge to determine the true cost of family
planning services when they are integrated with other health or education
services. The cost of individual facilities in programs also includes some
share of the indirect costs of the larger programs, but it is a challenge to
determine how large that share should be. This information is useful for
several purposes:
In services that are trying to recover costs through charging fees, cost
information is essential in order to set prices.
Integrating Cost Information with Program Information
In family planning programs, there are three common obstacles to overcome in
order to generate accurate cost information for the purpose of measuring
cost-effectiveness or of setting fees:
Tracking resources used in cash-based accounting systems. Family planning
programs typically use the cash-based accounting system. Cash-based systems
record resources purchased rather than resources used. For example, if two
years' worth of supplies are brought in Year One, analyzing costs on a
cash basis alone will inflate the supplies' cost for the first year.
Furthermore, the cost of donated assets and costs associated with the
deprecation of fixed assets are often not recorded.
Solution: A modified cash-based system keeps track of receivables (money
you have earned but not yet received), payables (money that you owe),
depreciation, and contraceptive/medical supplies used. The latter can be
tracked through conducting regular inventory of supplies.
Separating family planning costs from the costs of other services. When
family planning services are integrated with other health or social services,
the financial information does not separate family planning costs from the
costs of these other services.
Solution: Some of the program costs, such as contraceptive supplies and
surgical time for sterilizations, are clearly attributable to the family
planning program. Most programs estimate the percentage of the program's
resources which is devoted to family planning in order to assign the rest of
the costs. In clinical programs, they arrive at this estimated percentage by
counting the number of total visits versus the number of family planning
visits, and in CBD programs by averaging workers' estimates of what
percent of their time is spent on family planning.
Calculating indirect costs. If the manager wishes to compare the
cost-effectiveness of different operating centers or projects, the financial
information does not record the indirect costs of running an operating center
within a program. For example, usually some of the administrative costs of
running an operating center are incurred in a central or regional office.
Solution: The cost study must estimate what percentage of the
administrative costs of the total program corresponds to the costs of running
any one project or operating center within the program. One method that a
manager might use to make this estimate is the cost method. To use this
method, take the cost of one operating center and divide it by the total cost
of all of the operating centers within the program. For example, if the annual
budget of Clinic A is $10,000, and the annual budgets of all ten clinics in the
program amount to $100,000, then the costs of Clinic A are 10 percent of the
direct costs of the program, and 10 percent of the costs of the central office
could logically be assigned to Clinic A.
