Including non-client-facing provider time in calculating costs of health services

It is critical to calculate correctly the costs of implementing health interventions to generate reliable budgets, perform planning functions (including staff planning), and conduct economic evaluations. With the recent decrease in funding for international development assistance for health and the emphasis on country-led implementation of health programs in low- and middle-income countries, understanding the true cost of providing health services is even more important. As responsibility for funding and delivering health services shifts, inaccurate cost estimates can result in under-resourced disease response programs, ultimately lowering health outcomes. Costing studies, which aim to provide details on the financial and human resources necessary to deliver health services, rarely account for the time healthcare providers spend preparing for patient visits or following up with patients after a visit is complete. This deficiency in cost data is often acknowledged by researchers but seldom corrected, and consequently health policymakers do not know the true cost of staffing health facilities. In this paper, we present an updated methodology on how non-client-facing and non-clinical provider time should be incorporated into activity-based costing and management (ABC/M) applications. These methods are also applicable to traditional time-motion costing studies, including survey instrument changes and changes in calculating provider and operational costs. We present and discuss illustrative results which indicate that provider costs could increase by approximately 50% when non-client-facing provider time is included; operational costs could also increase, but likely by a smaller percentage. It is encouraging that we now have a simple, low-cost fix to the important issue of including provider costs correctly in both ABC/M and time-motion costing applications.