Estimating Cost Of Government Health Care Services In India | Suresh Kulkarni

This paper reports findings, conclusions and recommendations of a study estimating cost efficiency in government provided health care services. A maiden attempt is made to develop a separate framework for aggregate and unit cost analysis to evaluate cost efficiency. The framework is applied to five years financial data of three well-functioning and not-so-well -functioning community health centres (CHC?s) in a state. The study finds available financial data highly inadequate for unit cost analysis. In particular, the existing system of financial reporting contains broad items/subheads and is hence too aggregative for purposes of unit cost analysis. Information on cost of inputs provided by government to CHC?s is not available. The accounting procedures are not uniform among the CHC?S. These limitation notwithstanding, some important conclusions have been drawn, such as-well and not-so-well, functioning CHC?s were cost inefficient, implying that financial performance and physical infrastructure do not necessarily go together. Aggregate cost analysis showed that neither cost ratios nor cost shares followed norms. Both types of CHC?s either overspent or underspent and concentrated the cost share in one item namely salary. Unit cost analysis showed that it was highest in a least expected activity ?primary? intervention in both categories of CHC?s. Secondly wide variations in activitywise unit costs, cost ratios, cost shares, notwithstanding, unit cost in family welfare services was lower than unit cost in medical services in all five years in all CHC?s. This confirms that cost efficiency and physical performance are not necessarily related to each other. Author?s main recommendation is that for the purpose of cost efficiency, financial efficiency analysis of health care facilities rural as well as urban centres, should be instructed to prepare expenditure tatements, both activitywise and inputwise.