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 . 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.  . Mutilation/Cutting Gender Integration of Services Sustainability of Services Utilization of Research Findings Youth Reproductive Health The complete reports