The cost of the district hospital : a case study from Malawi

The author analyzes the cost to the Ministry of Health of providing district health services in Malawi, with an emphasis on the cost of the district hospital. She reaches several conclusions : 1) except for drugs and food, there seems to be little scope for major savings in hospital operation costs, unless the flow of patients to the hospital is reduced; 2) to increase the hospital's role in district-wide activities, efforts should be made to increase staff motivation to work outside the hospital; and 3) detailed costing of hospital activities is feasible in a low-income country like Malawi. The author's analysis provides firm evidence to assess district resource allocation patterns by carefully disaggregating district costs by level of care and department. The report focuses on average costs and the distribution of cost by input category, cost center, and direct service department. A strikingly low proportion of district recurrent costs was absorbed by salaries and wages: between 27 and 39 percent, depending on the district; while a surprisingly high proportion was absorbed by drugs and medical stores: between 24 and 37 percent. The hospital's largest cost center - in terms of resources it controlled - was the pharmacy. Average costs by hospital department showed variation by district, with one hospital being consistently the most expensive and another the cheapest.