Estimating the costs of psychiatric hospital services at a public health facility in Nigeria

Charles Ezenduka, Hyacinth Ichoku, Ogbonnia Ochonma
Journal of Mental Health Policy and Economics 2012, 15 (3): 139-48

BACKGROUND: Information on the cost of mental health services in Africa is very limited even though mental health disorders represent a significant public health concern, in terms of health and economic impact. Cost analysis is important for planning and for efficiency in the provision of hospital services.

STUDY AIM: The study estimated the total and unit costs of psychiatric hospital services to guide policy and psychiatric hospital management efficiency in Nigeria.

METHODS: The study was exploratory and analytical, examining 2008 data. A standard costing methodology based on ingredient approach was adopted combining top-down method with step-down approach to allocate resources (overhead and indirect costs) to the final cost centers. Total and unit cost items related to the treatment of psychiatric patients (including the costs of personnel, overhead and annualised costs of capital items) were identified and measured on the basis of outpatients' visits, inpatients' days and inpatients' admissions. The exercise reflected the input-output process of hospital services where inputs were measured in terms of resource utilisation and output measured by activities carried out at both the outpatient and inpatient departments. In the estimation process total costs were calculated at every cost center/department and divided by a measure of corresponding patient output to produce the average cost per output. This followed a stepwise process of first allocating the direct costs of overhead to the intermediate and final cost centers and from intermediate cost centers to final cost centers for the calculation of total and unit costs. Costs were calculated from the perspective of the healthcare facility, and converted to the US Dollars at the 2008 exchange rate.

RESULTS: Personnel constituted the greatest resource input in all departments, averaging 80% of total hospital cost, reflecting the mix of capital and recurrent inputs. Cost per inpatient day, at $56 was equivalent to 1.4 times the cost per outpatient visit at $41, while cost per emergency visit was about two times the cost per outpatient visit. The cost of one psychiatric inpatient admission averaged $3,675, including the costs of drugs and laboratory services, which was equivalent to the cost of 90 outpatients' visits. Cost of drugs was about 4.4% of the total costs and each prescription averaged $7.48. The male ward was the most expensive cost center. Levels of subsidization for inpatient services were over 90% while ancillary services were not subsidized hence full cost recovery.

CONCLUSION: The hospital costs were driven by personnel which reflected the mix of inputs that relied most on technical manpower. The unit cost estimates are significantly higher than the upper limit range for low income countries based on the WHO-CHOICE estimates. Findings suggest a scope for improving efficiency of resource use given the high proportion of fixed costs which indicates excess capacity. Adequate research is needed for effective comparisons and valid assessment of efficiency in psychiatric hospital services in Africa. The unit cost estimates will be useful in making projections for total psychiatric hospital package and a basis for determining the cost of specific neuropsychiatric cases.

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