Drugs and medical supplies comprise a major component of health budgets. These may account from 50 - 90 percent of non-personnel costs (MSH 1997). Further, up to 70 percent of the original pharmaceutical expenditure can be lost due to poorly managed supply chains. Informed public sector supply chain decisions are hampered when the cost of delivering products to patients is unknown.
In 2000, John Snow, Inc. and Ghana Ministry of Health staff developed a model to determine the cost of the supply chain for public sector health products. Their efforts demonstrate that it is possible and desirable to apply a total cost model to public sector logistics, but they also highlight the difficulties and constraints to collecting cost data and for implementing decisions based on cost analyses.
The literature indicates that studying logistics costs can produce useful information for decision-makers, including measures of staff capacity and estimation of benefit for different infrastructure investments. Although models can also estimate savings derived from cost reduction strategies like reducing distribution tiers and outsourcing, experience shows that such strategies are often organizationally and politically difficult.
Analysis of cost information is an essential tool for planning and evaluating cost-savings of alternate approaches for decreasing cost and for increasing logistics system efficiency. Developing tools and strategies for collecting, analyzing and using cost data remain a challenge.
Learning Objectives: By the end of the presentation, participants will be able to describe reasons for costing health product logistics and discuss applications of a cost model in analyzing the impact of interventions intended to reduce cost such as outsourcing, privatization and integration. Further, participants will be able to discuss the constraints involved in collecting, analyzing and using cost data for decision making.
Keywords: Cost Issues, International Public Health
Presenting author's disclosure statement:
Organization/institution whose products or services will be discussed: None
I do not have any significant financial interest/arrangement or affiliation with any organization/institution whose products or services are being discussed in this session.