Budeting & costing
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Budeting & costing
- 29. Responsibilities in Health by levels of Government AYUSH MEDICAL EDUCATION & RESEARCH FAMILY WELFARE HEALTH CENTRAL Govt. level STATE Govt. level LOCAL Govt. level (ULB/PRI) Communicable Diseases Secondary Healthcare Facilities Clinics & Dispensaries RCH-II Primary Healthcare Facilities Medical Education & Research Medical College Hospitals Secondary Healthcare Facilities Clinics & Dispensaries Medical Education & Research
- 30. Structure of Health Budget PLAN NON PLAN CENTRALLY SPONSORED SCHEMES State Funds EXTERNALLY AIDED PROJECTS REVENUE EXPENDITURE CAPITAL EXPENDITURE LOAN ACCOUNT EXPENDITURE “ SOCIETY” ROUTE (NRHM & RCH-II Flexi-pools; NACP-III) 2210 2211 4210 4211 6210 6211 “ TREASURY” ROUTE
- 31. All India: Health as proportion of total Budget
- 49. Allocation of Joint Costs of ANM 40% FP 30% ANC 20 % Curative % Annual salary Rs.1,10,000 10% MIS
Editor's Notes
- We now move on to a discussion of different types of costs. Costs can be classified in many different ways, and these three distinctions are important for some of the examples and exercises we will use in this workshop. It is important to note that these categories are not mutually exclusive. A cost can be fixed and either direct or indirect. It is also important to point out that not all of these distinctions come into play in every cost study. The research question will dictate which of the definitions are useful for a particular analysis. Finally, there are other ways to classify costs that are not presented here. We have chosen to present the definitions that are most relevant to other material in the workshop.
- Next we’ll examine the distinction between fixed vs. variable costs. This distinction hinges on whether or not the cost is sensitive to small changes in output. Costs that do not vary with small changes in the amount of output are classified as fixed. In the short-run, many costs may be considered to be fixed. For example, if another patient comes to the clinic, we do not need to build a new exam room, buy another chair, or hire additional staff. Variable costs, on the other hand, are costs that do vary with the level of output produced. For our example of another patient coming to the clinic, we will need to use more supplies to provide service to this patient. All costs can be categorized as being either fixed or variable.
- Let’s practice categorizing costs as fixed or variable. The clinic building: is this fixed or variable? Why? (Answer: fixed) What about brochures given to clients? (Answer: variable, if more clients come, more brochures are required) A salaried community-based-distribution supervisor (person who supervises field workers) (Answer: fixed, a salaried worker does not get paid more if the number of clients served increases). A surgeon paid on a per-procedure basis? (Answer: variable, as the number of surgeries increases, the payments to the surgeon also increases)
- Another way of classifying costs is as direct or indirect. The use of the term here is more in keeping with accounting definitions. Direct costs refer to those resources specifically attributed to the production of a service or an intervention. These are the types of inputs that would be obvious if you were to observe the provision of the service. The “indirect” costs are those for other inputs which may or may not be observable but that are necessary to support the provision of the service. Often these items are referred to as “overhead” expenses.
- So let’s try and classify the following types of expenses into direct vs. indirect. Clinician salaries? (Answer: Direct) Administrative staff salaries? (Answer: Indirect, support the provision of service) Contraceptives? (Answer: Direct) Clinic Building? (Answer: Indirect)
- A final category of costs is joint costs. These are the costs of resources that are shared across different outputs. The best example of this is the labor cost of clinic personnel. They provide multiple services and yet the salary and benefits received are not linked directly to the different outputs. For example, if the physician from the previous example had been providing prenatal visits in addition to IUD insertions, then the physician salary would be a joint cost. Once a cost is identified as being a joint cost, the analyst must decide on a method of allocating the cost to the different outputs produced. We will finish this part of the workshop with a brief discussion of joint cost allocation.