Resource Center

Purpose:
To assist in planning for new and renovated hospital and clinic facilities by projecting the recurrent costs of operation implicit in their design.

Description:
The model assists managers to plan and budget by estimating future annual costs for key budget categories based on various norms for staffing, support, etc. Users specify basic attributes such as size (bed capacity), capital costs, specialty services offered, and intensity of use. The model projects costs based on a set of alternative norms (either intermediate or optimal conditions). Users can adjust the norms to reflect local circumstances.

Developed by:
The Health Financing Program, Management Sciences for Health (MSH) in 1995 in Nicaragua, through a grant from the World Bank.

Intended Users:
Planners at the institutional and national levels.

Application:
In 1995, the model was used to help the Nicaraguan government determine if they had the financial capacity to maintain an initiative of modernizing their health care institutions. Over the course of nine months, the MSH team visited half of the hospitals in Managua and throughout Nicaragua, collecting data on the costs of operation of various sized clinics and hospitals. The data collected were analyzed and adapted to establish norms for the model. The government planners were then able to input their choice of facilities that they wanted to build, resulting in an estimated budget for the ongoing cost of maintaining these facilities.

Advantages:
Simple, easy to use, norms readily adjusted to deal with local conditions and priorities; format is general and can be applied to many types of organizations.

Limitations:
Not a predictor of exact future costs; rather, it projects implications of norms for future expenditures.

Recommendations for Users:
The model can be used to plan for new or upgraded facilities, or to estimate the financial implications of improving efficiency and moving from intermediate to optimal norms. The model will help the user to estimate future costs; it does not help an institution decide what to do when these costs are known.

Reports and Publications:
None.

Availability:
User’s manual and software (Excel workbook), available in English.

Contact:
Center for Leadership and Management
Management Sciences for Health
784 Memorial Drive
Cambridge, MA 02139
USA
Phone: (617) 250-9500
E-mail: toolkit@msh.org