The economics of hospitals in developing countries. Part I: expenditure patterns

In recent years, the attention of policy-makers and researchershas been directed at primary health care, with little noticetaken of hospitals except to observe that they take a disproportionateshare of health sector resources. However, it is precisely becausehospitals are large consumers of resources that more attentionneeds to be paid to them by policy-makers and researchers. Itis conventional and traditional to describe developing-countryhealth systems as hospital-dominated, with the great majorityof resources allocated to hospitals in urban centres. Casualinvestigation and observation certainly suggest this to be thecase. Yet the higher levels of a health system have an importantsupportive role in terms of supervision and referrals. Thusrelevant questions should be, ‘what mix of facilitiesis desirable, how can these be most economically provided andhow should resources be shared between the different levelsof facility?’ This paper presents the currently available data on the financingand economics of hospitals in developing countries. Part I firstdiscusses some of the problems of data availability and comparability,and then reviews data on the hospital share of health sectorresources, the extent to which hospital expenditure is distributedequitably, and whether the hospital share of expenditure hasbeen changing over time. Part II (to be published in Volume5:3 of this journal) reviews the cost structure of hospitals,in particular the functional breakdown of hospital expenditure,hospital factor mix and unit costs. Patterns of hospital incomeare then considered, with particular attention being paid tothe potential for shifting the burden of hospital financingaway from governments, through cost-recovery in the governmentsector or greater use of non-government or private sector services.The second part ends by outlining a possible research programmein the field of hospital financing and economics.