The economics of hospitals in developing countries. Part II. costs and sources of income

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 reources 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 (publishedin Volume 5:2 of this journal) first discussed Some of the problemsof data availability and comparability, and then reviewed dataon the hospital share of heatth sector resources, the extentto which hospital expenditure is distributed equitably, andwhether the hospital share of expenditure has been changingover time. Part II 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, thtough cost-recoveiy in the governmentactor or greater use of nongovernment or private sector services.The second part ends by outlining a possible research ptogrammein the field of Hospital financing and economics.