Estimating unbiased economies of scale of HIV prevention projects: A case study of Avahan

Abstract

Governments and donors are investing considerable resources on HIV prevention in order to scale up these services rapidly. Given the current economic climate, providers of HIV prevention services increasingly need to demonstrate that these investments offer good 'value for money'. One of the primary routes to achieve efficiency is to take advantage of economies of scale (a reduction in the average cost of a health service as provision scales-up), yet empirical evidence on economies of scale is scarce. Methodologically, the estimation of economies of scale is hampered by several statistical issues preventing causal inference and thus making the estimation of economies of scale complex. In order to estimate unbiased economies of scale when scaling up HIV prevention services, we apply our analysis to one of the few HIV prevention programmes globally delivered at a large scale: the Indian Avahan initiative. We costed the project by collecting data from the 138 Avahan NGOs and the supporting partners in the first four years of its scale-up, between 2004 and 2007. We develop a parsimonious empirical model and apply a system Generalized Method of Moments (GMM) and fixed-effects Instrumental Variable (IV) estimators to estimate unbiased economies of scale. At the programme level, we find that, after controlling for the endogeneity of scale, the scale-up of Avahan has generated high economies of scale. Our findings suggest that average cost reductions per person reached are achievable when scaling-up HIV prevention in low and middle income countries.

The Determinants of Technical Efficiency of a Large Scale HIV Prevention Project: Application of the DEA Double Bootstrap Using Panel Data from the Indian Avahan

“…In fact, we find a A further finding is that we find that a greater number of high-risk persons in the catchment area increases inefficiency, given this finding opposes our previous finding of the presence of economies of scale highlighted in a previous paper that examines the relationship between the numbers of persons reached by HIV services and costs [25].…”

“…The SLP is a key factor determining technical efficiency, corresponding with our previous finding that the SLP is a key driver of cost [25]; potentially illustrating the important role of support and supervision in achieving efficiency. Additionally, the number of NGOs per SLP is positively correlated with inefficiency when the number of NGOs per SLP is below 30.…”

“…This result is interesting given that in a previous paper analysing the determinants of average cost [25], we found that average cost has increased over time. However, in that paper we were unable to disentangle the effect of input price increases and technical efficiency.…”

“…Given the novelty of the area analysed, the selection of inputs and outputs does not come from the literature, but from consultation with the programme implementers and reviewing of previous programme literature [25]. We ran sensitivity analysis to ensure that our conclusion do not dramatically changed based on the inputs chosen.…”

“…Several potential environmental determinants of technical inefficiency are explored, that represent key theoretical drivers of average cost [25]. These include (1) the type of high-risk population reached (female sex worker versus men who have sex with men), (2) potential scale measured here by the estimated number of high-risk populations in the catchment area, c (3) competition level measured by the number of Avahan NGOs per district and by whether or not the NGO operate alone with HIV high-risk population over a district, (4) purchasing and funding characteristics proxied by the number of NGO per SLP and SLP dummies, (5) mismanagement that is measured by whether or not the NGO was replaced during the year and (6) maturity as measured by the number of years in Avahan, by whether or not the NGO has HIV experience before joining Avahan and by time dummies.…”