The cost of service quality improvements: tracking the flow of funds in social franchise networks in Myanmar

Abstract

IntroductionThis paper examines the cost of quality improvements in Population Services International (PSI) Myanmar’s social franchise operations from 2007 to 2009.MethodsThe social franchise commodities studied were products for reproductive health, malaria, STIs, pneumonia, and diarrhea. This project applied ingredients based costing for labor, supplies, transport, and overhead. Data were gathered seven during key informant interviews with staff in the central Yangon office, examination of 3 years of payroll data, examination of a time motion study conducted by PSI, and spreadsheets recording the costs of acquiring and transporting supplies.ResultsIn 2009 PSI Myanmar’s social franchise devoted $2.02 million towards a 94% reduction in commodity prices offered to its network of over 1700 primary care providers. These providers retained 1/3 of the subsidy as revenue and passed along the other 2/3 to their patients in the course of offering subsidized care for 1.5 million health episodes. In addition, PSI Myanmar devoted $2.09 million to support a team of franchise officers who conducted quality assurance for the private providers overseeing service quality and to distributing medical commodities.ConclusionIn Myanmar, the social franchise operated by PSI spends roughly $1.00 in quality management and retailing for every $1.00 spent subsidizing medical commodities. Some services are free, but patients also pay fees for other lines of service. Overall patients contribute 1/6 as much as PSI does. Unlike other NGO’s, health services in social franchises like PSI are not all free to the patients, nor are the discounts uniformly applied. Discounts and subsidies evolve in response to public health concerns, market demand, providers’ cost structures as well as strategic objectives in maintaining the network and its portfolio of services.

Cost-effectiveness of using a social franchise network to increase uptake of oral rehydration salts and zinc for childhood diarrhea in rural Myanmar

“…A household survey in 2010 asked households in both control and intervention areas how frequently they sought care for diarrhea in their children and what they paid to access diarrhea care in non-PSI providers. Guided by the decision tree in Figure 1 , we used this information to estimate the expected costs of diarrhea for households in the treatment area and households in the control area [ 8 ].…”

“…Social franchising offers a viable strategy to increase the uptake of health commodities in private facilities, but it can be costly to implement [ 8 ]. In a social franchise, an NGO forms a network of private providers who agree to regular visits and distribution of services and commodities.…”

“…The NGO will obtain financing to support its distribution network and to offer subsidies for the commodities. The costs of forming and maintaining the network and applying subsidies can be 2–3 times as much as the direct cost of the commodities [ 8 ]. However without the NGO’s investments, the private sector may not achieve adequate distribution of commodities.…”

Physicians in private practice: reasons for being a social franchise member

“…With price capitations often set below the providers’ customary fees and the increased administrative burdens of franchised membership, the motivations of providers to join and remain within a social franchise are poorly understood. This information is critically important given recent evidence on relative high costs associated with managing a franchise [12]. However, there is in general very little evidence in the published literature on the sustainability of social franchise models, [13].…”