Page 69 - Htain Manual

Different types of costing methodologies

Top down costing is done using the expenditure incurred during a given financial

period for delivery of the service. Total expenditure during given financial period is divided by

total number of services delivered during that periods. This is comparatively easier to do but
it is difficult to arrive at the unit cost of a specific disease or procedure since the expenditure

of a period covers many types of services and estimating what one of these services

consumed may not be accurate.
Bottom-up micro-costing is widely considered more appropriate as it takes into

account, all relevant cost components utilized for patient groups or subgroups. This costing

methodology has feasibility issues as it is very elaborate and time consuming, besides other

challenges like un-availability of records in hospitals. In countries like India, researchers

usually have to trade-off between accuracy and feasibility.
Many a times, mix of top-down and bottom-up methodology is used to ascertain the

unit cost of healthcare services. Top down approach is adopted for shared resources and

those resources, which contribute a small proportion of overall unit cost (e. g. Overheads);
whereas, bottom-up approach is used for resources which are exclusive for a given service or

contribute a large proportion of the overall cost (e. g. Human Resource)

Steps for costing exercise

For the costing exercise to be streamlined and to address the needs of stakeholders,
a clear work plan needs to be followed. Inadequately planned costing exercises can lead to

repeated visits to healthcare facilities or collection of irrelevant data. Broadly, the step wise

approach given below can be followed:

1 • Outline aims and objectives (services/packages)
2 • Decide perspective

3 • Select costing methodology
4 • Select sample
• Prepare data collection tools
5
• Collect data
6
• Validate and analyse the data
7
• Publish results
8

Figure 2. Steps to undertake costing.

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