Economic Costs of Providing District- and Regional-Level Surgeries in Tanzania

Background: Access to surgical care is poor in Tanzania. The country is at the implementation stage of its first National Surgical, Obstetric, and Anesthesia Plan (NSOAP; 2018-2025) aiming to scale up surgery. This study aimed to calculate the costs of providing surgical care at the district and regional hospitals. Methods: Two district hospitals (DHs) and the regional referral hospital (RH) in Arusha region were selected. All the staff, buildings, equipment, and medical and non-medical supplies deployed in running the hospitals over a 12 month period were identified and quantified from interviews and hospital records. Using a combination of step-down costing (SDC) and activity-based costing (ABC), all costs attributed to surgeries were established and then distributed over the individual types of surgeries. These costs were delineated into pre-operative, intra-operative, and post-operative components. Results: The total annual costs of running the clinical cost centres ranged from $567k at Oltrumet DH to $3453k at Mt Meru RH. The total costs of surgeries ranged from $79k to $813k; amounting to 12%-22% of the total costs of running the hospitals. At least 70% of the costs were salaries. Unit costs and relative shares of capital costs were generally higher at the DHs. Two-thirds of all the procedures incurred at least 60% of their costs in the theatre. Open reduction and internal fixation (ORIF) performed at the regional hospital was cheaper ($618) than surgical debridement (plus conservative treatment) due to prolonged post-operative inpatient care associated with the latter ($1177), but was performed infrequently due mostly to unavailability of implants. Conclusion: Lower unit costs and shares of capital costs at the RH reflect an advantage of economies of scale and scope at the RH, and a possible underutilization of capacity at the DHs. Greater efficiencies make a case for concentration and scale-up of surgical services at the RHs, but there is a stronger case for scaling up district-level surgeries, not only for equitable access to services, but also to drive down unit costs there, and free up RH resources for more complex cases such as ORIF.