FINANCE

Many financial issues need to be considered when preparing a NUM forecast.[1] There may be inhibiting/facilitating factors associated with commodity costs, particularly the program’s ability to purchase the anticipated required quantity of the product; the clients’ ability to pay for the product when relevant; and the health facilities’ ability to offer the product (e.g., is special equipment needed, are there incentive schemes in place, such as performance-based financing, that affect service delivery, etc.)?

Willingness and ability of donors and governments to procure the product will depend on product cost, budgets; and policies related to such factors as product registration, emphasis on certain types of products (e.g., long-acting and permanent methods (LAPM), injectable contraceptives), and preferred manufacturers (PATH 2009).

Programs have to examine the costs to clients (e.g., any repeat costs for continued use, willingness-to-pay through public/private sector outlets when relevant), intermediate costs to the facility/health delivery system/distributor, and comparative costs of the method to other existing methods. These costs can be influenced by the larger health system; e.g., if the public health system provides the method free of charge or not, if the method costs are covered by insurance, and/or if the product is available through both public- and private- sector channels. Secondary data sources with respect to finance factors include the DHS, RHS, and national population census data.  

Assumption-building tips:

  • Public-sector issues:
  • Can the program afford to procure enough of a product to meet demand? Are donors or other sources willing and able to procure the product?
  • Are performance-based financing structures in place, and, if so, is the NUM included in the system? Is there an incentive/disincentive to offer the product and how will this affect the health facilities’ willingness to offer the product?
  • Will clients be expected to pay for the product in the public sector? Can clients afford to pay for the method at the price point set?
  • Has funding for promotional strategies for family planning been allocated? How far has planning and implementation progressed? Is the NUM included? If not, is there an opportunity to do so?
  • Private-sector issues:
  • Is there a business case for distributors/pharmacies/social marketing organizations for offering the product? How much of the product will they need to sell to make a profit?
  • Can clients afford to pay for the method at the price point set?
  • What is the competition for the product in the market? Is there more than one brand of the product, and how does this affect price and demand?    

 


[1] For public health programs, availability of financing for commodity procurement should not be used to constrain a forecast. A forecast is the estimated future demand assuming full availability of supply. Funding constraints can be factored into roll-out plans, supply plans, and scale up after the forecast is complete.