2.4. Costing approach

As per the Lancet Global Health Commission on financing PHC, for actual costing, PHC services are defined as the services delivered at PHC facilities (34). To calculate the annual actual costs of PHC services as delivered at each facility surveyed, we aggregated the 2019 labor, drug, medical supply, and operational costs. Because of difficulties in apportioning the expenditure data collected on outpatient visits and inpatient days, these were apportioned assuming one inpatient day equated 4.4 outpatient visits at PHC facilities and 3.9 outpatient visits at general hospitals (35)¹—assumptions which are consistent with previous costing studies (36). To calculate the cost per patient, total costs at health facilities were divided by weighted service outputs, where weighted service outputs were equal to the sum of outpatient visits (OP) and 4.4 times inpatient (IP) days at PHC facilities and the sum of OP visits and 3.9 times IP days at general hospitals.

To determine the overall PHC cost for Kaduna and Kano, we used two different approaches to first expand the total annual actual costs from sampled PHC facilities to all public PHC facilities providing outpatient services as recorded in the DHIS2 for 2019 and then to expand from sampled PHC facilities and general hospitals to all public PHC facilities and general hospitals. In the first estimation method (estimate 1), expansion factors were derived based on service utilization. In the second estimation method (estimate 2), expansion factors were calculated based on numbers of health facilities. Both methods presumed that costs at the health facilities surveyed reflected statewide averages. Per capita actual costs for Kaduna and Kano were determined by dividing the total cost of each estimate for each state by the respective populations. This approach of approximating total actual PHC costs in a geographic area by extrapolating from a sample of health facilities has been employed in several previous studies (31, 32, 37, 38).

For normative costs, we costed the national MSP which the states have adopted (39, 40). While the MSPs for both states shared most services, they differed in target coverage levels for some services. A team of clinicians developed STPs for all 103 services included in the MSPs. These protocols specified average facility visits per service per year, staff time per service, required drugs and diagnostics per services, all priced accordingly. The population needing each service was determined using state demographic data and data on incidence and prevalence rates as well as utilization rates for promotional and preventive services. Incidence and prevalence rates were obtained from national sources or the 2019 Global Burden of Disease (GBD) dataset for Nigeria (41). To factor in indirect costs including the costs of non-clinical labor and operational inputs in the normative costs, we applied an overhead derived from our facility survey data. We calculated indirect cost rates for each facility type by dividing indirect costs by the total cost. We did not consider potential efficiency gains through economies of scale and scope in the normative cost estimates.

The financial resource gaps for PHC services in Kaduna and Kano were calculated as the difference between actual and normative costs (31, 32, 37, 38). We calculated resource gaps using actual estimates 1 and 2 described above. Our baseline financial resource gaps assumed that the entirety of the population in Kaduna and Kano would exclusively use public sector primary health facilities. However, recognizing that over half of health services in Nigeria are provided in the private sector (2), we also estimated resource gaps assuming 50 and 75% of the population used public sector services.

All costs are expressed in United States Dollars (US$). The exchange rate applied was 316 Nigerian Naira (NGN) per US$ (42).