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System Costs of Producing a Nurse: Evidence from PIMS Nursing College

Hidayat Ullah

Department of Health Economics & ManagementHealth Services Academy

Introduction

The health workforce is one of the most important pillars of

the health system. Qualified health professionals, especially

the nurses available in adequate numbers to deliver the

services, are very important for improving health outcomes.

More recently, there is growing awareness from local and

international health community on the relatively ignored

aspect of human resources of health. In absence of qualified

health care personnel, it becomes very difficult to achieve the

desired health care objectives, particularly, the ones that are

internationally agreed through the charter of the United

Nations in terms of the Millennium Development Goals

(MDGs).

At present in Pakistan, little data is available to identify what

the educational investment in nursing actually is or what it

should be. There is need for conversation of information

about costs and establishment of a more or less standard

method of cost determination applicable to the institutions

and organizations associated with it. Inquiry in this domain is

utmost important.

The study intends to explore what is the system cost

(provider’s cost) of producing a Post RN BSc Nurse at PIMS

College of Nursing, Islamabad? Data generated by the study

will be helpful in priority setting, planning, budgeting and

management of nursing education programs by the

government and the private sector.

Data

Results

Employees Pay Related Expenses (TVC1)

Policy Implications

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Supervisor: Prof. Dr. Shafqat Shehzad

Methodology

Study Model Costs have been calculated based on seven steps for

computing unit costs, a framework built on the procedures of the UNICEF

Manual for Analysis of District Health Service Costs and Financing (Hanson

and Gilson, 1996). However the steps adopted and modified according to

requirement of the study. The first step of the model is to define the final

product. With reference to the present study, Post RN BSc Nurse has been

taken as an output.

The second step is to determine the number of participants (Students) per

program. The third step determines the average length of participation

(duration of the Nursing program). The fourth step defines cost categories. The

major cost categories for most departments include employees pay related

expenses, operating expenses, expenses related to transfers, special purchases

made for the program’s use, repair and maintenance and other general

expenses.

The fifth step identifies the full cost for each input. It is an important step for

calculating the unit cost. Availability of complete cost data is an essential aspect

of this step. The sixth step assigns inputs to cost categories. In the seventh step,

all costs are allocated to the final cost.

Equations

The Total Variable Cost, Average Cost and Total Program Cost is calculated

by the following equations;

Total Variable Cost (TVC)

Total Variable Cost (TVC) = TVC1+ TVC2 + TVC3 + TVC4 + TVC5……….1

Where TVC1, TVC2, TVC3, TVC4 and TVC5 represents Employees

Expenditures, Operating Expenses, Transfers related Expenses, Purchase of

Physical Assets and Repair and Maintenance Expenditures respectively.

Average Cost

Average Cost (AC) = Total Variable Cost/Total number of Post

RN BSc N Graduates…..2

Total Program Cost

It is the sum of the Total Variable Cost for the fiscal Year 2009-10 and

2010-11

Data Sources

The study has been collected data related to variable cost per

student per year from the Administration, Accounts and Finance

Offices of the PIMS College of Nursing, Islamabad, Pakistan.

Data CollectionA detailed data collection form has been developed to extract cost information under different heads from the accounts and finance offices of the PIMS College of Nursing. Existing record of recurrent and developmental expenditures for the fiscal year 2009-10 and 2010-11 has been analyzed. Retrospective record reviews were used to gather information on expenditures made specifically for the program under study.

Study Variables

The following are variables of cost used in our study:

a) Employees Pay Related Expenses:b) Operating Expenses: It includes basic pay and all the allowances paid to the gazetted officers, non gazetted officers and other support staff. They are divided in to five broad categories e.g. communication related expenses, utilities, occupancy costs for residential accommodation of employees, travel and transportation of employees and goods and other general expenses. The general expenses includes expenses related to stationary, printing and publication, books and periodicals, uniforms, protective clothing and others for services rendered.

c) Transfers related Expenses: It includes Entertainment and Gifts

which are presented to employees who are transferred in the form of

welcome and farewell parties. The expenses for other extra-curricular

activities are also come under this head.

d) Purchase of Physical Assets: It comprised of two broad categories

e.g. plant and machinery, furniture and fixture. Plant and machinery

include transport, generators, computers, hard ware and other related

equipment used specially for the program under study. Furniture and

fixture used for office and classroom.

e) Repair and Maintenance: Repair and Maintenance expenditures

include repair and maintenance of transport, machinery and equipment,

furniture and fixture, office building and classroom, computer

equipment, telecommunication works and general maintenance of

gardens.

Cost Categories 2009-10 2010-11

Employees Pay Related Expenditures

8.73 12.68

Operating Expenses (TVC2)

Transfer Related Expenses (TVC3)

Cost Categories 2009-10 2010-11

Transfer Related Expenses 0.02 0.02

Purchase of Physical Assets (TVC4)    2009-10 2010-11

S.NO  Cost Categories

Amount (Millions

)

% of Total Purchasing

Cost

Amount (Millions)

% of Total Purchasin

g Cost

1  Plant & Machinery 0.1 33.33% - -2  Furniture & Fixture 0.1 33.33% - -3  Hard Ware 0.1 33.33% - -4 Medical & Laboratory

Equipment- - - -

5  Transport - - - -

  Total 0.3 100 - -

Expenses Related to Repair and Maintenance (TVC5)

Total Variable Cost (TVC) 2009-10

 S.NO

Cost Categories 2009-10Amount

(Millions)% of Total

Variable Cost

1  Employees Expenditures 8.73 70.01%2  Operating Expenses 2.69 21.57%

3 Expenses Related to Transfers

0.02 0.16%

4 Purchases of Physical Assets

0.3 2.41%

5  Repair & Maintenance 0.73 5.85%  Total 12.47 100%

Total Variable Cost (TVC) 2010-11

    2010-11S.NO

Cost Categories Amount (Millions) % of Total Variable Cost

1   Employees Expenditures 12.68 66.04%

2   Operating Expenses 6.07 31.61%

3   Expenses Related to Transfers 0.02 0.10%

4   Purchases of Physical Assets - -

5   Repair & Maintenance 0.43 2.24%

  Total 19.2 100%

Average Cost per Student per Year 2009-10

2009-10

Total Variable Cost Per Year 12.47

Number of Students Per Program 24

Average Cost Per Student Per Year 0.52

Average Cost per Student per Year 2010-11

2010-11

Total Variable Cost Per Year 19.2

Number of Students Per Program 22

Average Cost Per Student Per Year 0.87

Total Program Cost

The Total Program Cost for the two years’ Post RN BSc N

program has been calculated by adding the Total Variable

Cost for both the fiscal years 2009-10 and 2010-11. The Total

Program Cost for the Post RN BSc N Program has been

calculated 31.17 million rupees or 31,170,000 rupees.

As nursing has lack of information about costs of educating students in

Pakistan, if we are to increase educational capability to address the

nation’s need for nurses, we need to have cost analysis data. Once reliable

and valid data available on the cost of nursing education, prospects for

obtaining funds whether government other public or private, should be

identified and pursued.

Pakistan Nursing Council (PNC) which is the regulatory body for nurses

in Pakistan should have full cost information to inform the government

for the resources required to overcome nursing shortage and to promote

the educational level of existing nursing workforce to improve the health

outcome. We suggest similar studies in other nursing schools, colleges,

medical colleges and universities and allied health professions in Pakistan

enabling effective comparisons. Comparable data once obtained can then

be utilized by the policy makers at all levels for the enrollment expansion

and scaling up of nursing workforce in the context of Pakistan.

If the government wants to privatize the nursing education, cost analysis

permits policy makers to know the full cost of educating the nurses.

Studies of this type can provide quantitative basis for human resource for

and health policy considerations.

Operating Expenses (In millions)

S.NO Cost Categories 2009-10 2010-11

1. Communication 0.18 0.07

2. Utilities 0.75 4.43

3. Occupancy Costs 0.75 0.96

4. Travel & Transportation 0.66 0.19

5. General Expenses 0.35 0.42

Total 2.69 6.07

Table 5.7: Expenses Related to Repair and Maintenance

  Year 2009-10 2010-11

S.NO Cost Categories Amount (Millions)

% of Total Repair & Maintenance Cost

Amount (Millions)

% of Total Repair & Maintenance Cost

1 Transport 0.3 41.09% 0.05 11.63%

2 Machinery & Equipment

0.25 34.24% 0.12 27.91%

3 Furniture & Fixture

0.03 4.11% 0.01 2.32%

4 Office Building 0.15 20.55% 0.25 58.14%

5 Computer Equipment

0.001 0.14% - -

6 Telecommunication Works

- - - -

  Total 0.73 100 0.43 100