Costing

There is increasing evidence that mobile phone health interventions can improve health behaviors and outcomes and are critically important in low-resource, low-access settings. However, the majority of mHealth programs in developing countries fail to reach scale. One reason may be the challenge of developing financially sustainable programs and securing funding. As part of our efforts to explore pathways to financial sustainability for m4RH, we undertook a series of financial exercises that are relevant for those seeking to implement similar mHealth interventions at scale.

m4RH Implementation Costs

As a first step, we used 2014 program records to detail the costs of running m4RH as a nationally-scaled program in Tanzania. The 2014 budget for Tanzania showed a total implementation cost of $203,475. With about 125,000 unique users, this represented a program cost of $1.62 per user. The cost analysis showed that over half of total program costs (63%) were attributed to SMS costs because the m4RH program in Tanzania pays for both outgoing (sent) and incoming (received) messages, in order to keep the cost of requesting m4RH content entirely free for the m4RH program user. Technology, administration, and promotional costs each accounted for approximately ten percent of the budget, with personnel costs representing the smallest budget item.

Modeling cost-reduction strategies

Given that the SMS costs represented the bulk of the implementation costs for m4RH, we decided to model four different scenarios to explore the impact on overall program costs of reducing SMS rates or asking users to pay for some or all of the SMS fees.

Our decision to model scenarios involving user fees was informed by data that we collected about m4RH users’ willingness to pay to obtain m4RH program content. This data showed that almost half of m4RH users in Tanzania and approximately one-third of users in Kenya were willing to pay.

From the four scenarios that we modeled, we found that breaking even (and realizing a profit) was only probable when all SMS costs were transferred to the user and the lowest per-SMS cost was negotiated with partners. In this scenario, the total average cost to the user to receive m4RH services was $0.96 per user. While this may be high in the context of Tanzania or other lower-income countries it is important to note that this is the total cost for access to m4RH program services which could be spread over a year. Although the other three scenarios did not achieve a zero cost outcome, they did represent large reductions in annual program cost (from 54%-83%) and a lower total average cost to the user ($0.16-$0.64).

Cost-benefit analysis¹

Although we were interested in identifying potential strategies to reduce costs and generate revenue, the m4RH team also aimed to investigate the value of the service even when all program costs are born by the donor. We used past programmatic data (financial and user data) to conduct a hypothetical cost-benefit analysis of implementing m4RH in Uganda for one year. Uganda was chosen because it is identified as a potential scale-up site for m4RH. Cost categories were similar to those noted above for Tanzania, while benefit categories included: decrease in health care costs related to pregnancy, abortion, and maternal mortality, among others.

To accurately describe the range of potential costs and benefits based on the best existing data, we presented an upper and lower bound, the lower being the most conservative estimate of both the program’s potential benefits and the status quo that the program would be evaluated against. In addition to determining the costs and benefits of one year of m4RH implementation, this analysis extended the potential impacts of m4RH on the cohort of users for an additional four years.

In this analysis, the net cost/benefit for the first year of m4RH implementation at the lower bound is a loss of approximately $46,000 while at the upper bound it is a gain of over $8 million. Over five years, the net benefit for the lower bound increases to approximately $440,000 while for the upper bound it reaches $13.7 million.

Conclusion

The results of these financial exercises demonstrate that m4RH can provide long-term benefits relative to the cost of implementing the service and that there are several possible approaches to managing implementation costs. While program costs can be high, particularly the cost of SMS fees if the service reaches scale and remains free to users, these exercises illustrate some options that donors, governments, and implementers of m4RH and similar SMS-based health information services have for reducing their implementation costs—either by asking users to pay or by negotiating lower SMS fees.

Tools & Resources