Considerations for Pricing at the RMHC

By Sheena Jain, Intern – ICTPH and Zeena Johar, President – ICTPH

There is a lot of excitement with the opening of the second Rural Micro Health Center (RMHC) in Tanjore; this once ambitious goal for ICTPH is now a reality. The clinic will provide an accessible location for patients to receive diagnostic testing and treatments once they’ve been assessed by SughuVazhu Guides (SVGs) for Blood Pressure, BMI, Visual Acuity, Alcohol dependence, Nicotine dependence and Social Network Analysis.

So, what tests will be offered at the RMHC? And how can we ensure patients will attend? Will patients be able to afford the tests required? Though more questions come to mind than answers, our foremost concern, and definitely one of the more difficult considerations, is how to make the clinic affordable for all of our patients. Although we anticipate more than just diagnostic services being offered at the clinic (i.e. consultation services), a large percentage of total running costs of the RMHC must be recovered from these diagnostics.

How do we make the clinic affordable while still covering our costs? We need to consider two things: How much are other clinics in the area charging for the same tests? And how much is our total operational cost? To answer the first question, we gathered pricing data from 3 different labs in the area: Arasu Diagnostic Lab – Pattukotai, NM Hospital – Tanjore, and Kaniga Lab to gain a perspective of market prices. Our goal was to stay below market prices; thus, we took a 30% reduction off the cheapest market price, and kept this as our target.

Next, we had to consider our total cost of the clinic (operational costs, capital costs, depreciation, etc). As previously mentioned, our aim was to attribute a percentage of the total cost to each of the diagnostics in order to recover the costs. We took the monthly costs of running the diagnostic tests, plus a percentage of the total costs, to arrive at a final price for the diagnostic. In many cases, our diagnostic prices were much cheaper than the corresponding target price mentioned above.

Since this is a new clinic, we are operating under many assumptions. We do not know what miscellaneous costs may arise, depreciation rates will be, etc., so we needed to err on the side of caution. Until the RMHC is fully up and running, we anticipate costs to fluctuate and want to ensure we can stay afloat over our costs. Keeping our diagnostic pricing in mind, we have used the market prices (our target prices as mentioned above) as our prices for the diagnostic exams at the RMHC.

We look forward to seeing how it pans out and making the necessary adjustments as we forge ahead.

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May 2017
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