How much do digital health interventions cost? A new tool helps countries estimate
By: Laura Kallen, Digital Square Communications Officer
When country decision-makers have an opportunity to introduce a new digital health intervention as part of a country’s national health system—whether an electronic immunization registry, a decision-support tool for health care providers, or an appointment reminder system for antenatal care—they must weigh many considerations. What benefit would the intervention have to the health system? Would people actually use it? And—often the most urgent considerations—what will it cost, and can the country’s budget support its use long-term?
The digital transformation of health systems has tremendous potential to accelerate progress towards universal health coverage. Modeling led by Digital Square at PATH—as featured in a recent report from Transform Health—estimates that global digital transformation will require a total of US$12.5 billion—or $2.5 billion per year—over the next five years. To make this a reality, national governments need to allocate necessary funding and ensure that digital investments are part of their national plans and priorities.
Complicating decision-making is a lack of transparency on the costs necessary to develop, deploy, and maintain digital health interventions. At a presentation at the Asia e-Health Informatics Network (AeHIN) 2022 Annual Meeting, Asia-based country government stakeholders shared reflections on the lack of clarity around digital health costs:
“The question is always when we request budget for new tools, the Ministry of Finance will ask, what is the return on investment? What is the total cost of ownership (TCO)? As people from the medical background, we do not know how to answer that.”
"It is very difficult, there are no standards for costing."
"A key issue with my previous TCO work, is that tech people and finance people need to work together to cost out their solutions."
To address this gap and help inform country decision-making for digital health investment, Digital Square at PATH is working on several costing models. These include the one referenced in the Transform Health report above as well as a new Total Cost of Ownership (TCO) Tool to support country-level budgeting for digital health interventions. After working with several partners and gathering extensive community feedback, the first version of this tool is now ready.
Building the TCO Tool
Digital Square’s TCO Tool is an Excel-based, interactive budgetary and benchmarking resource to help stakeholders in countries with lower digital health market maturities understand and develop more realistic budgets for digital health interventions. The tool can be used across a range of interventions, including both those used by a large number of last-mile users (such as community health workers) and those more narrowly tailored for national-level health system management. It breaks down costs into development, deployment, and operations phases of implementation.
Digital Square developed its TCO Tool by reviewing and incorporating elements of country-specific digital health investment roadmaps (including Tanzania’s), the World Health Organization Digital Implementation Investor Guide (DIIG), the Digital Square and Vital Wave TCO reference case, the Dimagi TCO Model, and other existing TCO tools in the global health field. Once developed, the tool was then tested with a small working group—including Vital Wave, Dimagi, and PATH Tanzania—and select digital health global good manufacturers and refined based on their feedback.
Importantly, the TCO Tool is intended to assist in planning for expenditures over the entire lifecycle of the digital health intervention—not just the introduction.
“We aimed to identify common hidden costs and cost drivers, especially as they pertain to operational costs that are often overlooked in budgeting,” notes Tara Herrick, PATH’s Director of Market Analytics and Insights. “By better incorporating these operational costs in the estimates, we hope to improve the scale and sustainability of many digital health solutions.”
“By better incorporating these operational costs in the estimates, we hope to improve the scale and sustainability of many digital health solutions.”
How to use the TCO Tool
The Digital Square Total Cost of Ownership (TCO) Tool is Excel-based with simple user inputs to allow estimates of the comprehensive costs of digital health interventions.
The TCO Tool is intended to be easy to use. Users first download the tool from the Digital Square website, open it with Excel, and then enter relevant inputs in highlighted fields on the “Input” tabs. To simplify data input, the tool comes with some suggested inputs and notes for select cost line items. The tool also comes with a “User Guide” tab for specific instructions on utilization.
Once all data are entered, the “Output” tabs will display the estimated costs and provide guidance for benchmarking, budgeting commitments, and gaps.
Generating useful learnings for country decision-makers
The TCO Tool has already shed useful insights on potential cost savings and drivers for digital health investments. Notably, it has shown that operating costs are significant, so documenting evidence on potential savings generated by digital health is an important next step.
“The savings generated from telemedicine, more efficient supply chain management, and greater tracking of finances across the health system could all be used to subsidize the ongoing operations costs in the long term,” notes Skye Gilbert, former Executive Director of Digital Square.
Additionally, a country’s digital health market maturity will impact costs related to required infrastructure, local information and communications technology capacity, and other factors. If a certain intervention requires an existing infrastructure to be in place, then countries without that infrastructure will have much higher up-front costs for the intervention.
Key learnings from our digital health TCO work to date*
*Learnings generated in collaboration with VitalWave
Most importantly, feedback from country stakeholders has been critical in validating the demand for and value of the TCO Tool. After learning about the tool during the AeHIN presentation, country government stakeholders shared their excitement:
"We have just developed a draft of the digital health strategy. The tool will be very useful to us to cost the implementation of the national digital health strategy because we do not have any tool yet." – Representative from Lao PDR Ministry of Health
"We are really excited. We hope to use this tool.” – Representative from Malaysia Ministry of Health
"This tool is very useful in the development stage and project plan stage. This is very useful for us. We may have missed some of these components." – Representative from Sri Lanka Ministry of Health
Going forward, Digital Square will continue incorporating feedback from country stakeholders and developers into the TCO Tool and other, future costing models. Through feedback, these tools can better respond and provide what countries need to help build, expand, and sustain their digital health systems.
Download or share the Digital Square TCO Tool here.