Calculating the cost of digital health transformation
By: Alena Owen, Program Officer for Digital Square, Ryan Pinza, Market Dynamics Associate for PATH, Tara Herrick, Director of Market Analytics and Insights for PATH
Today, many low- and lower-middle-income countries are prioritizing digital health transformation as a way of improving overall population health. One of the primary ways Digital Square supports countries’ digital transformation is by providing regional and country digital health leaders with the tools they need to coordinate technical, financial, and operational resources.
Calculating the cost of sustainability: an improved tool
To appropriately plan for sustainable digital health transformation on a national level, it is important for countries to understand the approximate overall cost of implementation. In 2021, Digital Square developed a Sustainability Calculator tool for exactly this purpose—to help countries better understand the cost of transforming their own digital health systems. Digital Square has now released an improved version of the Sustainability Calculator that leverages stronger data sources. It can be used by countries with a maturity level between 1—3 as they begin to map out a plan for digital health transformation.
The Sustainability Calculator was developed by analyzing costed digital health roadmap data from 13 African countries with a digital health maturity level between 1 and 3. This data was then used to generate a suggested high-level cost-per-person estimate by digital health maturity level. All budget line items within the roadmaps were coded as development, deployment, or operations by Digital Square’s market analytics experts to understand the proportional breakdown of each category.
Development Costs: Costs associated with scoping and planning for implementation. Includes software development, human resources, travel for meetings, workshops, requirements gathering, project management and overheads, and other direct and indirect costs.
Deployment Costs: Costs associated with deploying the solution to a set number of locations as the system is scaled. Includes one-time costs for equipment, infrastructure, new deployment training, implementation services, interoperability updates, and system integrations, and further software development to address issues during the deployment period.
Operations Costs: Costs associated with the ongoing operation of a digital health intervention (DHI). Includes the human resource costs to manage and operate a DHI, regular maintenance and replacement costs, data and voice service, licenses, and subscriptions, recurrent or refresher training, helpdesk support, project management, governance, and monitoring and evaluation.
Operations costs were largely not accounted for in the roadmaps. Past research conducted by PATH and Vital Wave was utilized to estimate the ongoing operations costs, which are roughly 50% of the total costs. The Sustainability Calculator shows the range and average cost-per-person estimates based on the 13 roadmaps included in this analysis to aid users in entering in the necessary cost-per-person data. The fundamental equation (shown in Figure 1) used by the tool to estimate the five-year cost to sustainably transform a country’s digital health system is shown below.
Figure 1: Equation for understanding the cost of providing digitally-enabled health systems.
A real-world example
To illustrate how the calculator works, let’s estimate the cost of digital health transformation in Mozambique. Once the user selects a country from the dropdown menu, the calculator assists users in gauging what the cost-per-person could be for the country they selected. Users can review the “5-year, per-person costs by digital health maturity” graphic to see the estimated cost of transformation based on countries with the same digital health maturity level.
Mozambique has a digital health maturity of 1, so by applying the average per-person costs of other countries with a digital health maturity of 1 ($8.53 per person) and multiplying it by the country population, the total cost of digital health transformation over 5 years is $273,617,424. The calculator breaks that cost down by development ($24,707,653), deployment ($112,101,059), and operations ($136,808,712). The tool also estimates the operations costs annually after year 5, which is $27,361,742.
Figure 2: Sustainability calculator demonstration for Mozambique.
What makes the sustainability calculator unique—and as a result, useful to countries in the early stages of planning—is its simplicity. While a wide range of tools and resources should be used when planning, implementing, and sustaining digital health transformation, costly and time-consuming analyses can often hinder progress. The sustainability calculator is designed to be freely accessible, easy to use, and requires little work to be done in advance, making it a perfect starting place for countries looking to understand the total cost of digital health transformation. When countries are looking to do more granular budgeting, Digital Square’s Total Cost of Ownership Tool can be leveraged.
One tool in a box of many
At Digital Square, we work to provide a wide range of tools and services which countries can select to best suit their needs at all stages of the digital transformation journey. We believe when country health leaders have the resources necessary for digital transformation and can successfully execute and sustain digital transformation, health systems will thrive. To learn about the other digital health costing resources Digital Square offers, read our costing resources overview or visit the market analytics page on our website.