Capital and recurrent costs

The costs of establishing and operating the clinic were identified and valued. The capital costs (i.e. cost of establishing the clinic) were £10,968.57 (ZAR 214157.08) (Table 3a). The recurrent costs (i.e. cost of operating the clinic) were calculated per annum and amounted to £17,730.72 (ZAR 346185.54) (Table 3b). The economic and financial costs are reported in Fig. 2.

Table 3 Summary of (a) capital and (b) recurrent costs Full size table

Capital costs

The capital costs included the building alterations and installation costs, purchasing of furniture, equipment, consumables and medications as well as the pharmacy licensing fees.

Building alterations

The church provides a permanent space for the clinic and pharmacy. The clinic consists of three consultation rooms and a storage room. The consultation rooms were fitted with wash-hand basins including hot water totaling £ 895.34 (ZAR 17481.21). The storage room, used to keep additional consumable materials and equipment, was fitted with fixed shelving amounting to £ 481.83 (ZAR 481.83).

The alterations to the pharmacy were more extensive to meet the minimum requirements to be registered as a community pharmacy at a cost of £ 985.41 (ZAR 19239.73) (Table 3a). The alterations included adding an additional entrance for receiving stock, separate hand basin and sink with cold and hot running water, fixed counters for compounding and dispensing of prescriptions as well as storage of medications.

Equipment

The total cost of equipment was £ 2464.12 (ZAR 48111.00) (Table 3a). Equipment purchased for the consultation rooms, costing £ 653.66 (ZAR 16848.37) (Table 3a) included point of care test machines, thermometers, ear, nose and throat diagnostic sets and blood pressure meters. The equipment for the pharmacy was guided once again by the legislative requirements and cost £ 1601.19 (ZAR 31262.63) (Table 3a). It included reference materials (£ 940.22, ZAR 18357.49), dispensing and compounding equipment (£ 133.48, ZAR 2606.14), portable air-conditioner (£ 230.43, ZAR 4499.00) and a refrigerator (£ 245.84, ZAR 4800.00).

Installation costs

Installation costs, £ 2470.87 (ZAR 48242.78) (Table 3a), included the temperature monitoring system (£ 38.41, ZAR 750.00) and computerized dispensing system (£ 2432.46, ZAR 47492.78).

Furniture

The cost of furniture was £1442.90 (ZAR 28172.00) (Table 3a). Furniture for the consultation rooms included examination beds, desks, chairs, storage cupboards and light stands. Trestle tables, chairs and curtain dividers were purchased for the waiting area. Less furniture was needed for the pharmacy and included chairs and shelving.

Pharmacy licensing

The cost of the pharmacy license, £ 826.99 (ZAR 16146.71) (Table 3a), was a considerable expense in establishing the pharmacy. This cost included pharmacy premise’s application for licensing paid to the National Department of Health of South Africa while the Recording of New Pharmacy, Recording of Pharmacy Owner and Application for Registration of the Responsible Pharmacist were fees paid to the South African Pharmacy Council. The Responsible Pharmacist, appointed by the owner, is a registered pharmacist with defined duties and responsibilities to ensure the pharmacy complies with applicable legislation.

Consumables

Consumables needed to stock the consultation and storage rooms were purchased initially to ensure services could be provided. The consumable items purchased were costed at £ 869.16 (ZAR 16970.07) (Table 3a). The clinic established minimum stock levels for consumable items based on projected patient numbers per month. Stationery purchased at £ 58.92 (ZAR 1150.40) also contributed to the cost of consumables.

Medication

As per consumables purchased, a once-off consignment of medication was purchased according to the clinics’ formulary to initially stock the pharmacy. This holding stock was considered a capital cost, thereafter the replenishment of medicines was attributed to the operating costs of the clinic. The clinic purchases medication at the single-exit price (SEP) through a wholesaler. The SEP is the regulated price at which a medication may be sold at in the private sector in South Africa. The clinics formulary consisting of 53 items, was in alignment with Standard Treatment Guidelines and the Essential Medicines List of South Africa [31]. It also includes additional medications as requested by prescribers in consultation with the pharmacist. Minimum quantities for medication were established and amounted to £ 531.95 (ZAR 10386.07) (Table 3a).

The total cost of medication is however dependent on several factors which include the availability of active ingredients needed to manufacture the medicine, the cost of originator versus the generic medicine and the additional cost of medication if packed in patient-ready packs or blisters packs.

Recurrent costs

Overheads and maintenance

The costs of overheads and maintenance were £1718.35 (ZAR 33550.11) and £24 76.09 (ZAR 48344.66). Costs contributing to the overheads were electricity, water, security and internet. Maintenance costs included pest control, servicing of the fire extinguishers, calibration of the pharmacy scale, disposal of pharmaceutical and medical waste as well as services fees for the temperature monitoring and dispensing systems.

Rental

Monthly rental in the area the church is located area is approximately £5.01/m2 (ZAR 98.00/m2). The rental cost of permanent space i.e. pharmacy (44.84m2), consultation (22.52m2) and storage (7.02m2) rooms, was £4098.76 (ZAR 80026.76). The rental of shared space, the waiting area, was portioned according to monthly usage at a cost of £472.48 (ZAR 9225.00) per annum.

The church allows the clinic to use this space at no cost. This is an economic cost and contributes 29.7% to the overall annual operating cost.

Personnel

The clinic relies on volunteers, both qualified professionals and students, to form the workforce of the clinic. Although all personnel were volunteers, their cost was calculated according to hourly locum rates. The annual cost of pharmacy staff was calculated as £22 91.88 (ZAR 44780.00) for a pharmacist and five pharmacy assistants. There were two medical doctors and ten undergraduate medical students working each evening and calculated costs were £4842.35 (ZAR 94545.00) per annum.

The cost of personnel was accounted for during the times the clinic was operational, however administrative duties that staff, and students complete at other times were not taken into consideration.

Pharmacy licensing

Following the initial registration fees for the pharmacy license, annual fees (£184.58, ZAR 3603.88) for the pharmacy and responsible pharmacist were paid to the regulatory authority. All pharmacy personnel paid annual registration fees however these were not included.

Consumables

The cost of consumables was £ 587.03 (ZAR 11461.46) and included stationery and disposable items used in the consultations. The exact cost of consumables used in the consultations could not be determined from patient records. Therefore, the cost was estimated based on average of 12 consultations per/night and provided a minimum cost of consumables used which included gloves, masks and linen savers.

Medicines

A total of 573 prescriptions were reviewed from 2016 and 2017, consisting of 1054 items dispensed. The cost of medication dispensed in 2016 and 2017 was £394.20 (ZAR 7555.58) and £981.32 (ZAR 18808.65) respectively. The average cost of medicines for the two-year period was calculated (including the cost labelling and packaging) as £677.94 (ZAR 13263.55) (Table 3b) and contributed 3.8% to the total operating costs.

Figure 1 groups medication and depicts expenditure and the number of prescriptions. There was a marked increase in the antimicrobials and antipyretic/anti-inflammatory medications dispensed with a correlating increase in cost. Paracetamol 500 mg tablets (£82.16, ZAR 1611.02; prescriptions: 132), framycetin/gramicidin/dexamethasone eye drops (£52.37, ZAR 1026.85; prescriptions: 6), and cefuroxime 500 mg tablets (£32.97, ZAR 646.50; prescriptions: 3) were the highest contributors to the total costs of medication in 2016 as compared to amoxicillin/clavulanate 1000 mg tablets (£215.41, ZAR 4223.68; prescriptions: 25), paracetamol 500 mg tablets (£ 128.82, ZAR 2525.79; prescriptions: 174) and cefuroxime 500 mg tablets (£87.91, ZAR 1724.00; prescriptions: 8) in 2017.

Fig. 1 Cost and quantity medication dispensed in 2016 and 2017 (GIT: gastrointestinal tract) Full size image

Running cost of treatment per patient

The average running cost of treatment per patient per visit was £3.53 (ZAR 69.05) and comprised of medication (£2.36, ZAR46.36) and consumables used in the consultation (£1.18, ZAR 22.69). It represents the financial cost incurred by the clinic in treating a patient per visit. All the additional recurrent costs are donated either by the church or through volunteer services. If these are included in the running costs, the total cost per visit is £61.73 (ZAR 1210.43). If the annualized cost of the capital items (£319.02; ZAR 6255.27) is included, this would add an additional £1.12 (ZAR 21.87) per visit. If both financial and economic capital and operating costs were included, the total cost per consultation would be £62.85 (ZAR 1232.31).

Financial versus economic costs

The analysis of the financial and economic costs, Fig. 2, distributes the costs described in Table 2. The majority of costs, 66%, were economic costs. The salaries of personnel and rental costs were the highest in this group.

Fig. 2 Capital and recurrent costs itemized as financial and economic costs Full size image

Costs relating to building alternations, equipment and installation costs contributed the most to capital costs (65%). Equipment and installation costs were donations the clinic received. Therefore, building alterations and furniture, contributing 62% to the financial costs, were the most expensive capital costs incurred.

The pharmacy license directly contributed 7% of the capital costs. There were numerous costs incurred for the renovations, equipment and installation costs required to meet the minimum standards for a community pharmacy as set out in Pharmacy Act 53 of 1974 of South Africa [32]. The minimum standards include a computerised dispensing and temperature monitoring system, contributing 22% of the capital costs.

The costs relating to personnel and rent contribute 68% of the recurrent costs yet both of these are economic costs. The maintenance costs of the computerized dispensing and temperature monitoring system were donations received. Therefore, the financial costs relating to overheads and maintenance were £ 2163.63 (ZAR 42424.17) and contributed 60% of the financial recurrent costs. The cost of medication (19%) and consumables (16%) were substantial financial costs incurred.