The revenue generating potential of user fees in Kenyan government health facilities.

ABSTRACT

This paper develops and implements a methodology for estimating the total revenue that would result from a system of user fees for health services provided by public facilities in a developing country. After setting out a set of principles based on efficiency, equity, and administrative goals upon which the user fees should be founded, a formula for estimating total revenue generated is presented which reflects six different factors affecting total revenues. These factors include reductions in demand due to imposing fees, exemption of selected services from any fees, forgiving fees from those unable to pay, and 'leakage' of revenue due to bribes, etc. Three specific fee structures are then examined for Kenya, and the total revenue to be generated is predicted. The revenue totals are large, on the order of 10-22% of the government's total recurrent health costs, suggesting that even modest user fees can make a significant contribution to public health costs.