Unpacking the Costs of Public Health Supply Chains in Tanzania: Insights and Implications

Presenter: Farhan Yusuf

Presented on: 27 April 2024

The public health sector supply chain costs in Tanzania

George M. Ruhago, Frida N. Ngalesoni, Daudi Msasi, James T. Kengia, Mathew Mganga, Ntuli A. Kapologwe, Majiliwa Mtoroki, Mavere A. Tukai

Published: November 28, 2022

https://doi.org/10.1371/journal.pgph.0000960

In a recent engaging presentation at the IQPRACT supply chain journal club meeting, Farhan Yusuf delved deep into the intricacies of public health supply chain costs in Tanzania, based on a pivotal paper that sheds light on an often overlooked aspect of health system strengthening - health financing. The paper, primarily authored by Tanzanians deeply involved in the supply chain process, serves as a critical examination of the financial underpinnings of health commodity supply chains in the country.

Declining Donor Funding: A Wake-Up Call

Farhan highlighted a pressing concern that has long been whispered about but is now a stark reality - the decline in donor funding. This reduction in external financial support underscores the urgent need for sustainable health financing mechanisms. The paper's focus on public health supply chain costs in Tanzania is timely, offering a lens through which to view the financial challenges and opportunities within the health sector.

A Deep Dive into Methodology and Findings

The paper employs an activity-based costing approach, a meticulous method that assigns overhead and indirect costs to specific products and services, providing a more accurate picture of supply chain costs. This approach revealed significant insights, including the differentiation between financial costs (directly incurred expenses) and economic costs (including donated goods and services not directly paid for by health facilities or the Medical Stores Department (MSD)).

One of the standout findings from the study is the annual cost of running the central supply chain at MSD, amounting to $15.5 million, with an additional $4.1 million for the four sampled zonal branches. This data, while crucial, raises questions about how these figures translate into actionable strategies for improving supply chain efficiency and sustainability.

Challenges and Opportunities for Improvement

The presentation sparked a rich discussion on several fronts, notably the issue of expired goods, which not only incur costs but also waste valuable storage space. The conversation also touched on the feasibility of implementing a just-in-time inventory model in Tanzania, considering the significant proportion of health commodities procured internationally. This model, while ideal in theory, faces practical challenges due to the complexities of international procurement and the existing procurement regulations.

Participants also raised concerns about the distribution costs, particularly in light of the transition from four to six distribution cycles per year by the MSD. This change, intended to improve supply chain efficiency, may have inadvertently increased the overall distribution costs, highlighting the need for a careful evaluation of the redesign’s financial implications.

Looking Forward: A Call for Further Research

The presentation and subsequent discussion underscored the critical need for further research in understanding and optimizing public health supply chain costs in Tanzania. There's a consensus on the importance of developing more comprehensive and nuanced analyses that can guide policy and operational decisions. This includes exploring the impact of direct health facility financing, the potential for local production to reduce procurement costs, and the overall sustainability of supply chain financing.

Conclusion

Farhan Yusuf's presentation on the journal article, public health supply chain costs in Tanzania, opens up a vital dialogue on the need for sustainable health financing strategies. As the country grapples with declining donor funding and seeks to strengthen its health system, understanding and optimizing supply chain costs emerge as crucial steps towards achieving financial sustainability and resilience. This discussion sets the stage for further research and action, with the aim of making health commodity supply chains more efficient, cost-effective, and ultimately, more sustainable.