An Assessment of the Effectiveness of Cost Recovery Methods for Financial Sustainability in Government Hospitals: Case of Parirenyatwa Hospitals

Abstract

This study sought to assess then propose an effective cost recovery method for financial sustainability in government hospitals. The research problem was serious deterioration of infrastructure and shortage of medical equipment in government hospitals due to lack of funding. The main objective was to assess and propose an effective cost recovery method for the financial sustainability in government hospitals. The reviewed literature specified that traditional costing systems have been abandoned and nowadays activity-based method (ABC) is being used by some hospitals as a cost recovery method that aid financial sustainability. Purposive sampling was used selecting the participants. The research approach used was a case study and a mixture of both quantitative and qualitative methods were used. The population for this study was made up of employees of Parirenyatwa Hospitals, MoHCC, CIMAS and PSMAS medical aid societies. The sample was 112 participants, only 110 responded. Telephone interviews, emails and questionnaires were the tools used to gather information. Descriptive statistics were computed and chi squared and Pearson exact tests were calculated using STATA 16. The study identified poor leadership, government policies, organisational culture, financing complications, economic hardships facing the country, as some of the existing challenges affecting cost recovery. Conclusions drawn were that there is room for improvement in the way the government hospitals are conducting their cost recovery procedures and processes. The research recommended the government and MoHCC to invest in automation for costing and billing of services and ABC costing adoption. The government is further recommended to engage in policy monitoring and evaluation in the health sector so as to get immediate feedback on the effect of its policies on institutions like hospitals. Further studies are needed to explore financial sustainability in the health sector.