The impact of price changes on demand for family planning and reproductive health services in Ecuador

Abstract

Donor funding for family planning and reproductive health (FP/RH) has declined in Latin America over the past decade, obliging providers to consider other financing mechanisms, including cost recovery through user fees. Pricing decisions are often difficult for providers, who fear that increased fees will cripple demand and create barriers to access for poor clients. Providers need information on how changes in price can affect utilization of services, and how to resolve trade-offs between generating income and serving poor clients. This paper reports on an experiment that measured the impact of higher client fees on utilization, revenue and client socioeconomic characteristics at 15 clinics operated by CEMOPLAF, an Ecuadoran not-for-profit FP/RH agency. The study improves on previous research by comparing effects of different price levels on demand for services. We conclude that demand was inelastic for three of CEMOPLAF's four main FP/RH services, and we found no evidence that the price increases had a disproportionate impact on utilization by poorer clients. The study therefore provided CEMOPLAF managers with knowledge that price increases at the levels tested would help to achieve sustainability goals (by increasing locally generated income) without undermining CEMOPLAF's social mission.