ganda, an east African republic north of Lake Victoria, lies at the epicenter of the AIDS epidemic in sub-Saharan Africa. The country has been devastated by the epidemic, with the incidence of HIV infection estimated as high as 40% in some high-risk groups. In recent years, however, the country's incidence of new HIV infections has begun to decline, a drop confirmed by the World Bank, the World Health Organization, and other organizations. One of the reasons Uganda has been successful in lowering its rate of HIV infection has been a willingness to acknowledge the magnitude of its problem, according to Deborah McFarland, associate professor of health policy and management at the Rollins School of Public Healt h. "Uganda has been open and transparent about its problem with HIV and has welcomed assistance from all over the world," McFarland says. "Openness pays dividends." This is talk one would expect from a health economist, McFarland's specialty. McFarland approaches health from the perspective of one interested in how governments and households finance services and allocate scarce resources in dealing with specific d iseases, from malaria to polio to AIDS. She is an expert on the financing of health systems and has been instrumental in estimating the effects of user fees on the poor and in developing social insurance models. McFarland became involved with AIDS in Uganda in 1993 through her collaboration with the International Health Program Office at the Centers for Disease Control and Prevention (CDC). Her initial assignment was to determine the cost-effectiveness of the services offered at the AIDS Information Center (AIC) in Uganda. At that time, the AIC was only site in all of sub-Saharan Africa to offer voluntary testing and counseling for HIV. Supported by the United States Agency for International Development (USAID), the AIC opened its doors in 1990. Since then, it has tested some 350,000 Ugandans for HIV. With offices in the capital city of Kampala as well as outlying areas, the AIC offer s pre-test and post-test counseling on topics such as virus transmission and safe sex practices, and, in the case of positive test results, it gives referrals to appropriate medical and social services. In terms of demand, the AIC has proven itself sustai nable, McFarland says, seeing about 150 people each day in the Kampala branch. But USAID wants to know, is it financially sustainable?

Deborah McFarland

IV testing falls into a gray area that McFarland categorizes as "quasi-public and quasi-private goods." While individuals reap private benefits--for example, referral to health services and the time to put t heir affairs in order--the public likewise benefits if people use the knowledge of their HIV status to change sexual behavior. McFarland's first task was to determine the actual cost of the HIV testing and counseling at the AIC, then to evaluate its cost-effectiveness in terms of changing sexual behaviors and the associated risk for HIV. She found the unit cost for the service in 1993 was approximately $12 per person. With the per capita health expenditure in Uganda at around $3 per person, it was obvious that country's Ministry of Health would be unable to assume the cost of continuing the AIC. But the question remained wheth er individuals would be willing to pay for this service. Based on the findings, the AIC decided to initiate a small fee for the service, to enable the agency to decrease its support over time. In January 1994, the AIC began charging 1,000 shillings (about the price of two soft drinks or an in town bus ride) at its office in Kampala. In smaller towns and rural areas, the fee was lower, at 500 and 300 shillings, respectively. McFarland then had an additional task: to determine if the fees actually generated revenues and how the fees affected utilization. In other words, were people discouraged by the fees? Did the fees adversely affect the poor? How did the charge affect th e use of services by gender? Her study in turn became an opportunity for Anthony Bondurant, then a graduate student at the Rollins School of Public Health, to study health economics firsthand. Bondurant's master's thesis--"The effects of user fees on the utilization of voluntary a nd anonymous HIV counseling and testing services in Uganda"--reported that AIC's introduction of a fee did, in fact, affect the ability of poor people to afford services at the center. Women's utilization, however, surprisingly increased. Because women in Uganda often have little discretionary income, this increase reflects the interests of men to know their partner's HIV status, McFarland says. The generation of revenues, while not enough to cover the full cost of the service, was significant, with fees contributing to around 8% of overall costs. In January 1996, with a surge in demand for its services, the AIC doubled its user fees. With the revenue generated from fees, it has now purchased a building in Kampala and has plans to offer testing in more remote regions of Uganda. It also recently switched to a rapid test for HIV, which makes results available in a few hours. McFarland currently is analyzing data to determine how these new fees affect cost-effectiveness and to see if the new strategies make economic sense.

The Kasubi Tombs, the burial place of Baganda kings, lie on the outskirts of Uganda's capital city, Kampala. Deborah McFarland's economic analysis of the AIDS Information Center extends from Kampala to Lake Victoria to the countryside.