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This paper examines the cost of quality improvements in Population Services International (PSI) Myanmar’s social franchise operations from 2007 to 2009.    Methods  The social franchise commodities studied were products for reproductive health, malaria, STIs, pneumonia, and diarrhea. This project applied ingredients based costing for labor, supplies, transport, and overhead. Data were gathered seven during key informant interviews with staff in the central Yangon office, examination of 3 years of payroll data, examination of a time motion study conducted by PSI, and spreadsheets recording the costs of acquiring and transporting supplies.    Results  In 2009 PSI Myanmar’s social franchise devoted $2.02 million towards a 94% reduction in commodity prices offered to its network of over 1700 primary care providers. These providers retained 1/3 of the subsidy as revenue and passed along the other 2/3 to their patients in the course of offering subsidized care for 1.5 million health episodes. In addition, PSI Myanmar devoted $2.09 million to support a team of franchise officers who conducted quality assurance for the private providers overseeing service quality and to distributing medical commodities.    Conclusion  In Myanmar, the social franchise operated by PSI spends roughly $1.00 in quality management and retailing for every $1.00 spent subsidizing medical commodities. Some services are free, but patients also pay fees for other lines of service. Overall patients contribute 1/6 as much as PSI does. Unlike other NGO’s, health services in social franchises like PSI are not all free to the patients, nor are the discounts uniformly applied. Discounts and subsidies evolve in response to public health concerns, market demand, providers’ cost structures as well as strategic objectives in maintaining the network and its portfolio of services.

The cost of service quality improvements: tracking the flow of funds in social franchise networks in Myanmar