This study was to cost the health services provided by Nyenga Hospital in the FY 2012/2013. The main objective of the study was to establish the average cost of providing a unit output of a service in Nyenga hospital and the specific objectives were to: i. To determine the total cost of providing services for the financial year 2012/13 ii. To determine the average cost per unit output for the financial year 2012/2013 iii. To determine the average cost recovery per cost service charged in the FY 2012/13. The study was a retrospective descriptive costs analysis study using a step down costing methodology (Shepard 1998). The cost of providing health services in Nyenga in the financial year 2012/2013 was determined using relevant data from 1st July 2012 to 30th June 2013. The study therefore recommends; i. The hospital should use this information to justify need for more financing other than user fees to government and other development partners. ii. The facility should adopt a flat rate for all services in OPD as this will enhance certainty and hence utilization iii. Since the theatre is underutilized the facility should consider revising the charges downwards and benefit from increased utilization and economies of scale and consider employing a surgeon. iv. Efficiency gain measures in terms of medicines selection and prescriptions should be implemented in attempt to reduce costs. v. Government should increase support to the facility if it has to remain providing quality services at a low cost Further studies should be done to cost other related levels of care to be able to make comparisons.

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