Cost Benefit Analysis
Cost-benefit analysis (CBA) compares interventions and their effects in healthcare evaluation where costs and results (such as health outcomes and others) are expressed in monetary terms. As a result, it is possible to compare two or more treatment options using the summary statistic of net financial benefit, which is the difference between the benefit of each treatment (represented in monetary units) less its cost. The most frequent methods for obtaining monetary benefits assessments are willingness-to-pay (WTP) surveys and discrete choice experiments (DCEs). Despite being widely employed in other industries, CBA is not frequently used in evaluating health technology since it is challenging to link monetary values to health outcomes like (improved) survival. Large capital development projects (new hospital facilities) or initiatives that reduce waiting times or improve location/access to services have been assessed using CBAs.
When to use a cost-benefit analysis
You want to compare your digital product to other items to determine whether it is worth the cost.
An essential aspect of the overall consequences of utilizing your digital product is the non-health benefits.
Similar to cost-benefit analysis, CBA can take non-health advantages into account. For instance, your product might enhance the value and usability of a specific health service.
CBA can help with resource allocation decisions in many healthcare contexts since costs and effects are assessed in the same units as cost-utility analysis, making decisions explicit and visible.
The value attributed to health or non-health benefits in monetary terms may vary depending on an individual’s attributes, such as their socioeconomic class.
It isn’t easy to gather information on people’s willingness to pay for a health benefit.
You should adhere to the general guidelines for any study of economic evaluation. The following ideas are particularly pertinent to CBA:
Choosing a perspective for your study
CBA often considers a broad range of expenses, regardless of who pays for them, as well as various consequences on both health and non-health. This means that the best point of view is frequently one that encompasses the entire society.
putting a price on the impact
There are various methods for assigning a monetary value to impacts. The type of effect determines the technique to take.
Financial advantages are appraised using techniques that translate resource utilization into costs, as is frequently done in cost-effectiveness or cost-utility analysis.
Salary rates based on human capital are frequently used to value earnings or productivity increases. In essence, this strategy assumes that a person’s life has a worth equal to their output. For instance, if a digital product accelerates a stroke victim’s return to work, this additional (indirect) benefit might be measured in financial profits.
People’s expressed preferences are frequently used to value intangible benefits. This entails determining how much people are willing to spend on a health or non-health benefit. You can gather this information through interviews or surveys. Using the risk of cardiovascular disease as an example, people might be asked how much they would be willing to spend for a digital product that tracks their cholesterol levels to lower that risk. If pertinent estimates are already available, you might not even need to undertake your willingness-to-pay study.
presenting the findings
By contrasting the difference between your product’s costs and effects in monetary terms (net value) with those of rival products, you may determine if your product is cost-beneficial (the preferred option) or not. If your product delivers the highest net value among the alternatives, it offers the best value for the resources available and ought to be used.
Cost Benefit Analysis
Cost Benefit Analysis Content
- Develop a cost benefit analysis for your current QI project related to the increase number of resident falls in your long-term care facility. Some of these figures may be estimates although please include the specific process details if you don’t have the exact figures.
Use a tool you find or develop a tool to help you monitor the costs of your overall QI project. Cost may be related to staff time, materials, training, and/or any facility or operational investments (structural, electronic, new equipment, etc.). Benefits may result from changes in costs, revenue, or efficiency (e.g., required FTEs and/or overtime)