Cost Benefit Analysis In Health Care

Decent Essays
There are several basic approaches that can be utilized when conducting economic evaluations for any new health care intervention; which can include medications that are designed for the treatment and prevention of disease and how to relate the effectiveness with the overall monetary value of the new treatment. The economic tools that can be employed to perform such an analysis can be broken down into four basic parts that consist of cost-minimization analysis (CMA), cost-effectiveness analysis (CEA), cost-benefit analysis (CBA) and cost-utility analysis (CUA). These four categories will contain the major financial analytical techniques employed when evaluating medical treatments and interventions along with other types termed cost-consequence …show more content…
In this specific type of analysis, one can determine costs associated with various treatments in terms of utilities, which can be looked at as quantity and quality of life. This type of analysis can be employed to compare different medications or procedures in which the perceived benefits can be different in nature. This analysis can be used to measure the incremental cost to gain an extra quality-adjusted life-year (QALY) . The QALY used by the CUA technique can be defined as the outcome measured as life years gained adjusted (weighted) by patient preferences for various health states . The fourth major technique that can be used when performing a pharmacoeconomic analysis is the cost-benefit analysis (CBA) is considered the broadest form of all the economic evaluation types. The importance of this technique lies within the ability to analyze the costs associated with particular medical intervention as well as the benefit. CBA can be used to evaluate both incremental costs and outcomes in monetary terms, which will allow for a direct calculation of the net monetary cost of achieving a health outcome …show more content…
CMA has the advantage of being the simplest of the of all the pharmacoeconomic techniques in that the comparisons performed are considered to be equivalent, which allows one, the ease of only evaluating the cost of the medication or intervention to be looked at. This technique can be highly effective when comparing equivalent treatments, but will be inappropriate when there is no equivalence between two products or if therapeutic equivalence cannot be demonstrated . CMA will be applied more often in the health sector and we can evaluate this type of analysis as it relates to a diuretic-based antihypertensive therapy reducing cardiovascular events in older adults with isolated systolic hypertension. The CMA analysis used in this trial was able to present cost as the number-needed-to treat (NNT) of patients for 5 years to prevent one adverse event associated with cardiovascular disease (CVD) . The result of this study found the cost of 5 year NNT to prevent one adverse CVD event ranged widely from $6,843 to $37,408 in older patients with isolated systolic hypertension (ISH)7. Based on the CMA, researchers were able to define that CMA was most cost-effective in patients that were at high risk for developing CVD, therefore confirming that the use of CMA was effective in evaluating input costs pertaining to equivalent outcomes. Further, it can be argued that it is inappropriate for separate

Related Documents

  • Decent Essays

    The Health Belief Model

    • 1299 Words
    • 5 Pages

    As a social cognition model of health behaviours, this theory observes how well numerous factors linked to health beliefs could potentially predict intentions to alter health behaviours. In addition, the model is used in practice for predicting health behaviours (Rosenstock,1966). Nowadays the HBM is the most broadly used conceptual framework in health psychology (Carpenter, 2010). Keenness to attain precautionary health care in the HBM is formed by originally four core beliefs. Although, in later times, Rosentock and colleagues (1988) included self-efficacy as a core factor to further develop the explanation of individual differences in changes among health behaviours, making the five core beliefs a foundation for the HBM.…

    • 1299 Words
    • 5 Pages
    Decent Essays
  • Decent Essays

    Economics Of Health Care

    • 804 Words
    • 4 Pages

    Health economics is described as the “applied field of study that allows for the systematic and rigorous examination of problems faced in promoting health for all” (Johns Hopkins, n.d.). An important factor that economists consider when looking at the economy is the gross domestic product (GDP). The GDP is the “primary indicator used to gauge the health of the country’s economy” (Investopedia, 2015). Economists utilize the GDP when studying microeconomics and macroeconomics of health care. Microeconomics studies health care markets and how it affects “consumer behavior, individual labor markets, and the theory of firms” and macroeconomics studies the economy as a whole (Pettinger, 2013).…

    • 804 Words
    • 4 Pages
    Decent Essays
  • Decent Essays

    The number or extent of board-ensured doctors. The proportion of suppliers to patients. Structural measures of value ordinarily incorporate the assets ' qualities in the health care system,…

    • 1032 Words
    • 5 Pages
    Decent Essays
  • Decent Essays

    2) Compare activity-based costing systems to traditional costing systems. 3) Analyze the circumstances and provide arguments with solid numbered reasoning to support appropriateness of any of the two systems. 4) Foresee and critically assess the implications of moving from one system to another. Table 1 Clinic income statement Total HD PD Revenues Number of patients 164 102 62 Number of treatments 34 967 14 343 20…

    • 1499 Words
    • 6 Pages
    Decent Essays
  • Decent Essays

    This paper will provide a description regarding the Medicare and Medicaid program, which are the major health care delivery systems in the united states. Also, a paper will demonstrate the similarities and differences between Medicare and…

    • 911 Words
    • 4 Pages
    Decent Essays
  • Decent Essays

    The laws and regulations are protecting people. Healthcare programs helping susceptible people get the medical services they need. Helping in selecting a doctor, informed consent, patient rights, manage long-term care, the dissimilarities between Medicare and Medicaid. Examples of laws and regulations currently facing the healthcare industry lie under The Affordable Care Act (ACA). Changes in insurance principles The ACA contains guidelines that establishes principles for insurance, some assigned to the law.…

    • 1414 Words
    • 6 Pages
    Decent Essays
  • Decent Essays

    Ratios are important for measuring for comparing one hospital to another and financial statements are necessary to compare from another. Accountants, management, and health care administrators are to refer to ratios as a guide to develop a broader convey of the financial standing of the organization. Liquidity ratios have a big part of accounting and health care organizations, and the purpose of them to assess how well the organization is doing in terms of assets. Then, solvency, efficiency, and profitability are major types of ratios for how the health care organization evaluates or wants to increase profit. Lastly, equations and calculations for discounts from invoices are important to consider when completing for patients.…

    • 1006 Words
    • 4 Pages
    Decent Essays
  • Decent Essays

    To pay the health care services and/ or to get health insurance, financing is very important. Insurance is a plan by which a company or government agency offers a promise of compensation for loss or damage in properties, illness, or death in response for payment. The action of providing health care services by different providers is called delivery. The service delivered to the insured should be reimbursed to the service providers under the process of payment also called reimbursement. 2) Compare the medical model of health and health care to the wellness model of health and health care.…

    • 1169 Words
    • 5 Pages
    Decent Essays
  • Decent Essays

    RWE – For better accessibility of drug treatments Thinking Beyond the Clinical trials Though clinical trials are the gold standard measuring the safety and efficacy of drugs, to evaluate the cost-efficiency of a drug in a real-world environment and measure its impact on quality of healthcare, RCTs need to be supplemented or followed up with the comparatively new standard, called real-world evidence (RWE). Real world evidence has is entering every part of the drug product life cycle from discovery to the late stage marketing. RWE The Basics RCT RWE Patients are randomised into the study treatment; Selection of the treatment choice does not depend on physician and patient Treatment of choice depends on choice of the treating doctor according…

    • 1597 Words
    • 7 Pages
    Decent Essays
  • Decent Essays

    Statement of operations is analogous to for-profit income statements. The main sections of statement of operations are: Total Revenue, Cost of goods sold, Operating expenses, Operating Income, Earning before Tax, Taxes, Net Income, and EPS What are revenues, gains, and other support? What are expenses and losses? Funds released from restricted net assets to unrestricted net assets are presented in what section of the statement of revenue, expenses and other activities? Revenues are from providing medical and health related services and other patient services.…

    • 1119 Words
    • 5 Pages
    Decent Essays