Cost analysis

• Cost is the value of all resources used to produce a good or a service
• Cost includes time, buildings, vehicles, equipment, supplies, and the cost of the next best alternative that could have been chosen (opportunity cost)
• Costs incurred in healthcare include diagnostic tests, drugs, medical supplies, physician office visits, hospitalization, self-treatment, program administration, physical space, utilities, patients' out-of-pocket expenses, emotional anxiety, pain, suffering, psychological stress, stigma, time spent seeking care, travel costs, work days lost, costs incurred by caregivers, and less payments to patient and caregiver replacement
• Economic evaluations involve identifying, measuring, valuing, and comparing the costs and consequences of alternative prevention strategies
• Types of economic evaluations include Cost Minimization Analysis (CMA), Cost Effectiveness Analysis (CEA), Cost Utility Analysis (CUA), and Cost Benefit Analysis (CBA)
• Cost Minimization Analysis (CMA) compares the costs of healthcare interventions with equal outcomes, based solely on comparative cost
• CMA is used when programs being assessed are equally effective, only one program is being assessed, and there is no available information about program effectiveness
• Cost Effectiveness Analysis (CEA) examines both costs and health outcomes of alternative strategies, presenting results in a cost effectiveness ratio expressing cost per health outcome
• CEA is used to compare alternative programs with a common health outcome and assess the consequences of expanding existing programs
• Cost Utility Analysis (CUA) calculates the cost per quality-adjusted life year gained (QALY) by combining quality of health status and duration of time in that state
• Limitations of CUA include challenges in valuing health states, discounting future benefits, and ethical dilemmas
• Cost Benefit Analysis (CBA) compares costs with the monetary value of outcomes, providing a more global perspective but facing limitations in data requirements and ethical issues
• Economic evaluation methods include Cost Minimization Analysis (CMA), Cost Effectiveness Analysis (CEA), Cost Utility Analysis (CUA), and Cost Benefit Analysis (CBA)
• Uses of economic evaluation include comparing costs and effects of different healthcare interventions, identifying interventions with the largest health impact per currency spent, and selecting essential packages of services
• Limitations of economic evaluation include being resource and research intensive, methodological controversies, lack of capacity of policymakers to understand results, and efficiency criterion not addressing equity
• Economic cost of a good or service includes the cost of resources used in production and the cost of the next best alternative that the resources could have been used for
• Economic evaluation is used by decision makers at different levels to make choices based on limited resources and competing needs