This document discusses cost effectiveness analysis in healthcare. It defines different types of costs, including direct, indirect, and intangible costs. It also outlines the purposes, steps, and drawbacks of conducting a cost effectiveness analysis. A cost effectiveness analysis examines both the costs and health outcomes of alternative interventions to identify the most cost effective option. It aims to maximize health benefits relative to the available resources and provides empirical evidence to compare costs and consequences of different programs.

1. COST EFFECTIVENESS
Sarita
MSc nursing IInd year

2. Cost
• Cost can be defined as expenditure (actual or notional) incurred
on or attribute
• able to a given thing.
• Costs are the values of all the measure of the value of all
resources used in the intervention. The cost of the intervention
is an important part of the decision to use one intervention over
another.

3. TYPES OF HEALTH COST
Direct costs- defined as the values of all resources expended on
design and implementation of the health intervention.
Example- personnel lab, lab tests and facilities.
It can be either direct health care cost or direct non health care cost.
Indirect costs- Indirect costs or productivity losses are the income
forgone because of changes in productivity as a result of health
intervention or illness.
Example- Cost of lost work due to absenteeism, early retirement.

4. • Intangible costs- Intangible costs are the non material costs.
Intangible costs impose a major burden on a patient.
Quantifying intangible costs is difficult and these costs are not
included in the majority of the studies.
Example- emotional anxiety, fear, pain and stigmatization

5. Cost effectiveness
• Cost effectiveness is the extent to which an organization or
program produces particular outputs
• Cost effectiveness in the nursing is the effectiveness that is
primarily relates to quality outcomes being achieved. Is
concerned with doing the right things in provide the patients
care with low cost and high quality.

6. AIM & OBJECTIVES COST
EFFECTIVENESS
• Aim-To maximize the level of benefit health effect relative to
the level of resources available.
• Objective- To compare alternative programs with a common
health outcome
To assess the consequences of expending.

7. PURPOSE
• To identify the most cost effective intervention from a group of
alternatives
• To provide empirical justification of an program.
• To identify and excluding program that is wasting resources.
• To provide general information on the relative costs and health
benefits of different alternatives
• To evaluate the interventions in terms of efficacy, absolute
health gain and affordability.

8. STAGES OF COST EFFECTIVENESS
• Cost awareness
• Cost monitoring
• Cost management
• Cost avoidance
• Cost incentives
• Cost reduction
• Cost control

9. • Cost awareness: It focuses the employee attention on costs. It
increase the organizational awareness of what cost are, how they
can be managed and by whom.
• Cost monitoring: It focuses on how much will be spent where,
when and why.

10. • Cost management: It includes conceptual and physical acts to
limit unnecessary spending through planned and practical use
of personal, material and physical resources for maximum
productivity. It focuses on what can be done by whom to
contain costs.
• Cost avoidance: It means not buying supplies, technology or
services, the costs of them should be analyzed carefully and the
most expensive and less effective items avoided.
• Cost incentives: It motivate cost containment and reward
desired behavior.

11. • Cost reduction: It means spending less for goods and services,
the amount of reduction depend on the size of the agency,
previous, efficiency, skills of mangers and cooperation of
employees.
• Cost control: It is effective use of available resources through
careful forecasting, planning, budget preparation, reporting and
monitoring

12. Strategies to control cost
• Provider networks and selective provider: It contracting at a
favorable reimbursement rate, this strategy restricts consumers
choice of provider.
• Payment methods with risk sharing: Reimbursement includes an
incentive for providers to limit the cost care.
• Gate keeping: The goal of this practice is to prevent
unnecessary resource utilization. The strategies used

13. • Utilization review: This refers to a variety of practices that
require appropriate use of resources by clinicians:
preauthorization is the requirement that specified services, such
as hospitalization or emergency room care be approved before
they provide preauthorization.
• Favorable selection of clients: one criticism of managed care
organization is that many seek to enroll younger and healthier
individuals who will require fewer resources

14. BENEFITS
• Easy to understand and more readily suited for decision making
• Provide empirical results for the decision makers to compare the
costs and consequences associated with alternative programs.
• The analysis of cost effectiveness help to know the cause of
failure to meet the objectives.
• Adequacy of corrective action taken, and revised

15. COST EFFECTIVE ANALYSIS
• Cost effectiveness is an economic study design in which
consequences of different interventions are measured using a
single outcome, usually in natural units
- National Institute of Health and Clinical Excellence
The cost effectiveness analysis is a type of economic evaluation
that examine both the costs and health outcomes of alternative
intervention strategies.

16. COST
EFFECTIVENESS
ANALYSIS
COSTS HEALTH
OUTCOME

17. PURPOSES
• To identify the most cost effective intervention from a group of
alternatives
• To provide empirical justification for a program
• To identify and exclude programs that is wasting resources
• To provide general information on the relative costs of health
benefits of different alternatives.
• To evaluate the interventions in terms of efficacy

18. STEPS OF COST EFFECTIVE ANALYSIS
• Defining the problem
• Adopting a research strategy
• Specify audience
• Define perspective
• Specify the time frame work
• Prepare the analytic horizon
• Decide the type of study design

19. CONTINUE
• Identify the outcome measures or variable
• Search for available alternatives
• Identify the types of costs to be included in CEA
• Analysis

20. DRAWBACKS OF COST EFFECTIVENESS
ANALYSIS
• The data regarding direct costs such as doctors or nurses time
and supplies used; indirect costs such as a portion of
administrative cost, such as a portion of administrative costs,
the cost of equipment are usually not readily available.
• It does not facilitate comparison across different diseases when
different outcome have been used.
• Cost effectiveness is the only one criterion for judging whether
an intervention effective or not