Ch 13- 16 Flashcards
define– Cost–benefit analysis.
Cost–benefit analysis. An economic evaluation technique in which outcomes are expressed in monetary terms.
define– Cost-effectiveness analysis.
Cost-effectiveness analysis. An economic evaluation technique in which out- comes are expressed in health units such as life years saved.
define– Cost–utility analysis.
Cost–utility analysis. An economic evaluation technique where outcomes are expressed in health units that capture not just the quantity but quality of life.
define– Economic evaluation.
Economic evaluation. Compares the costs and consequences of alternative health care interventions to assess their value for money.
define– Sensitivity analysis.
Sensitivity analysis. The process of assessing the robustness of the findings of an economic evaluation by varying the assumptions used in the analysis.
what is comparative analysis?
- compares 2 or more options
- in terms of their costs and their consequences
what are the 4 main forms of economic evaluation?
- CBA. cost benefit analysis (expressed in monetary terms)
- CEA. cost effectiveness analysis (expressed in single health effects such as life years saved)
- CUA. cost utility analysis (multiple effects can be captured under measures such as QALYs)
- CMA. cost minimization analysis
the main forms of economic evaluation are used to pursue what 2 types of efficiency?
- economic efficiency. ‘what is the least costly way to achieve a particular goal?’
- allocative efficiency. resources are allocated and goods distributed in a way that maximizes social welfare
which economic evaluation can assess potential Pareto improvement?
CBA cost benefit analysis can be used to measure both economic and allocative efficiency questions.
which economic evaluation can focus on the least cost way of producing a good?
CEA and CUA are based on the production function approach.
What are the four broad steps in undertaking an economic evaluation:
- defining the decision problem (also known as ‘framing the evaluation’);
- identifying, quantifying and valuing the resources needed;
- identifying, quantifying and valuing the health consequences;
- presenting and interpreting the evidence for decision-making.
Define– Annual cost.
Annual cost. The cost of an intervention, calculated on a yearly basis, including all the capital and recurrent costs.
Define– Annualized costs.
Annualized costs. The annual share of the initial cost of capital equipment or investments, spread over the life of the project – usually modified to take account of depreciation.
Define– Average cost.
Average cost. Total cost divided by quantity.
Define– Capital cost.
Capital cost. The value of capital resources which have useful lives greater than one year.
Define– Direct cost.
Direct cost. Resources used in the design, implementation, receipt and continuation of a health care intervention.
Define– Discount rate.
Discount rate. The rate at which future costs and outcomes are discounted to account for time preference.
Define– Discounting.
Discounting. A method for adjusting the value of costs and outcomes which occur in different time periods into a common time period, usually the present.
Define– Financial (budgetary) cost.
Financial (budgetary) cost. The accounting cost of a good or service, usually representing the actual (historical) amount paid – distinct from the economic (opportunity) cost.
Define– Indirect cost.
Indirect cost. The value of resources expended by patients and their carers to enable individuals to receive an intervention.
Define– Intangible cost.
Intangible cost. The costs of discomfort, pain, anxiety or inconvenience
Define– Marginal cost.
Marginal cost. The change in the total cost if one additional unit of output is produced.
Define– Overhead cost.
Overhead cost. A cost that is not incurred directly from providing patient care but is necessary to support the organization overall (e.g. personnel functions).
Define– Recurrent cost.
Recurrent cost. The value of resources with useful lives of less than one year that have to be purchased at least once a year.
Define– Shadow price.
Shadow price. The true economic price of a good that reflects its value to society.
Define– Time preference
Time preference. People’s preference for consumption (or use of resources) now rather than later because they value present consumption more than the same consumption in the future.
Define– Total (economic) cost.
Total (economic) cost. The sum of all the costs of an intervention or health problem.
explain total cost
the sum of all costs of an intervention, taking into account the value of all the resources used
explain annual cost
the cost of the intervention calculated on a yearly basis – including all the annualized costs of capital expenditures as well as the yearly recurrent costs. Annual costs will vary from one year to another – in the first year, the start-up costs will be greater whereas after the intervention has been in operation for a while, the recurrent costs may form a higher part of the annual cost.
