Organizations a healthcare organization may be

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organizations. A healthcare organization may be interested in the costbenefit of a palliative care program versus traditional medical protocols. Inthis case, the firm is not interested in the transfer payments that may resultby participation because these are not paying for resources being utilized.Instead, the firm is concerned with its own direct and indirect costs of thecourses of action and their associated outputs (seeTable 14-1). The societalview includes all persons so that the opportunity cost of the various coursesof action can be taken into account. In terms of a palliative care intervention,this would include all direct and indirect costs of the courses of action andthe transfer payments that may be involved as well, because they reflect theopportunity costs of pursuing one course of action versus another for thepopulation as a whole (Drummond et al., 1997).Economic evaluations link the alternative courses of actions’ inputs andoutputs and provide a comparative analysis of alternative courses of actionin terms of the value of their inputs and outputs. Without such an analysis, itis difficult to objectively justify the value for the money invested in analternative. The real cost of any alternative isn’t measured by the budgetaryallocations, but by the health output achieved through some otheralternative which has been foregone by committing resources or inputs tothe alternative in question. This cost is the opportunity cost of thealternatives considered and is compared to the alternative’s benefits.Figure14-1depicts a diagram of the process (Drummond et al., 1997).TYPES OF ECONOMIC ANALYSESThe identification and measurement of costs is similar across the economicevaluation methods and are discussed later in the chapter. However, thetype of output from the alternative courses of action can vary significantlyacross the methodologies. Four types of evaluation methods illustrate thisconcept. A summary of the various types are seen inTable 14-2.
Cost-Minimization AnalysisTABLE 14-1 Types of Outputs of a Course of Action.Outputs:changes inphysical, social, oremotional role functionHealth:changes in naturalunits (e.g., reduction indisability days, reductionin blood glucose levels)Utility:changes in thequality of life of patientsand their families (e.g.,QALY or Healthy Years)Benefits:changes inresourcesutilizedDirect1. Organizing andoperating services within thehealth sector for original orunrelated conditions2. Related activities ofpatients and their families(e.g., savings in expendituresor leisure time input)Indirect1. Savings in patients' orfamilies' lost work timeIn this case, outputs of the courses of action are identical (or at leastassumed to be so), and costs only are considered. For example, acomparison of the common output of interest is the number of successfulprocedures at a day surgery center versus performing the procedures at anoutpatient center of a hospital (Evans and Robinson, 1980). In this example,

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Term
Spring
Professor
Rusnak,J

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