Health Economics - Costs

This section contains the following:

Introduction

Cost estimation is an integral part of economic analysis, with many decisions made on the basis of whether the benefits of the programme outweigh the costs. costs can be broken down into two distinct categories: those that accrue to the health care sector and those that accrue to the patient and family. It is important to determine at an early stage the scope of the economic evaluation as the inclusion criteria fro costs will be dependent upon the perspective of the study i.e. whose costs and benefits are important. If a narrow perspective is taken, then the relevant costs and consequences included in the analysis will also be confirmed. Likewise, if a broad societal perspective is taken then the relevant costs and consequences will be much wider. The trade off is that with a broad perspective the analysis is fuller; however the time and costs involved in such an analysis will be much larger

Collection of costing data

Data collection will generally focus on estimating the use of:

Primary care ( for example a health centre) averted etc. The results are often presented in terms of incremental costs effectiveness ratios e.g. the incremental (or extra) costs per additional life saved.
Secondary care (for example hospitals) and
Personal costs to individuals (such as time and travel costs).

Primary care costs

Primary care resource use can be obtained from patient completed questionnaires. data collected should include:

Number of general practitioner / family doctor / nurse consultations
Information of prescriptions
Information on any use of private health care

Secondary care costs

The use and cost of secondary health services can be divided into 2 components:

The cost of the intervention (if the intervention is provided in secondary care)
the use of secondary services after the intervention until the end of follow-up

Participant costs

Personal costs comprise three main elements: self purchased healthcare; travel costs for making return visit(s) to a health centre; and time costs of traveling and attending health care services.

Self-purchased health care is likely to include items such as prescription costs and over the counter medications. Information on these costs should be collected via a health care utilisation questionnaire.
Estimation of travel costs requires information from participants about the number of visits to, for example, the family doctor (estimated from the health care utilisation questionnaire) and the unit cost of making a return journey to each type of health care provider (from a specific Patients Costs Questionnaire).
The cost of participant time can be estimated in a similar manner. A Patient Costs Questionnaire could include information on how long they spent traveling to and attending their last visit to each type of health care provider, which activity they would have otherwise been undertaking (e.g. paid work, house work, leisure activities) had they not attended the health care provider. These data should be presented in their natural units, e.g. hours, and costed using standard economic conventions, for example lost wages, cost of employing someone else to do the housework etc.

Additional resources

Health Economics Information resources

An open web access outreach course on health economics.

References

Drummond MF, Jefferson TO, for the BMJ Working Party on Guidelines for Authors and Peer-Reviewers of Economic Submissions to the British Medical Journal. Guidelines for authors and peer-reviewers of economic submissions to the British Medical Journal. BMJ. 1996;313:275-383