A cost-benefit analysis (CBA) and cost-effective analysis (CEA) provide valuable information for individuals responsible for financial planning. These tools are also helpful in health care organizations. The principles of CBA and CEA can also be applied to your personal financial decisions.
To prepare for this Discussion, complete the readings in your Learning Resources. Think of a project or program (e.g. creating a new geriatric health center, purchasing a piece of expensive diagnostic equipment, or adding an employee benefit) in a health care setting. Identify all of the primary and secondary benefits of the program. Also identify the direct and indirect costs.
By Day 4
Post a comprehensive response to the following:
Provide a brief description of the project or program you selected.
Highlight the primary and secondary benefits of this project. Briefly explain the direct and indirect costs. Are there costs that cannot be quantified? Are there any benefits that cannot be quantified? Why?
As a decision maker, how would you use the CBA and CEA for this project?
Be sure to support your work with specific citations from this week’s Learning Resources and/or additional scholarly sources as appropriate. Your citations must be in APA format. Refer to the Essential Guide to APA Style for Walden Students to ensure your in-text citations and reference list are correct.
Introduction to Health Care Economics & Financial Management
Chapter 7, “Cost Allocation and Cost-Finding”In their operating expense budgets, many health care settings budget and report indirect costs generated by departments that provide direct services. This chapter presents an overview of the allocation of indirect costs. The concepts of cost allocation and cost-finding are explained with examples from health care settings.
Chapter 8, “Break-Even Analysis”The break-even analysis calculates how much one should charge or how many patients must be seen to cover the cost of doing business in health care. This chapter addresses these factors and includes the calculation and application of the contribution margin as well as the importance of indirect and overhead costs.
Chapter 9, “Cost-Benefit Analysis and Cost-Effectiveness Analysis”Cost-benefit and cost-effectiveness analyses are the focus of this chapter. This chapter will explain how you evaluate the benefits and resources used between two or more alternative interventions.
Kee, J. E. (1999). At what price? Benefit-cost analysis and cost-effectiveness analysis in program evaluation. The Evaluation Exchange, 5(2 & 3), 4–5. Retrieved from http://www.hfrp.org/evaluation/the-evaluation-exchange/issue-archive/methodology-15/at-what-price-benefit-cost-analysis-and-cost-effectiveness-analysis-in-program-evaluation
Hutton, G. & Reyfuess, E. (2006). Guidelines for conducting a cost-benefit analysis of household energy and health interventions. World Health Organization. Retrieved from https://extranet.who.int/iris/restricted/bitstream/10665/43570/1/9789241594813_eng.pdf
Centers for Disease Control and Prevention. (n.d.). Cost benefit analysis. Retrieved from http://www.cdc.gov/owcd/eet/cba/PrintAll.html