Cost-Benefit Analysis in Healthcare

Cost-Benefit Analysis in Healthcare

Preparation

Scenario

Suppose an issue has emerged in your organization that presents significant risks to the stakeholders involved. Your supervisor has asked you to conduct a CBA, make a recommendation, and present it to the board of directors. You are expected to consider the numbers within the context of the organizational mission, strategic direction, patient safety, risk-management issues, regulatory requirements, patient and stakeholder satisfaction, and the dynamics within the health care industry.

Select a relevant issue within your workplace (or one from the Suggested Resources) for which a CBA may be conducted. The CBA should include one of the following course-related topics:

  • Patient safety.
  • Risk management.
  • Regulatory standards.
  • Patient and stakeholder satisfaction.

Instructions

Step One: Identify Costs

Apply the process from Writing a Cost-Benefit Analysis article (from the Required Resources) to identify costs:

  1. Make a list of all monetary costs that will be incurred upon implementation and throughout the life of the project. These include start-up fees, licenses, production materials, payroll expenses, user acceptance processes, training, and travel expenses, among others.
  2. Make a list of all non-monetary costs that are likely to be absorbed. These include time, low production of other tasks, imperfect processes, potential risks, market saturation or penetration uncertainties, and influences on one’s reputation.
  3. Assign monetary values to the costs identified in steps one and two. To ensure equality across time, monetary values are stated in present value terms. If realistic cost values cannot be readily evaluated, consult with market trends and industry surveys for comparable implementation costs in similar businesses.
  4. Add all anticipated costs together to get a total costs value (Plowman, 2014).

Step Two: Identify Benefits

Continuing with the CBA, proceed with the identification and quantification of benefits, per Writing a Cost-Benefit Analysis article.

  1. Make a list of all monetary benefits that will be experienced upon implementation and thereafter. These benefits include direct profits from products or services, increased contributions from investors, decreased production costs due to improved and standardized processes, and increased production capabilities, among others.
  2. Make a list of all non-monetary benefits that one is likely to experience. These include decreased production times, increased reliability and durability, greater customer base, greater market saturation, greater customer satisfaction, and improved company or project reputation, among others.
  3. Assign monetary values to the benefits identified in steps one and two. Be sure to state these monetary values in present value terms as well.
  4. Add all anticipated benefits together to get a total benefits value (Plowman, 2014).

Cost-Benefit Analysis

Enter the cost and benefit data you developed for the CBA in your preparation steps into the Cost-Benefit Analysis Template, linked in the Required Resources.

Then, write an analysis in which you do the following:

  • Describe the organizational, program, or departmental issue for which you have created the CBA.
  • Evaluate the cost versus benefit according to the general guidelines outlined by Plowman’s 2014 article, which you read in the preparation for this assessment.
  • Make a recommendation as to whether the benefits are sufficient to outweigh the costs of the proceeding.
  • Describe the systems-based context for your recommendations, integrating the CBA within the organization as a whole.
  • Describe how the issue relates to the organization’s vision, mission, and strategic direction.
  • Provide a rationale that explains how your recommendations are appropriate for your organization’s capacity and strategy.

Your analysis should use proper APA style and formatting and include the following sections. Each section, except the title page, should include the appropriate section heading.

  1. Title page: Use APA formatting and include the following:
    • Assessment number (Assessment 3).
    • Your name.
    • The date.
    • The course number
    • Your instructor’s name.
  2. Abstract: Include a one-paragraph summary of analysis content. This is not an introduction to the topic, but a summary of the entire analysis. Make sure to double-space.
  3. Issue description.
  4. CBA evaluation.
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