Definition, importance, types and steps of economic evaluation of public health services

GP Chudal

Meaning and Definition of Economic evaluation

Economic evaluation of public health services is a critical process for assessing the efficiency and effectiveness of healthcare interventions and programs. It helps policymakers make informed decisions about resource allocation and ensure that public health services deliver the best value for money. Economic evaluation in public health involves the systematic assessment of the costs and consequences associated with healthcare interventions and services.

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It seeks to compare different interventions in terms of their costs and outcomes, helping decision-makers understand which options provide the most cost-effective approach to improving public health. Here’s a detailed explanation of its definition, importance, types, and steps:

Importance of Economic evaluation in public health

Economic evaluation in public health is crucial for several reasons:

  • Resource Allocation: It helps allocate limited healthcare resources efficiently by identifying interventions that offer the greatest health benefits for the least cost.
  • Accountability: It holds healthcare systems accountable for their spending and ensures that public funds are used effectively.
  • Priority Setting: It assists in setting priorities for healthcare interventions, focusing on those that have the most significant impact on population health.
  • Evidence-Based Policy: It provides policymakers with evidence-based information to make informed decisions about which interventions to fund or expand.
  • Transparency: It promotes transparency and allows for comparisons between different interventions and programs.

Types of Economic Evaluation

  1. Cost-Benefit Analysis (CBA): Measures both the costs and benefits of an intervention in monetary terms, allowing for the calculation of a net benefit or cost.
  2. Cost-Effectiveness Analysis (CEA): Compares the costs of interventions with their health outcomes in natural units (e.g., life-years gained or cases prevented).
  3. Cost-Utility Analysis (CUA): A type of CEA that uses quality-adjusted life years (QALYs) to measure health outcomes, considering both quantity and quality of life.
  4. Cost-Minimization Analysis (CMA): Compares interventions that are expected to have equal outcomes, focusing solely on cost differences.

Steps in Economic Evaluation

  1. Define the Problem: Clearly articulate the public health issue or problem that the evaluation aims to address.
  2. Identify Alternatives: Identify the different healthcare interventions or programs that could address the problem.
  3. Measure Costs: Gather data on the costs associated with each intervention, including direct costs (e.g., healthcare resources) and indirect costs (e.g., productivity losses).
  4. Measure Outcomes: Quantify the health outcomes associated with each intervention, whether in terms of lives saved, diseases prevented, or quality-adjusted life years.
  5. Analyze and Compare: Apply the appropriate economic evaluation method (CBA, CEA, CUA, or CMA) to compare the costs and outcomes of the interventions.
  6. Interpret Results: Discuss the findings, considering the cost-effectiveness ratios or net benefits of each intervention.
  7. Sensitivity Analysis: Assess the robustness of the results by varying key parameters and assumptions.
  8. Report and Communicate: Present the findings in a clear and transparent manner to inform decision-makers and stakeholders.

Public Health Service Cost

Public health service cost refers to the expenses associated with activities and programs aimed at safeguarding and improving the health of an entire population or community. These services are preventive and proactive in nature, focusing on disease prevention, health promotion, and the overall well-being of the community. Public health service costs encompass a wide range of activities, such as immunization campaigns, health education, sanitation, epidemiological surveillance, and policy development. These costs are often incurred by government agencies, public health organizations, and community initiatives.

Medical Care Cost

Medical care cost, on the other hand, pertains to the expenses related to the diagnosis, treatment, and management of individual patients’ health conditions. This includes the direct costs associated with medical services, such as doctor’s visits, hospital stays, surgeries, medications, and diagnostic tests. Medical care costs are reactive, focusing on addressing specific health issues or diseases in individuals. These costs are typically incurred by healthcare providers, hospitals, clinics, and patients themselves through health insurance or out-of-pocket payments.

Difference Between Public Health Service Costs and Medical Care Costs

AspectPublic Health Service CostsMedical Care Costs
ScopeFocus on entire population/communityFocus on individual patients
PurposeDisease prevention and health promotionDiagnosis and treatment of existing health conditions
NatureProactive and preventiveReactive and treatment-oriented
TimingLong-term prevention and preparednessImmediate response to illness
Services ProvidedImmunization, health education, policy development, epidemiological surveillance, etc.Doctor’s visits, hospital stays, surgeries, medications, diagnostic tests, etc.
Primary ProvidersGovernment agencies, public health organizations, community initiativesHealthcare professionals, hospitals, clinics, healthcare institutions, etc.
Funding SourcesPublic funds, grants, taxation, community contributionsHealth insurance, out-of-pocket payments, private funding
GoalImprove overall population healthTreat and manage individual health conditions
EmphasisPreventing health problems before they occurTreating health problems after they have developed
Primary FocusPrevention and well-being of the communityDiagnosis and treatment of specific health issues

Types of costs involved in public health service

  1. Direct Medical Costs: These costs are directly related to healthcare services provided to individuals in the community. They include expenses for medical consultations, diagnostic tests, treatments, vaccinations, and medications. Direct medical costs are a crucial component of public health services, especially when addressing specific health issues or outbreaks.
  2. Personnel Costs: Personnel costs cover the salaries, wages, and benefits of the healthcare professionals and staff involved in delivering public health services. This category includes epidemiologists, nurses, public health educators, and administrative personnel.
  3. Infrastructure Costs: Infrastructure costs refer to the expenses associated with the physical facilities and equipment required for public health services. This includes the construction and maintenance of healthcare centers, laboratories, vaccination clinics, and public health offices.
  4. Program Development Costs: These costs are incurred during the planning, development, and implementation of public health programs. They encompass activities such as research, policy development, program design, and strategic planning.
  5. Preventive Intervention Costs: Public health services often involve preventive interventions to reduce the risk of diseases and improve overall health. These costs include funding for immunization campaigns, health education programs, and community outreach initiatives.
  6. Surveillance and Data Collection Costs: Effective public health requires continuous monitoring and surveillance of health trends and disease outbreaks. This category covers the expenses associated with data collection, analysis, and reporting, as well as the maintenance of surveillance systems.
  7. Research and Evaluation Costs: Public health research and evaluation are essential for assessing the effectiveness of interventions and identifying areas for improvement. These costs include research studies, evaluation of public health programs, and the dissemination of research findings.
  8. Outreach and Communication Costs: Public health services rely on effective communication to educate the community and raise awareness about health issues. Outreach and communication costs encompass advertising, public service announcements, and community engagement initiatives.
  9. Training and Capacity Building Costs: To maintain a skilled workforce in public health, training and capacity-building activities are necessary. These costs include training programs, workshops, and professional development for healthcare professionals and staff.
  10. Administrative and Overhead Costs: Administrative and overhead costs cover general operational expenses, such as office space, utilities, office supplies, and administrative staff salaries. These costs are necessary to support the day-to-day functioning of public health agencies and organizations.
  11. Emergency Response and Preparedness Costs: Public health services need to be prepared for emergencies, including natural disasters and disease outbreaks. This category includes the expenses associated with emergency response planning, stockpiling supplies, and conducting drills and exercises.
  12. Quality Assurance Costs: Ensuring the quality and effectiveness of public health services requires ongoing monitoring and quality assurance activities. These costs involve assessing and improving service quality.

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