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Healthcare Economics: Cost-Effective Analysis


Within the field of healthcare economics, experts use various measures and tools to make informed decisions and meet the demands of the targeted patients. This would refer to the loss recorded when other alternatives are avoided. This outcome will emerge after one choice is made (Cookson et al., 2017). Medical professionals and financial experts will use the tool to make workable decisions before considering a specific investment.

Initial Costs

This term identifies the expenses or costs investors incur during the preliminary stages of a project. For instance, a medical facility will have to spend some financial resources to setup a given facility or process. Some of the costs associated with this term would include the ones associated with preliminary analysis, project design, and planning (Khullar & Chokshi, 2018). A proper analysis is necessary to ensure that the intended health program is capable of delivering the intended results.

Continuing Costs

After designing and implementing a specific project, the participants should be aware of the projected continuing costs. These would include expenses that are mandatory and need to support the smooth running and operations of the entire project (Khullar & Chokshi, 2018). Such costs are unavoidable and are worth determining ad budgeting to ensure that the targeted project is able to deliver the intended results.

Induced Costs

The term induced costs derive their meaning from the word induce. The meaning is that such expenditures would vary significantly depending on the recorded level of production. Since the term is intended for the healthcare sector, it would refer to the incurred costs that arise from the level of income and production within the stipulated period of a given project (Khullar & Chokshi, 2018). Professionals and stakeholders should consider such costs continuously to ensure that they are within the limits and budget of the specific health program.

Averted Costs

This concept would revolve around the recorded cost savings while focusing on the changing health needs of different patients. It is a resultant of the next cost divided by the recorded health experiences and outcomes. Those planning to capitalize on such costs would consider some of the best approaches to reduce expenditures and ensure that every health activity delivers positive medical outcomes (Seguí et al., 2020). For instance, a specific program could be associated with medical interventions that are cheaper. The end result is that the agency or organization will record the relevant cost savings.

Fixed Costs

After launching the intended project, it would occur that there are specific costs that will not change whether the targeted services are offered or not. These expenses would fall within the category of fixed costs. Some good examples would include the salaries available to different medical professionals and leaders, rent, and monthly utility bills (Khullar & Chokshi, 2018). Those in charge of any given project should consider such costs and make the relevant adjustments to ensure that the entire program eventually records the anticipated results.

Variable Costs

This term is used widely to refer to expenses that will significantly depending on the initiatives and other factors of production an organization puts in place. Such costs might increase or fluctuate depending on the activities undertaken. For a given healthcare program, variable costs might include when more patients are admitted within the same time period (Seguí et al., 2020). Experts can contrast them with fixed costs to determine the most appropriate decisions and measures that can support the delivery of high-quality and personalized services to the targeted patients.

Selected Program

The selected topic is that of increasing the number of children who receive flu vaccine annually from a pediatric clinic. This health program is essential since will reduce the medical challenges associated with flu and maximize the medical experiences of the beneficiaries. The hypothetical program entails the adoption of two processes. The first one would be the provision of one-on-one information to mothers who bring their children to the pediatric clinic (Seguí et al., 2020). This approach is appropriate since more people visit such clinics with the aim of recording positive medical results. The second method that has the potential to support the delivery of desirable outcomes is the use of social media to reach out to community members and sensitize them about the targeted flu vaccine and its specific benefits.

Intended Outcome

The purpose of this analysis is to compare the overall cost effectiveness of the implemented two procedures. The issue to consider is the manner in which method is more appropriate and capable of delivering sustainable results. The exercise would entail examining the number of children who receive the vaccine based on the use of either processes (Fleming, 2015). A control would be necessary and would include women who bring their children voluntarily for the annual flu vaccine without the presented interventions.

Control One-on-one communication Control internet and social media-based platforms
200 children 200 children 200 children
50 attended 100 attended 150 attended
Extras 50 children 100 children

Calculating Costs

Under this segment, it is appropriate to calculate the overall costs incurred to complete the activity ad meet the demands of both the mothers and their young children. From the above table, it is evident that online-based approaches led to more children attending the clinic and getting the annual flu vaccine (Fleming, 2015). Specifically, the method attracted 100 more children in comparison with the control process. On the other hand, the one-on-one communication attracted 50 more children to be part of the health initiative. The breakdown for the incurred expenses is described in the table below.

Cost One-On-One Communication Online-Based Approaches
Staff 4 trained professionals ($4,000) One professional ($1,000)
Transport Bus fare ($1,000) None ($0)
Equipment Pens, handouts, writing pads ($500) Computer and Internet ($600)
Administrative Office expenses ($1,000) None ($0)
Total $6,500 $1,600

Dividing Cost for the Processes

From the above segment, it is evident that the project implementers would incur around $6,500 to communicate to more parents and encourage them to bring their hidden for the targeted immunization. The second approach is cheaper since the office had to incur a total of $1,600. A comparison of the two reveals that the use of the Internet is cheaper ad capable of delivering sustainable outcomes.

With this kind of information, the next thing would be to calculate the cost-effectiveness of the measures. This would be achieved by dividing the recorded cost by each process’ outcome. In this case, the total of $6,500 will have to be divided with the extra number of children who embraced the vaccine. The same would be done for the second process that entails the use of online-based platforms, such as social media networks.

One-on-one communication = 6,500 /50 = $130 for every extra child immunized.
Online-based approaches = 1,600/100 = $ 16 for every extra child immunized.

From this program, it would be right to say that the second method is more appropriate and capable of maximizing the level of cost saving. More children will be immunized in the selected community if the program considers the importance of applying this technique.


The suggested program is intended to address the problem of influenza in the selected community. This disease is dangerous when left untreated or uncontrolled. The relevant stakeholders should begin by considering the outlined costs and make informed decisions. They will make the relevant tradeoffs and make initial investments. The involvement of all key partners and support for the major players will support the delivery of positive results (Seguí et al., 2020). The proposed processes aimed at sensitizing parents in the community to be aware of this annual vaccination and the benefits they stand to receive from the exercise.

Several measures are capable of dictating the quality of the program and the anticipated outcomes. First, the relevant leaders will begin by applying the measures of cost effectiveness to consider the necessary investment decisions and procedures that can deliver positive results. The leaders will identify some of the existing challenges and opportunities that can impact the nature of the program (Fleming, 2015). They will consider the relevant arithmetic and calculations and make the relevant tradeoffs. The ultimate aim is to ensure that the most appropriate and beneficial initiatives are put in place.

Second, a statistical tool could be developed to gauge the experiences of most of the stakeholders, including the members of staff, members of the wider community, and the patients. These individuals will complete the presented surveys and make the necessary recommendations. The leaders at the company will rely on such feedback and views to make the relevant decisions and improvements (Fleming, 2015). The acquired insights will form the basis for improving quality and ensuring that more people in the selected community eventually receive personalized and high-quality medical services.

Third, the program leaders can consider a superior framework for assessing the performance of different professionals and health services providers. The model will analyze the contributions of such workers and how their actions meet the demands of the targeted patients. The leaders will make informed decisions relying on the performance of the experts (Fleming, 2015). They will solve emerging problems and provide the relevant support to improve the quality of services available to the community members. The leaders can also be involved to make timely observations, propose the relevant changes, and consider the demands of all community members.

Since this program revolves around the provision of high-quality medical support to different beneficiaries, the leaders can identify a number of attributes to measure the quality of outcomes. The stakeholders can begin by examining the level of care available to the individuals. They will also examine the percentage of medication errors recorded within the first few months of the project (Fleming, 2015). They will also analyze the experiences of the patients after receiving the relevant medical support. Other key parameters to monitor could include the timelessness of the available care and the contentment of the workers. The introduction and efficient use of medical informatics can also dictate the quality of the program outcomes. The observations made should dictate whether there is a need to implement a change process or continue with the project as originally implemented.


Cookson, R., Mirelman, A. J., Griffin, S., Asaria, M., Dawkins, B., Norheim, O. F., Verguet, S., & Culyer, A. J. (2017). Using cost-effectiveness analysis to address health equity concerns. Value in Health, 20, 206-212. Web.

Fleming, S. T. (2015). Managerial epidemiology: Cases and concepts (3rd ed.). Health Administration Press.

Khullar, D., & Chokshi, D. A. (2018). Can better care coordination lower health care costs? JAMA Network Open, 1(7), e184295. Web.

Seguí, F. L., Parella, J. F., García, X. G., Peña, J. M., Cuyàs, F. G., Mas, C. A., García-Altés, A., & Vidal-Alaball, J. (2020). A cost-minimization analysis of a medical record-based, store and forward and provider-to-provider telemedicine compared to usual care in Catalonia: More agile and efficient, especially for users. International Journal of Environmental Research and Public Health, 17(6), 2008-2016. Web.

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