The central concern of economics is how best to allocate scarce resources among competing uses. The same concern applies to the scope of health care. As a result, pharmacoeconomics, which compares the value of one pharmaceutical drug or drug therapy to another, became a prominent issue by the mid 1980s. There are several types of pharmacoeconomic evaluations, one of which is cost–utility analysis (CUA).
CUA focuses on quality of a health outcome produced or forgone by different health programs or treatments. CUA is a form of cost-effectiveness analysis (CEA) that attempts to capture timing and duration of disease and disability by comparing the utility (person’s preference) associated with different health outcomes. (see Figure 1) It was originally called “Generalized Cost-Effective Analysis” as it is used to narrow the restrictiveness of traditional cost-effectiveness analysis. In 1972, it was renamed “Utility Maximization” and then “Healthy Status Index Model” in 1976.
Since 1982, it has been referred to as CUA in many countries, although the United States still called it CEA. Even though these two terms are used interchangeably, there are still several distinguishing features between the two. Such differences include integration of multiple outcomes, , quantification of outcomes based on desirability, and measurement of relative desirability of outcomes with von Neumann-Morgenstern utility theory.
A cost-utility analysis describes the additional cost of the new intervention per unit of health gain and assesses health in terms of length and quality of life using the quality adjusted life year (QALY). QALYs were invented in 1956 by two health economists, Christopher Cundell and Carlos McCartney. The concept of QALY was f...
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Neumann, P., Weinstein M. (2010, Oct 14). Legislating against use of cost-effectiveness information. The New England Journal of Medicine, Vol 363, 1495-1497. doi:10.1056/NEJMp1007168.
Office of Health Economics (2002). What is a QALY? Retrieved from http://oheschools.org/ohech5pg4.html
Wilkerson J. (2011, Sep 28). PCORI head vows not to do cost-effectiveness studies, but notes gray areas. InsideHealthPolicy.com. Retrieved from
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Papanicolas, I. & Smith, P. (2013). Health system performance comparison an agenda for policy, information and research. Maidenhead: Open University Press.
For years, the price of drugs have been held in congress because the cost of pharmaceutical drugs is the most controversial aspect of this industry. Stuart Schweitzer, a professor of health policy and management at the University of California Los Angeles, author of Pharmaceutical Economics and Policy, comments on this topic. According to Schweitzer, consumers are more sensitive to drug prices more than the price other health services. Schweitzer states, “Consumers are more likely to complain about a $50 bottle of tablets than a $500 radiology procedure, or a $5000 hospital stay”. This may be due the fact that these procedure and hospital stays are less frequent than taking prescription medication that is needed continuous. Most patients are seeing multiple doctors and nurses, that is accounting for the cost. Whereas at a pharmacy, they only see the pharmacist for a consultation and then the patient goes home to take their medication. Consumers may expect this to be cheaper because they are not receiving extensive care. To bring a new drug onto the market in the 1990s, it costed $359 million compared to $1.7 billion in 2003. Pricing of most products is usually based on marginal cost, which is the change in the total cost that comes from producing one extra item. However, this is not the case with the pharmaceutical industry because if prices were based on marginal cost, drugs would be a lot more
The Real Cost: Contract is a commercial that was released October 31, 2014 across multi-wide media, TV, Radio, Print, and digital causes a bright side of controversy for teens who were expected to be in use of Tobacco. The commercial shows a list of scenes in an average teen life while also the slow effects of losing free time and your own time with the use of cigarettes. It’s not the typical anti-smoking commercial because instead of just saying don’t smoke its digs in the feel of teen emotion towards how they chose to live there life and what decisions that are willing to make. The commercial features a teenage girl narrating normal events in her lifestyle talking in a way she’s stepping up in her life to find herself when initially
Ormond, B., Spillman, B., Waidmann, T., Caswell, K., & Tereshchenko, B.. (2011). Potential National and State Medical Care Savings From Primary Disease Prevention. American Journal of Public Health, 101(1), 157-64. Retrieved February 23, 2011, from ProQuest Psychology Journals. (Document ID: 2233850141).
It is very important that we utilize cost control methods in the health care field. The reason being is that about 10% of the population, usually with chronic to severe problems, use approximately 70% of the total spending (Shi, & Singh, 2008). If we didn’t monitor the costs and spending we wouldn’t be using the money efficiently. To avoid potential problems we frequently use six different cost control methods to monitor what medical services are necessary, the most cost efficient way for these services to be provided, and keep an up to date chart of the patient’s condition to offer only treatment deemed necessary.
As a college student, you are required to make decisions all the time. These decisions differ in there level of seriousness and way it can affect you as an individual and how they may affect your academic performance. I came to college as an athlete, and my choice to be a college athlete meant my life would be different from traditional students. The rigor of my sport meant i would have weights every morning, and practice in the afternoons. It meant I would have to miss class to travel for games but that is what I signed up for.
West, S. L., & O'Neal, K. K. (2004). Project D.A.R.E. outcome effectiveness revisited. American Journal of Public Health. doi:10.2105/AJPH.94.6.1027
The main limitation for CEA, is the weighting of QALYs through trade-offs and specific health outcomes may also make it hard to quantify, thus making it harder to measure all factors that may influence QALY for an individual. Also, QALY’s lack of usefulness to physicians in determining the proper route of treatment for their patients represents another limitation. Additionally, older individuals are presumed to have a lower QALY...
Lovaglio, P.G. (2011, November 29). Benchmarking strategies for measuring the quality of healthcare: Problems and prospects. The Scientific World Journal, 2012, 2-3. doi:10.1100/2012/606154
The Patient Protection and Affordable Care Act (PPACA) (2010) or the Affordable Care Act (ACA) helps the healthcare system to function as a clinically integrated system, measuring and reporting the quality of care provided and focuses on quality improvement in hospital admissions and readmissions (Rosenbaum, 2011).
care outcomes help to control costs? It is not possible to determine the accuracy amongst
Cost-effectiveness analysis (CEA) is a form of economic analysis that compares the relative costs and outcomes/effects of two or more scenarios. The CEA is typically expressed as a ratio, where the denominator is a gain in health using a natural unit of measurement (years of life, cases of flu prevented, etc.) and the numerator is the cost associated with that health gain.
Budgeting Assignment A company's budget serves as a guideline in planning and committing costs in order to meet tactical and strategic goals. Tactical goals such as providing budgetary costs for daily operations, and strategic objectives that include R&D, production, marketing, and distribution are all part of the budgeting process. Serving as a guideline rather than being set in stone, the budget is a snapshot of a manager's "best thinking at the time it is prepared." (Marshall, 2003, p.496)
The cost of US health care has been steadily increasing for many years causing many Americans to face difficult choices between health care and other priorities in their lives. Health economists are bringing to light the tradeoffs which must be considered in every healthcare decision (Getzen, 2013, p. 427). Therefore, efforts must be made to incite change which constrains the cost of health care without creating adverse health consequences. As the medical field becomes more business oriented, there will be more of a shift in focus toward the costs and benefits, which will make medicine more like the rest of the economy (Getzen, 2013, p. 439).
Accurately forecasting the cost of projects is vital to the survival of any business or organization. Cost estimators develop the cost information that business owners or managers, professional design team members, and construction contractors need to make budgetary and feasibility determinations. From an Owner's perspective the cost estimate may be used to determine the project scope or whether the project should proceed. According to the U.S. Department of Labor there were about 198,000 cost estimators in 1994. That of which 58% work in the construction industry, 17% employed in manufacturing industries, and the remaining 25% elsewhere. From this we could conclude that a great deal of cost estimation lies in the construction industry, where multi-million dollar contracts are formed after a thorough cost estimation.