Cost-efficiency Health Dictionary

Actual expenses incurred to provide a health care product or service. Cost can be divided into a number of types including: average cost: The average cost per unit; equals the total cost divided by the units of production. avoided cost: Cost caused by a health problem that is avoided by a health care intervention. direct cost: Cost borne by the health care system, the community and families, e.g. diagnosis and treatment costs. A cost that is identifiable directly with a particular activity, service or product. fixed cost: Costs that, within a defined period, do not vary with the quantity produced, e.g. overhead costs of maintaining a building. incremental cost: The difference between marginal costs of alternative interventions. indirect cost: Cost which cannot be identified directly with a particular activity, service or product of the programme experiencing the cost. Indirect costs are usually apportioned among the programme’s services in proportion to each service’s share of direct costs. intangible cost: The cost of pain and suffering resulting from a disease, condition or intervention. marginal cost: The additional cost required to produce an additional unit of benefit (e.g. unit of health outcome). operating cost: In the health field, the financial requirements necessary to operate an activity that provides health services. These costs normally include costs of personnel, materials, overheads, depreciation and interest. opportunity cost: The benefit foregone, or value of opportunities lost, by engaging resources in a service. It is usually quantified by considering the benefit that would accrue by investing the same resources in the best alternative manner. recurrent cost: An item of expenditure that recurs year after year, such as the remuneration of health workers and other staff; the cost of food and other goods and services; the cost of vaccines, medicines, appliances and other supplies; the replacement of equipment; and the maintenance of buildings and equipment. tangible cost: Objective elements in the production of care, i.e. number of personnel, beds, consumables, technologies, staff qualifications. total cost: The sum of all costs incurred in producing a set quantity of service.... cost

The personal cost of acute or chronic disease. The cost to the patient may be an economic, social or psychological cost or loss to himself, his family or community. The cost of illness may be reflected in absenteeism, productivity, response to treatment, peace of mind, quality of life, etc. It differs from health care costs in that this concept is restricted to the cost of providing services related to the delivery of health care, rather than the impact on the personal life of the patient. See “burden of disease”.... cost of illness

The systematic comparison, in monetary terms, of all the costs and benefits of proposed alternative schemes with a view to determining: which scheme or combination of schemes will contribute most to the achievement of predetermined objectives at a fixed level of investment; or the magnitude of the benefit that can result from schemes requiring the minimum investment. The resources required per unit of benefit must be determined, account being taken of the fact that costs and benefits accrue with time. For example, the cost of establishing a home and community care programme might be compared with the total cost of building residential facilities. Cost-benefit analysis can also be applied to specific medical tests and treatments.... cost-benefit analysis

See “cost”.... average cost

See “cost”.... avoided cost

An accounting device whereby all related costs attributable to some “financial centre” within an organization, such as a department, centre or programme, are segregated for accounting or reimbursement purposes.... cost centre

A set of steps to control or reduce inefficiencies in the consumption, allocation or production of health care services which contribute to higher than necessary costs.... cost containment

A determination of the least costly among alternative interventions that are assumed to produce equivalent outcomes.... cost minimization analysis

A case which is more costly to treat compared with other persons in a particular diagnosis-related group. Outliers also refer to any unusual occurrence of cost, cases which skew average costs or unusual procedures.... cost outlier

Payment method whereby a person is required to pay some health costs in order to receive medical care. The general set of financing arrangements whereby the consumer must pay out-of-pocket to receive care, either at the time of initiating care or during the provision of health care services, or both. Cost sharing can also occur when an insured person pays a portion of the monthly premium for health care insurance.... cost sharing

Recouping the cost of providing uncompensated care by increasing revenues from some payers to offset losses and lower net payments from other payers.... cost shifting

The relationship between the cost of an activity and the benefit that accrues from it.... cost-benefit

A form of analysis that seeks to determine the costs and effectiveness of a health intervention compared with similar alternative interventions to determine the relative degree to which they will obtain the desired health outcome(s).... cost-effectiveness analysis

A determination of the economic impact of a disease or health condition, including treatment costs.... cost-of-illness analysis

Increase to a monthly long-term disability benefit, usually after the first year of payments. May be a flat percentage (e.g. 3%) or tied to changes in inflation.... cost-of-living adjustment (cola)

See “cost”.... direct cost

The extent to which the specific resources used to provide a specific intervention, procedure, regimen or service of known efficacy and effectiveness are minimized.... efficient / efficiency

See “cost”.... fixed cost

See “cost”.... incremental cost

See “cost”.... indirect cost

The cost of pain and suffering resulting from a disease, condition or intervention.... intangible cost

See “cost”.... marginal cost

See “cost”.... operating cost

See “cost”.... opportunity cost

See “cost”.... recurrent cost

n. measures that are used in health economics and ethics to assess treatments of all kinds. A treatment that works or achieves its object is effective, but may do so at great cost. If it is also efficient, it achieves its aim equally but at lower cost (or consumes less resources) when compared with other treatments. Such an assessment may be part of an *intervention study. Even apparently effective and efficient treatments may work for patients only by depriving others of similar care (opportunity costs), so a moral evaluation must take into account the overall aims and purposes of health care in general.... effectiveness and efficiency