A. General Cost-Effectiveness Analysis Issues

2. What cost should I measure?

To find the cost of an intervention the analyst should include the cost of all activities needed to replicate the intervention in a typical healthcare setting. Costs incurred only to develop or study the intervention should be excluded. When an activity involves both delivery of the intervention and research on its effect, the cost of any activity needed to deliver the intervention is included.

For example, consider the cost of a follow-up telephone call. The study participant is asked to return to a clinic to receive more intervention and to fill out a research assessment. The call is a cost of intervention. In order to replicate the intervention in the real world, the follow-up call will still be needed so that the patient will return to clinic to receive more intervention. A strict accounting of intervention cost would exclude any extra cost that was exclusively attributable to research-for example, any extra minutes spent describing the research assessment. This extra cost would not be needed to replicate the intervention in the real world. Another example is a laboratory test conducted to identify patients who are eligible for the study. The test is a cost of the intervention because it would be needed to replicate the intervention elsewhere with same level of effectiveness.

Staff cost should be fully burdened with the cost of benefits, employer contributions to taxes, and non-productive time such as vacation and sick leave. This can be done in the calculation of the hourly cost of staff time. Total staff cost is divided by the number of applied (productive) hours, the time spent on activities that involve patient care. Hours on overhead activities such as vacations, sick leave, and professional training are excluded from the count of applied hours. For more details on measuring the cost of staff time, view FAQ C1.

When the cost is found in this manner, it represents the hourly cost of a worker engaged in productive activities. This method distributes the cost of vacation and sick leave across the productive hours of the employee. The analyst should consider if some of the cost of administrative duties, phone calls, and other activities should also accrue to the intervention; if so, they may be excluded from applied hours, and the cost distributed using this same method.

There may be costs arising from subcontracts with outside firms. Contract costs should be included if they relate to the intervention. Beyond the stated value of a contract, there will also be indirect costs relating to the bidding process and contractor oversight. These indirect costs should also be included. Clinical studies may involve a more intensive level of patient assessment than would occur under usual circumstances. For example, physicians may order more tests in a clinical study in order to detail patient outcomes as fully as possible in the final report. By contrast, in general practice there is typically pressure to minimize costs by performing only those tests that are medically indicated. A knowledgeable clinician can determine whether the intervention is being carried out differently from how it would occur in typical practice settings. If so, a discussion of cost-effectiveness could present additional figures for the cost of the intervention under typical circumstances.

Additional topics on cost measurement appear in this article:
Smith MW, Barnett PG. Direct measurement of health care costs. Medical Care Research and Review 2003;60 (3 Suppl):92S-123S.