1. Economic Dynamics of Health Care Delivery Models
After reading Chapter 7 and the required resources for this week, consider the following scenario:
HIV Help-Inc., a non-profit organization focusing on the prevention of HIV/AIDS just received a $10 million grant to fund several projects. The organization is currently located in an older building that needs extensive repairs. The organization is using outdated office equipment In addition, one additional staff member is needed in order to keep up with incoming phone calls and requests for presentations and community outreach activities. A portion of the grant – $2 million – is allotted for business improvements which can address one of these three areas: repairs to building, outdated office equipment, and more staff. The remaining $8 million is to be used to further enhance the continuum of care level to provide access to preventive health services.
Section A: Create a cost benefit analysis for an update that will improve the business: structural, office equipment, or staff. You can be creative in determining what the business needs. The cost will use the full amount of funds allotted to this improvement ($2 Million), so you can only improve one of these three needs
Note: Your work must include Steps 1-4, as outlined in section 7.2 of your course text.
Section B: Create a cost effective analysis to determine how to best spend the $8 million portion of the grant funding on education and other preventive services.
The organization currently serves the community and clientele with community education classes at schools and community centers, as well as the distribution of condoms and educational materials. They wish to expand their current services to reach the neighboring community (4,000 residents), add social media advertising and messaging to reach the younger population, distribute educational material and condoms to homeless shelters in the area, and add HIV testing to at-risk individuals. Select two of the potential services and determine how the money can be best spent to have the greatest outcome for the HIV+ population in the community.
Note: Your work must address the costs as well as the anticipated benefits, as outlined in section 7.2 of your course text
Section C: Based on the CDC website (Links to an external site.)Links to an external site., analyze how cultural norms impact the risk of getting HIV. Explain one method or action on how to address this challenge.
Your initial contribution should be 250 to 300 words in length. Use proper APA formatting for in-text citations and references as outlined in the Ashford Writing Center
Discussion 1 asks you to understand the differences between Cost Benefit Analysis (CBA) and Cost Effective Analysis (CEA). The CBA is pretty straight-forward: it’s an exhaustive list of pros (benefits) and cons (costs) when making a decision. Every possible outcome is listed. This is a tool often used by managers to determine whether or not a decision is good for their bottom line. It looks like this:
Potential Decision Outcome
List of costs following this plan of action:
Update office equipment (as an example; you may choose any one of the items from the list)
List of strengths and weaknesses of following this plan of action:
1. New computers $
1. How will this strengthen the efficient operation of the business?
How might this detract from the efficient operation of the business?
2. New office furniture $
3. New patient room furniture $
Indirect costs: list and possible cost(s)
Discussion of potential benefits to the program.
Comparison of costs and benefits.
Total costs (- $)
Total benefits (+ $)
Outcome (which of the two is greater, the costs or benefits?)
Decision: Pursue this plan of action, or drop this plan of action
Cost Effective Analysis is a bit different in that this analysis looks at two or more processes and determines which one offers the greatest benefit for the financial cost. For example, let’s look at two different drugs to treat cancer and one of those drugs costs more money. The outcome for drug A, the less expensive drug, has a lower rate of cure than drug B, which is the more expensive drug. The studies for Drug A show 55% of the recipients progress to a remission state. The studies for Drug B show 90% of the recipients progress to a remission state. This then means that, while Drug B has a higher cost at the onset, this one is seen as having a lower overall cost because there are more people who reach remission and thus do not need long term treatment, do not typically face major periods or lifetime disability, and have a higher quality of life. Essentially, value is given to both the monetary and the non-monetary outcomes, and the value is to a group of people or society as a whole; there is little or no direct benefit to the organization.
Another example of this is when buying furniture. It’s important to identify how the furniture piece will be used. If you are buying a chair that is meant for relatively constant use, you need a chair that is well built and sturdy. When you get to the furniture store, you see a chair that looks good and the price is very affordable; let’s say this chair costs $200. You also see chairs that are more expensive that you like; these cost $700. Once you carefully investigate the first chair, you find that it is not as well constructed as the more expensive chairs. You could buy the less expensive chair now, but you will have to replace it in two to three years. If you continue to buy the same quality chair that needs to be replaced every two to three years, you will spend $1000 over a 10 to 15 year period. If you spend more money now on the better-quality chair, it will last 25 or more years. Ultimately, spending more money up front on the chair means you will save money in the long run.
Here is a link to a great website (Links to an external site.)Links to an external site. that has further explanations and examples. There are tabs across the top that offer different tools. Below the START button are the explanations of the two different types of analyses.
Now that you have an understanding of the two different types of Cost Analyses, you will apply this to the first discussion. This discussion focuses on an HIV/AIDS program serving a community. The program has received grant funds that are divided between internal program improvements and program services offered to the clientele. You know that each person can reduce their risk of sexually transmitted diseases through behavior changes and education. Obviously, it is best to prevent disease, but there is also a need to provide treatment for those who have contracted HIV/AIDS.