Monitoring & Budgeting with CEA


The healthcare delivery environment has been in a constant state of flux as payors look to control more elements of care delivery, government programs, incentivize new delivery structures and patients continue to demand more personalized care. However, most notable among these many changes is the emphasis on appropriate limitation of medical resources to those patients who truly require it by set criteria.

Healthcare organizations now face unique challenges in this new environment to deliver appropriate and quality healthcare yet remain profitable. How can they determine if what they are doing is economically beneficial? Should they continue the same programs and how much money should they devote to each program to remain profitable? How can they determine this analytically? And, how can they conduct these analyses that are predicated on comparing disparate and unrelated programs? You might say, how do you compare an apple to an orange.

This is a perfect scenario where Cost Effectiveness Analysis (CEA) can provide the appropriate guidelines to make good economic decisions. In CEA, a decision tree with two or more scenarios is created to compare which scenario (branch) is the best economically.  CEA also has the added advantage of building the effectiveness of each decision branch into the model. This then provides both a comparison and a ranking.

For example, suppose your organization has a CHF disease management program as a supplement to the physician’s offices to help manage these chronically ill patients. A CEA decision tree can compare the costs to maintain CHF patients without the program, versus with the program. If the patients are clinically better with the program, this can be built into the model using Quality Adjusted Life Years (QALY). A CEA model can tell how much savings one program can bring versus another program or no program at all. This information can help in not only deciding whether to keep such a program, but also how much to invest in the program for economic benefit to the healthcare organization. This can be critical to budgeting for subsequent years.

This is only one example of how CEA can help healthcare organizations in medical decision making and budgeting of existing healthcare programs.

If your objective is to provide the best decision-making for your organization and take a global view of your business, expanding your sights beyond ROI, and educating other decision-makers, Cost Effectiveness Analysis can make your organization more competitive and more profitable.