I would like help with questions listed below 11-1,

1

Chapter 11-Economic Analysis

EXERCISES

Use the following information to do a cost-effectiveness analysis of a work site screening program:

Factor A is an early predictor of Disease 47, a serious health problem, and it is measurable by a blood test. As the level of Factor A increases, the risk of contracting Disease 47 increases, particularly for individuals with values of Factor A greater than 350 mg per deciliter of blood.

Disease 47 treatment is expensive. For example, a death from the disease costs $45,000 and a nonfatal case costs $94,000 on average. For purposes of this analysis, assume that the expected lifetime benefits from averting Disease 47 for persons less than 60 years old, who lowers their level of Factor A by 5% are equal to a present value of $83.

This figure represents the present value of health care dollars saved as a result of cases of Disease 47 averted in the population lowering their Factor by 5%. Most individuals do not suffer from Disease 47 so the average cost saved over many people is quite low. These lifetime costs can be compared to the costs of an intervention to lower Factor A.

One way of reducing the costs of prevention interventions is to provide an intervention at the work site. This would consist of two parts: 1) initial screening for all participants; and 2) a special intervention for those whose Factor A is found to be 350 mg/dl or greater. The data in

Table 11.1 represent the costs for an initial Factor A screening program. 2

Table 11.1 Factor A Initial Screening Program Resources (per screener) for each screening Session

Preparation Time 12.4 hours

Travel Time to/from site 1.3 hours

Time on Site 6.4 hours

Follow-up Time 7.8 hours

Average Number of Screenees

Per Session 250

Supply Costs $1000

Mail/Phone $150

Average Salary of Screener,

Including Fringes $65,000

Annual Hours Worked per

Screener 2080

Number of screeners 4

Costs for the special intervention were calculated to be $75 per individual receiving the intervention.

Effects on Factor A, obtained from the baseline and 12-month rescreening of all program participants whose initial values were 350 mg/dl or greater were:

Initial Screening Only 1.9% reduction

Initial Plus Special 3

Intervention 5.3% reduction

The first step is to compute the cost for each screener per hour.

Screener Cost per Hour = Average Salary of Screener/Hours Worked by Screener =

$65,000/2080 = $31.25/hour

To answer the questions below, the first step is to create a table to determine per screener cost for program.

Activity Cost per Unit # of Units Total Cost

Prep Time $31.25/hour 12.4 hours $387.50

Travel Time $31.25/hour 1.3 hours $40.63

Time On-Site $31.25/hour 6.4 hours $200.00

Follow-Up

Time $31.25/hour 7.8 hours $243.75

Supply Costs $1000

Mail/Phone $150

Total Costs per Screener $2,021.88

With 4 screeners, the total cost for screeners = $2,021.88 * 4 = $8,087.52

11-1

How much did it cost, per person screened for the initial Factor A testing. NOTE: Screeners get paid for their travel time.

11-2

How much did it cost for each person who participated in the special intervention as well as the initial screening? 4

11-3

What is the cost per percentage reduction in Factor A for the initial screening only and for the initial plus special screening?

11-4

What is the marginal cost per percentage additional reduction in Factor A attributable to the special intervention?