Types of Healthcare Expenditure

Types of Healthcare Expenditure

• Capital Expenditure: Investment aimed at acquiring or enhancing assets that have value.
  • Examples include buildings and medical equipment.
  • Assets can be sold to meet financial commitments or debts.
• Recurrent Expenditure: Ongoing costs that do not contribute to asset acquisition or enhancement.
  • Examples include staff salaries, pharmaceuticals, and consumables.

Cost-Effectiveness Analysis (CEA)

• CEA compares the costs of health interventions with their effectiveness, measured in health units.
• Costs are evaluated in monetary terms.
• Outcomes are reflected in natural health units, such as cases prevented or years of life saved.
• It is particularly useful for decision-makers working with limited budgets in specific fields.

Decision Making

• CEA is used to assess the value for money of digital products against alternatives using the same effect metric related to particular diseases.
• Ideal when the benefits are primarily health-related and clinical measures effectively capture the health improvements from the product.

Pros and Cons of CEA

• Advantages:
  • Clinical outcomes are generally easier to measure, especially when linked to clinical trials.
  • Provides a comparison of alternative options based on disease-specific health effect measures.
• Drawbacks:
  • Limited in informing broader resource allocation decisions across different diseases due to varying health benefit measurements (different clinical outcomes).