Page 67 - Htain Manual

C
ost refers to the actual expenditure made by service provider to deliver the

service, which implies the sum of monetary value of all resources utilized

during service delivery. It is often confused with price (amount which

beneficiary or any other other purchaser of services pays, e.g. fee paid to get ECG done), but
the cost of services is different from the price of servcies. In economics costs is defined as

opportunity costs which is ‘the sacrifice (of benefits) made when a given resource is consumed

in a programme or treatment’.
Accurate measurement of costs is very important in Economic Evaluation and in the

overall process of Health Technology Assessment. It is also used to decide the rates of re-

imbursement in health insurance schemes. Calculation of unit cost of a service

(surgery/consultation/diagnostic test etc.) or cost of rolling out a program in lower middle

income countries like India is often very difficult due to various conceptual and practical
challenges.

Approaches for costing

There are different known approaches for costing of healthcare services.

1. Normative costing is an exercise to estimate unit cost of service delivery by taking

assumptions and expert opinions about various resources required. Here, analysts

take expert opinion from various clinical and administrative experts; to arrive at a

consensus about resources like staff, equipment, essential drugs and other

consumables etc consumed in the delivery of a service
2. Clinical trial data can be used to find the unit cost of the intervention either

prospectively, by planning costing exercise along with clinical trial or by using trial data

retrospectively. By this approach, it is easier to avail the required data but results from
clinical trials cannot often be generalized to real world settings.

3. Pragmatic costing includes use of real world data i.e. how much of resources are

actually being used to deliver the given service. This approach is most appropriate to

estimate costs for doing HTA as well as for deciding package rates; but, is relatively

the most difficult of the three approaches, especially in lower and lower middle
income countries due to lack of maintenance of records.

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