Economic Evaluation of Programs & Policies

Demonstrating Value and Impact

The Stewardship Imperative

Commercial incentives often drive healthcare toward more services, not necessarily better outcomes. Public healthcare agencies operate under a different mandate: to maximize community health with limited public resources. This requires rigorous evaluation of whether programs actually deliver value—improving health at reasonable cost—and adjusting course when they don't.

This stewardship role is both ethical and practical:

Ethical because public agencies have a duty to use taxpayer and premium dollars wisely

Practical because funders, boards, and communities increasingly demand proof that programs work and are worth the investment

Without rigorous economic evaluation, agencies risk:

Continuing ineffective programs because "we've always done this"
Expanding interventions that cost more than the health they generate
Missing opportunities to shift resources to higher-value programs
Losing funding when they can't demonstrate return on investment
Eroding public trust when outcomes don't justify expenditures

What Economic Evaluation Adds to Program Assessment

Traditional program evaluation asks: "Did the program work?"
Economic evaluation asks: "Did the program deliver enough health improvement to justify its cost—and could we have achieved better results spending those resources differently?"
This distinction matters. A program can be effective (it improves health) but still not be good value (it improves health less than alternative uses of the same resources). Economic evaluation helps you identify programs that are both effective AND efficient—delivering maximum health benefit per dollar spent.

Economic evaluation answers critical questions:

What does this program actually cost when we account for all resources used?
What health outcomes does it produce?
How much does it cost per unit of health gained (life saved, case prevented, QALY gained)?
Is this better or worse value than other programs we could fund?

Does it generate financial returns through cost savings or avoidance?
What return does the community get on their investment?
Should we expand, maintain, modify, or discontinue this program?

Types of Economic Evaluation We Conduct

We select the evaluation method based on your decision question, available data, and stakeholder needs:

Types

Best for:

Example Applications:

What you get:

Cost-Effectiveness Analysis (CEA)

Cost per natural health outcome (e.g., cost per case prevented, cost per life-year saved, cost per hospitalization avoided)

Comparing programs targeting similar health outcomes
Demonstrating efficiency to public health funders
Publications in peer-reviewed journals
Comprehensive assessment of program value

Diabetes prevention program: $3,200 per case of diabetes prevented
Tobacco cessation intervention: $1,800 per life-year saved
Immunization campaign: $450 per case of disease prevented

Clear metric showing health gained per dollar spent, comparable to published benchmarks and alternative interventions

Cost-Utility Analysis (CUA)

Cost per quality-adjusted life year (QALY) or disability-adjusted life year (DALY) gained

Programs affecting both length and quality of life
Comparing interventions across different health conditions
Aligning with national cost-effectiveness thresholds
Comprehensive assessment of program value

Chronic disease management: $15,000 per QALY gained
Mental health intervention: $8,500 per QALY gained
Palliative care program: $12,000 per QALY gained

Standardized metric allowing comparison across diverse health interventions, interpretable against commonly used thresholds ($50,000-$150,000 per QALY)

Return on Investment (ROI) Analysis

Financial return (cost savings, cost avoidance) relative to program costs, expressed as ratio or percentage

Demonstrating value to budget-focused stakeholders
Programs expected to generate cost savings
CalAIM and managed care evaluations
Board presentations and funding justifications

Care coordination program: $2.30 return per $1 invested (130% ROI)
Home visiting program: $3.50 saved per $1 spent (250% ROI)
Preventive screening: $1.80 in avoided costs per $1 invested (80% ROI)

Financial metric that translates directly to "savings" language boards and funders understand

Budget Impact Analysis (BIA)

What it measures: Total financial consequences of adopting, expanding, or discontinuing a program over specified timeframe (typically 1-5 years)

Multi-year planning and sustainability assessment
Understanding cash flow and budget implications
Evaluating affordability of new programs
Scaling decisions (pilot to full implementation)

CalAIM ECM expansion: Year 1 net cost $1.2M, Year 3 net savings $400K
New clinic opening: 5-year cumulative budget impact $8.5M
Program discontinuation: savings of $600K annually with loss of $2.1M in outcomes

Detailed projection of program costs and savings over time, informing financial planning and sustainability decisions

Cost-Benefit Analysis (CBA)

What it measures: Both costs and benefits valued in monetary terms, enabling net benefit calculation

Programs with benefits extending beyond health (productivity, crime reduction, education)
Comprehensive societal perspective evaluations
When monetary valuation of health is appropriate and accepted

Early childhood program: $7.16 benefit per $1 invested
Substance use treatment: $4.50 societal benefit per $1 cost
Lead abatement: $17 in benefits per $1 spent

Comprehensive accounting of all costs and benefits in common metric, showing net value to society

What We Deliver

Executive Summary
(5-8 pages)

Key findings in accessible language
Bottom-line results (cost per outcome, ROI, etc.)
Policy implications and recommendations
Visual summary of main results

Technical Report

Complete methodology documentation
Data sources and analysis approach
Detailed results with statistical precision
Sensitivity analysis findings
Limitations and caveats
Comparison to published literature
Appendices with supporting calculations

Policy Brief
(2-4 pages)

Findings translated for non-technical audiences
Clear implications for decision-making
Comparison to alternative programs or benchmarks
Actionable recommendations

Presentation Materials

• Board presentation (15-20 slides)
Funder presentation
Community stakeholder presentation
One-page summary for wide distribution

Data Visualizations

Cost-effectiveness planes
ROI charts and infographics
Budget impact projections over time
Tornado diagrams showing sensitivity
Equity impact visualizations

Publication-Ready Manuscript (if desired)

Peer-review quality documentation
Formatted for target journal
Supporting materials for submission