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UMUC Health & Medical Health Care Economics Discussion

UMUC Health & Medical Health Care Economics Discussion



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Response 1-Jennifer Glockner


What kinds of treatments will comparative effectiveness research compare?

Comparative effectiveness research compares the effectiveness of treatments relative to their other options. This type of research identifies the most effective and efficient interventions that have the potential to reduce unnecessary treatments, which in turn, may help lower costs. For example, a randomized trial for treatments of osteoarthritis of the knee found that patients who received surgery did not have better outcomes than those treated with medicine and physical therapy. (KFF, 2009) In this case, the combination of medicine and physical therapy was as effective as the more costly, riskier surgical procedure. UMUC Health & Medical Health Care Economics Discussion


Kaiser Family Foundation (KFF) (2009, October) Explaining Health Reform: What is Comparative Effectiveness Research? Retrieved from,

Question 2-Brianna Hart posted

Should comparative effectiveness research include measures of cost?

Yes, since the Patient Protection and Affordable Care Act of 2010 established comparative effectiveness research (CER) as a central feature of federal efforts to improve health care, measures of cost should be included. CER evaluates and compares many health care entities such as multiple treatment facilities, benefits, risks, services, and care. CER also compares services and items such as procedures, medical devices, protocols, pharmaceuticals and even health care interventions. (Garber & Sox, 2010)

It’s not uncommon for other countries to set budgets for health care spending and use comparative effectiveness to determine treatments and health care plans for patients. Typically using CER helps clinic management produce better decisions in regards to cost and revenue as well as the best care is given to the patient. (UMGC) UMUC Health & Medical Health Care Economics DiscussionReferences:

Garber, A. M., & Sox, H. C. (2010, October). HealthAffairs. Retrieved April 30, 2020, from The Role of Costs In Comparative Effectiveness Research :…

UMGC. (n.d.). Retrieved April 30, 2020, from HMGT 435 7981 Health Care Economics:…


Cost Benefit Analysis

Any organization aims to maximize returns. Therefore, due to the competitive nature of the corporate world, the management must ensure that costs are minimized. However, cost minimization is not an easy process for the department heads since they are tasked with the responsibility of preparing budgets and justifying the expenses included. This is the cost value analysis technique used by the managers to analyze the projects, systems, decisions, and the determination of the value of the intangibles. Costs benefits analysis identifies the benefits of the actions that are undertaken by the management less than the associated costs. As a result, the managers are in a position to make informed decisions when making investments.

The different methods that are used to determine the benefits under cost-benefit analysis include payback period (PB), internal rate of return (IRR), net present value (NPV). The ne NPV is a discounting technique in which the present value of cash inflows and outflows are compared to evaluate the risk nature of a project.  The approach measures the returns of an investment. The project is chosen for investment when the NPV is positive. The payback period is the method that is used to evaluate the period; it will take a project to generate the initial investment. The shorter the timeframe, the better (Pearce, Atkinson & Mourato, 2006). IRR is a profitability margin obtained as compared to the cost of investment. If IRRR is greater than the cost of capital in the market, it is an indication that the project will be valuable to the organization. Other approaches such PI and ARR use the same approach of in determining the profits of a venture. There is a decision criterion that is supposed to be used as a metric to evaluate the outcomes of the investment made. As a result, managers can determine if the project will be profitable or not. UMUC Health & Medical Health Care Economics Discussion



Pearce, D., Atkinson, G., & Mourato, S. (2006). Cost-benefit analysis and the environment: recent developments. Organisation for Economic Co-operation and development.

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