Cost Effectiveness Analysis for Non Profit Healthcare Organizations - by Dr. William Matzner (California)

Cost Effectiveness Analysis for Non Profit Healthcare Organizations

At first glance, cost effectiveness analysis is best used in healthcare organizations that are for-profit as it helps decision making to spend the least amount with the greatest benefit to patients. So, why would a non-profit organization be interested in such analysis techniques

Most non-profit organizations have to operate based on a budget, with strict resource allocation based upon the budget report. Cost effectiveness analysis is a very appropriate tool for this challenge. As most non-profits care about the impact of their organizational efforts on a particular or target population, the effectiveness in CE analysis, measured in quality adjusted life years, is especially useful. Combined with the decision tree aspect of the modeling involved, CE analysis can provide strong evidence to justify a budget to the appropriations decision-maker. It is the proper use of broad data to rigorously support the conclusion to fund.

A recent example of this was proposed at our firm.  A nonprofit healthcare company specialized in taking care of indigent patients in their community. Their funding came from the state budget. The company (XYZ Health) had instituted a new clinic program and a new mental health program that increased system use by 20% and 58% respectively. At first it may appear that it is just a simple expansion. However, if one uses broad data to analyze all the possibilities, the impact of increase use in the new systems actually decreased overall cost to the state because the patients were being treated earlier and with less complications. This not only decreased costs but resulted in better health outcomes (and thus and increase in quality of health or effectiveness).  Therefore what at first appeared just to cost more was actually more cost effective and made that particular healthcare system run more efficiently. Only through the implementation of a broad data analysis were we able to ascertain this conclusion

The uses of broad data analysis are many. In the case of XYZ Health, they were armed with compelling data to justify the next year’s budget, impacting many indigent patients in a very positive way. Many nonprofit healthcare organizations can use broad data analysis to help support their particular innovative program.

About William L. Matzner, M.D., PhD, FACP

Dr. William Matzner works in the area of healthcare economics consulting at Healthcare Analytics, LLC, in California. He graduated Phi Beta Kappa from Stanford University. He received his M.D. with Honors from Baylor College of Medicine. In 1988, he was the Solomon Scholar for Resident Research at Cedar Sinai Medical Center. Dr. Matzner subsequently was awarded a PhD in Neuro Economics from Claremont Graduate University. He is board certified in Internal Medicine and Palliative Medicine. He has researched and published extensively on the issue of reproduction and immunology in medical literature. He has been in private practice since 1989, specializing in Reproductive Immunology and Internal medicine.

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William Matzner, MD (Simi Valley, California), has been practicing medicine since 1989, Internal Medicine and Reproductive Immunology. M.D. with Honors from Baylor College of Medicine.

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