3. L. Mars, "An Exploratory Cost-Benefit Analysis

of Vocational Rehabilitation," prepared for the Vocational Rehabilitation Administration, 1967. 4. D. E. Carter and T. J. George, "A Manual for Reporting and Analyzing the Costs and Benefits of Social Services," prepared for Social and Rehabilitation Services, November 1973.

5. H. Emlet, et al., "Estimated Health Benefits and Cost of Post-Onset Care for Stroke," prepared by Analytic Services, Inc., in cooperation with Johns Hopkins University, for Social and Rehabilitation Services, September 1973. [This is an assessment of the cost and benefits of poststroke care in the population of three States.]

6. D. R. Matlack, "Cost Effectiveness of Spinal Cord Injury Center Treatment," prepared by the National Paraplegia Foundation for OHDS, 1974. [This report provides a CEA of two alternatives spinal cord injury treatment methods. ]

7. Stanford Research Institute, "Feasibility and Cost Effectiveness of Alternate Long-Term Care Settings," prepared for Social and Rehabilitation. Services, May 1978. [This is a pilot study which is designed to identify methods that could be used to determine the relative cost-effectiveness of various alternate types of long-term care settings.]

State-Sponsored Studies

1. Michigan Department of Education, Division of Vocational Rehabilitation, "A Benefit-Cost Analysis of Vocational Rehabilitation Programs in the State of Michigan," 1970.

2. R. D. Struthers, "A Benefit/Cost Model Developed in a State Vocational Rehabilitation Agency: Michigan Vocational Rehabilitation," Journal of Rehabilitation Administration, July 1977. 3. E. Wright, "A Benefit-Cost Analysis of Vocational Rehabilitation Programs in the State of Michigan," prepared for the Michigan Rehabilitation Service, Lansing, Mich., 1970.

4. C. M. Grigg, A. G. Holtman, and P. F. Martin, "Vocational Rehabilitation for Disabled Public Assistance Clients: An Evaluation of Fourteen Research and Demonstration Projects," prepared for the Institute for Social Research, Florida State University, Tallahassee, Fla., 1969. 5. J. E. Muthard, et al., "The Vocational Rehabilitation of Public Assistance Recipients: A National Survey," prepared for the Rehabilitation Research Institute, University of Florida, Gainesville, Fla., 1976.

6. K. W. Reagles and G. N. Wright, "A BenefitCost Analysis of the Wood County Project: An

Illustrated Lecture," prepared for the University of Wisconsin Regional Rehabilitation Institute, 1971.

7. M. Berkowitz, "Benefit Cost Analyses: An Application to a Vocational Rehabilitation Project: An Interim Report," prepared for the Bureau of Research, Rutgers University, New Brunswick, N.J., May 1976.

8. C. Cole and R. Dodson, "An Introduction to Cost Benefit Analysis of the Vocational Rehabilitation Program: A Model for Use by State Agencies," prepared for the Institute of Urban and Regional Development, University of California, Berkeley, Calif., October 1972.

9. F. C. Collignon, "A Working Outline for CostBenefit Analyses of Vocational Rehabilitation. Programs," prepared for the Institute of Urban and Regional Development, University of California, Berkeley, Calif., November 1971. 10. D. W. Dunlop, "Benefit/Cost Analysis: An Analytical Framework for Vocational Rehabilitation," prepared for the Michigan Vocational Rehabilitation Service, Lansing, Mich., 1969.

It is generally conceded that these studies possess a number of serious limitations. Several of the analyses, particularly those conducted by State vocational rehabilitation agencies, suffer from poor methodological design and inadequate data (52). In addition, cost estimates are often imprecise because of the difficulty of measuring rehabilitation costs, and benefit assessments tend to represent general estimates because a number of benefits are psychic or intangible and do not lend themselves to quantification (123).

The 1973 amendments (Public Law 93-112) to the 1965 vocational rehabilitation legislation (Public Law 89-333) mandated that Federal officials broaden their efforts and work towards achieving the goal of independent living for the severely disabled. Measurement of the costs and benefits of services to the severely handicapped is very difficult, though, because of the problem of expressing in economic terms the worth of independent living. Further, many policymakers emphasize the importance of considering together with the costs of rehabilitation programs their humanitarian goals, and they argue that a traditional cost-benefit framework is inappropriate for this purpose (123,460,599).

Currently, OHDS is trying to deal with some of these problems and make CBAs more useful for its decisionmaking by sponsoring the development of a more sophisticated cost-benefit model. At the same. time, however, several officials emphasized the danger of using CBA without understanding its limitations (479). Many seem to agree with John Noble's

observation made in 1977 that "the state-of-the-art needs substantial upgrading before CBAs can be taken seriously as a guide to priority-setting in the field of rehabilitation" (461).

Veterans Administration

VA operates the largest centrally directed hospital and clinic system in the United States. VA also is extensively involved in medical and health services research. Apart from one current study of the cost-effectiveness of hospice care, however, VA has not been involved in conducting cost-effectiveness or cost-benefit studies. Health systems research officials intend to study the results of the hospice study, "An Evaluation of the Wadsworth Palliation Treatment Programs," which is to be completed in 1983, in order to assess the feasibility of using CEA (184).

Officials within VA are considering intensifying VA's efforts in the evaluation of health care technology and are therefore interested in exploring the cost-benefit methodology. VA's new health services R&D director, Dr. Richard J. Green, has expressed a special interest in the use of evaluation techniques such as CEA in the examination of health care issues. A few of the areas in which VA hopes to employ CEA techniques in the future are rehabilitation medicine, alternative models of care, extended care programs, and contracted services. An area that VA hopes to focus more attention on in the future is preventive care and preventive care packages for veterans. It is uncertain at this point whether CEA will play a role in the evaluation and planning in this area, but it seems clear that there is great interest in its use.

State and Local Governments and
Nongovernmental Organizations

Although a few State and local governments and nongovernmental organizations have had experience with cost-effectiveness and cost-benefit studies, they appear to use such analyses only rarely. This is not surprising for at least two reasons. First, these groups traditionally devote far less funds and staff to evaluation than the Federal Government does. And second, State, local, or regional CEA/CBAs tend to be expensive because the necessary data are generally difficult to obtain. Where State and local CEA/CBAs have been conducted, their performance has usually reflected individual staff interest in CEA/CBA techniques. Perhaps, the one major exception to this generalization lies in the area of rehabilitation, where many State and local governments have followed the

Federal Government's lead in using cost-benefit studies to justify investment in vocational training. 15 As the following lists of State and local studies show, apart from vocational rehabilitation studies, most State and local CBAs have been conducted in Massachusetts and New York (19).

State Government Studies

1. Massachusetts Department of Public Health, "Cost-Benefit Analysis of New Born Screening for Metabolic Disorders, N. Eng. J. Med., 291:1414, 1974.

2. Massachusetts Department of Public Health (M. E. Farber and S. N. Finkelstein), "A Cost Benefit Analysis of A Mandatory Premarital Rubella-Antibody Screening Program," N. Eng. J. Med., Apr. 12, 1979.

3. D. S. Shepard, and M. Thompson, "The Economics of Prevention: The Method of Cost-Effectiveness Analysis," prepared for the Office of State Health Planning, Boston, Mass., July 1977, revised and published as "First Principles of CostEffectiveness Analysis in Health," Public Health Reports, November/December 1979.

4. A. Rogers and P. M. Bloomburgh, "Cost-Effectiveness Under Medicaid," Dec. 31, 1979, prepared by staff of the Massachusetts Department of Public Welfare for the Health Care Financing Administration. [HCFA terminated this project before its scheduled completion.]

5. E. L. Hannany and J. K. Graham, "A Cost-Benefit Study of a Hypertension and Screening and Treatment Program at the Work Setting," Inquiry, 4(4):345, December 1978, prepared for the New York State Department of Health, Bureau of Disease Control.

6. J. K. Paperfuss and B. C. Ejeldshed, "Cost-Benefit Study of Selected Interventions in Control and Prevention of Tuberculosis in the State of Michigan," prepared by the Michigan Division of Health for the Center for Disease Control, December 1969.

Local Government Studies

1. A. Leslie, "A Benefit/Cost Analysis of New York City Heroin Addiction Problems and Programs, 1971," in Analysis of Urban Health Problems, edited by I. Levinson and J. Weiss, New York: Spectrum Publications, Inc., 1976.

2. M. L. Ingbar, "Data System To Evaluate Cost-Effectiveness of Ambulatory Health Services to the

15See the section of this appendix on the Office of Human Development Services (p. 154) for a discussion of these State and local studies.

Poor in Cambridge, Massachusetts," 1971, prepared by staff of the Department of Health, Hospitals, and Welfare, Cambridge, Mass.

Nongovernmental Studies

Among nongovernmental agencies, cost-effectiveness and cost-benefit studies also have been infrequent. Further, as the following list shows, those studies that have been conducted have often been funded by the Federal Government.

1. D. R. Matlack, "Cost-Effectiveness of Spinal Cord Injury Center Treatment," prepared by the National Paraplegia Foundation for the Office of Human Development Services, HEW, 1974. 2. A. Zuvekas, "Cost-Effectiveness of Community Health Centers," prepared by the National Association of Community Health Centers for the National Center for Health Services Research, 1979. [This study provides a cost-effectiveness methodology for evaluation of CHCs.]

3. M. M. Kristein and S. Jonas, "A Cost-Effectiveness Manual for HSA Planning. Prepared by the American Health Foundation for the National Center for Health Services Research, 1980. [This study will provide an HSA cost-effectiveness manual with particular emphasis on health promotion areas.]

4. M. M. Kristein and C.B. Arnold, "Mammographic Screening for Breast Cancer: The Economic Analysis," paper presented at the American Public Health Association, Oct. 17, 1978.

5. M. M. Kristein, "Cost-Effectiveness of Various Smoking Cessation Methods," prepared by the American Health Foundation, 1978.

6. M. M. Kristein, "The Economics of Secondary Prevention: Screening for Disease: An Example From Colo-Rectal Cancer," prepared by the American Health Foundation for the National Cancer Institute, 1978.

Resource Costs of CEA/CBA

Introduction

Formal CEA and CBA are applied to a wide range of topics in a number of diverse areas. A CEA or CBA can be performed by a single analyst or by a dozen or more. An analysis can take a few months to complete or may require more than a year. The size of the problem, the availability and quality of data, the complexity of the issues involved, and the presence of the right mix of professionals combine to exert considerable influence on the cost, the quality, the usefulness, and the credibility of the analysis.

A major focus of The Implications of Cost-Effectiveness Analysis of Medical Technology project was on the feasibility and implications of using CEAS and/or CBAs in the health care decisionmaking process. An important component of that focus are the direct resource costs of performing these types of analyses. The cost of producing a CEA or CBA will significantly influence the use of the methodologies. What are the resource needs, the problems likely to be encountered, and the time needed to produce quality analyses? What variables influence the resources used or needed to perform various CEAS or CBAs in the health care system? The feasibility and potential impacts of using CEA or CBA in the health care system are directly tied to such questions. To identify and discuss the range of answers, OTA conducted a survey of the resource costs of CEA/CBA.

Method

The survey instrument OTA used was a questionnaire designed to explore the types and amounts of resources required to perform a CEA and/or CBA of various health care technologies. (See the addendum to this appendix for a copy of the questionnaire.) Two types of information were desired: first, the resource costs of performing actual CEAS or CBAS that have been published in the literature; and second, the resources the sample group, comprised of the individuals who performed those analyses, felt would be required to staff a hypothetical research team responsible for conducting CEAS or CBAs on medical technologies on a regular and continuing basis. In essence, the survey sought a listing of resources that had been used for actual studies and estimates of resources needed to perform CEAS and CBAs on a routine basis.

The sample population was chosen on the basis of an analysis of the health care literature and discussions with analysts in the health care area. Thirty

five studies were selected by this process; no attempt was made to randomize the selection process. The survey was sent to analysts identified as having done "quality" work or whose studies were cited frequently in the health care literature. Not necessarily all quality studies were identified and selected by this process.

Twenty-two responses were returned. Eighteen respondents answered the questions pertaining to the resources actually used in performing the published analyses. Twenty-two respondents answered the questions related to the resource needs of the hypothetical CEA/CBA team described in the survey.

Results

Resources Used in Published CEAS and CBAS

The number of professional-level people directly involved in a single analysis ranged from 1 to 10 per study team, with the mode at 3 and the mean at 3.7. There was insufficient information to determine the degree of effort, or percentage of time, that the various professionals devoted to the studies. The responses were so varied and wide ranging that it was difficult to characterize the amount of time that, say, a physician or economist spent on a given analysis. The amount of full-time effort devoted to the studies ranged from as little as a single day to as much as a full year.

One trend that did emerge from the survey was the use of physicians on the study teams. Only one study did not have a physician directly involved in the analysis; the remaining studies had at least one physician, and several had two or more physicians, as part of their research group. The professions that were used in performing actual CEAs or CBAS on health care topics are summarized in table C-1.

The survey also attempted to identify the information used by the analysts. Their responses are summarized in table C-2. The types of data that the various analysts used tended to be study-specific. Responses included data on investment and operating costs, health education program costs, drug costs, screening costs, travel time to hospital, ambulance response time, physician fees, and on a host of other cost and benefit variables that cut across the four major categories listed in table C-2.

The final topic that the respondents were asked to address related to the data sources they used and the problems they had in obtaining their information. Their responses are summarized in table C-3.

688888

Data characteristics

Availability of data

Readily available..

Difficult to obtain

Almost impossible to obtain

Had to purchase data

Did original research.

Collected from existing sources

18

Data was free....

18

Data was inexpensive.

Data was expensive.

4

Public health/public policy. Engineering..

Hospital administration Medical sociology. . . . . . Sociology/behavioral science Medical student. . . . . . Support services

Secretary....

Research assistant.

Computer programer. Administrator.

Librarian.

Accountant

aSystems analysis, operations research, and decision analysis. SOURCE: Office of Technology Assessment.

Several respondents specifically noted that provisions must be made for hiring the necessary consultants or experts as needed for assistance. Many respondents also cited the need for more than one of each professional (e.g., two physicians, three economists, several secretaries, six research assistants, etc.) to staff the research group.

The number of studies that this "ideal" office would be able to perform was estimated to be 6 to 10 studies per year with 8 to 12 full-time professionals and the necessary consultants, research assistants, and support staff present. The estimated cost of the research group was between $400,000 and $500,000 per year.

The estimated cost per study, not necessarily related to the aforementioned total office cost esti