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The challenge
 lmost
everyone has heard the expression "an ounce of prevention
is worth a pound of cure." The longstanding assumption is
that investments in prevention pay economic, as well as social and
health dividends. Until recently, however, there was little concrete
evidence to show that this is, in fact, true, and even fewer people
in the health and social service sectors qualified to do the necessary
research. In an era of intense competition for shrinking public dollars,
policy makers are challenging advocates of prevention to prove the
widely held belief that investing in prevention programs such as early
childhood interventions pays. They are asking that these concepts
be demonstrated so that limited public resources are invested where
"cost effectiveness" and "return on investment"
are evident.
With this increased use of investment terminology
among funding agencies, prevention advocates and practitioners are
becoming more aware of the importance of knowing what the cost implications
of their work are. The Prevention
Dividend Project was created to help promote the knowledge and
use of different types of economic evaluations in the Canadian non-profit
sector, and to provide some of the tools to do this increasingly important
work.
Costs and benefits
Attention to both costs and benefits distinguishes economic evaluations
from effectiveness evaluations, where a greater emphasis may be placed
on the impacts and benefits for individual clients. While social service
professionals are concerned that interventions are effective (i.e.
do produce benefits), economic evaluations help to ensure that the
choices being made are also an efficient use of the available resources
(i.e. most benefit for the least cost).
The focus of most economic evaluations is to ensure that the value
of what is being produced by using resources in one way, is greater
than the potential alternative uses for the same resources. Simply
stated, the interest is in the "bang for the buck" and not
whether more or fewer resources will be used in total. Economic evaluations
are fundamentally designed to help ensure that resources are allocated
in the most efficient and value enhancing way.
The types of economic evaluations that are most widely used in the
health and social service sectors are: 1) costing studies; and 2)
cost-benefit analyses. Economic evaluations of prevention initiatives
provide the evidence to show whether the advantages (benefits) for
investing in areas of prevention outweigh the disadvantages (costs)
associated with the choices under consideration. This "balance
sheet" approach provides the most explicit criteria for choosing
between competing goods. While particular methods differ, a "cost-benefit"
framework is fundamental to all economic evaluations.
1) Costing studies
Costing studies give a dollar value to an existing social condition
or health problem. Being able to assign an overall cost to a problem
can help the public understand the relevance of the issue and the
price we pay when a problem is not prevented.
- The costs of obesity and physical inactivity
Canadians spent over $1.8 billion on obesity related direct health
care costs in 1997 for hypertension, type-2 diabetes mellitus
and coronary artery disease. If Canadians increased their physical
activity by just 10%, about $150 million a year in direct health
care costs and an additional $5 billion a year that is spent on
indirect costs related to physical inactivity and the burden of
illness could be saved.
- The costs of tobacco
Smokers cost society about $15 billion while contributing roughly
$7.8 billion in taxes. In 1991, smoking-attributable health care
costs in Canada were $2.5 billion. Additional smoking-attributable
costs included $1.5 billion for residential care, $2 billion due
to workers' absenteeism, $80 million due to fires and $10.5 billion
due to lost future income caused by premature death. Adjustments
for future costs if smoking had not occured and smokers had not
died were estimated to be $1.5 billion.
- The costs of work-life conflict
In one year, Canadian businesses lost roughly 19.8 million workdays,
or the equivalent of approximately $2.7 billion to excess absence
due to work-life conflict (imbalance between work and non-work
obligations and roles). Health care costs to treat these individuals
during that same year were at least an additional $425 million.
2) Cost-benefit analyses
A cost-benefit analysis (CBA) of a prevention program or strategy
shows how the initiative saves money. An economic analysis measures
both the costs and consequences of programs or services, and provides
solid information to compare alternatives.
- Chicago early childhood intervention program shows benefits
even after 21 years
The Chicago Child-Parent Center Program is a school-based preschool
and early school-age intervention for low-income children that
emphasizes parent involvement and the development of literacy
skills. A CBA of the program when participants reached age 21
shows that for every $1 invested, there is a return to society
of $7 in cost savings. The greatest benefits are the savings on
school remedial services, increased tax revenues, and averted
crime victim costs.
- Home care for Canadian seniors is cost-effective
A major research program conducted in 2002, the National Evaluation
of the Cost-effectiveness of Home Care in Canada, shows that home
care services are a cost-effective alternative to residential
long term care for seniors. The 15 studies conducted across Canada
conclude that home care and home support services "can help
to achieve the seemingly contradictory goals of saving money,
and improving care and the quality of life for clients",
said Dr. Neena Chappell, co-director of the program of research.
- 'When the Bough Breaks' study proves that recreation programs
save money
This award-winning economic evaluation demonstrates that recreation
services for children not only paid for themselves within the
first year of follow-up, but by four years, cut in half the cost
of children/youth use of all other health and social services.
Kathy Wiele, from the City of Toronto Parks and Recreation Department,
states that "this study shows that the most cost-effective
way to help kids in need is through recreation. Every dollar spent
in subsidizing children's programs provides a return to society".
"Making the case": Effective
communication and economic evaluation:
Incorporating economic evaluation into community service decision-making
will result in demonstrated efficiencies and better community service
planning. It is wrong to assume, however, that 'figures will speak
for themselves'. It is also important to have an effective communications
strategy or marketing plan as part of an overall economic evaluation.
Advocates for prevention need to consider early on in the process
how they will share the findings to make their case for prevention.
The ability to influence decision makers and affect public policy
requires much more than the evidence of societal benefit. There is,
however, good reason to believe that economic information can play
an important role in the decision making process, depending on the
circumstances. Most frequently we see economic evaluations used to:
- sustain support for an existing intervention by demonstrating
"worth";
- demonstrate the economic effectiveness of an alternative approach;
- model how a new service would impact on existing structures
/costs.
Given the relatively small number of economic evaluations of community
and social services that have been done thus far, the art and science
of effectively communicating the results is best described as a "work
in progress".
The Future Case for Prevention:
It seems clear from the early evidence that economic evaluation has
the potential to be a useful management and decision-making tool for
the Canadian non-profit sector. An economic approach provides a new
method to assess the efficiency of how resources are used. Economic
evaluation is a powerful tool that is, however, still in its infancy.
At a recent economic evaluation conference, Dr. Amiram Gafni, a leading
Canadian health economist, was quoted as saying, "Ours is one
of the few businesses that still doesn't have a clear idea of what
it produces and what it costs". As work continues to make the
methodology more accessible and better adapted to community settings,
program supporters and donors will be increasingly interested in measuring
and describing the economic benefits of their contributions. Economic
evaluation can be used to 'make the case' for investment in prevention
and health promotion at a crucial time in the history of health care
and community health care reform in Canada. Forward thinking organizations
will anticipate this trend and make their own plans to utilize and
benefit from an economic evaluation of their work.
References for this article
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Date published: January 15, 2003 |
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 Article prepared for the Canadian Health Network by Graham Clyne, Executive Director and Susan Himel, Research Consultant, Prevention Dividend Project. |
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