Applying Cost-Effectiveness Concepts to the Community Health System

Abstract

This paper investigates ways in which concepts of model building and cost-effectiveness can be applied to the health planning process. The problem is described and methodological implications drawn that recommend large-scale digital-computer simulation techniques. A study of effectiveness measures suggests that the system's basic purpose is to reduce the likelihood that individuals will be in a state of ill health. The proposed measure of ineffectiveness is defined as the expectation of the weighted sum of the population's expected duration of stay in each of m disability states. The applicability of this and other measures to specific health problems is also discussed. The paper deals with the problem of estimating costs. Distinctions are made among the various kinds of costs and among the various bearers of the costs.