After reading Chapter 7 and the required resources for this week, consider the following scenario:
HIV Help-Inc., a non-profit organization focusing on the prevention of HIV/AIDS just received a $10 million grant to fund several projects. The organization is currently located in an older building that needs extensive repairs. The organization is using outdated office equipment In addition, one additional staff member is needed in order to keep up with incoming phone calls and requests for presentations and community outreach activities. A portion of the grant – $2 million – is allotted for business improvements which can address one of these three areas: repairs to building, outdated office equipment, and more staff. The remaining $8 million is to be used to further enhance the continuum of care level to provide access to preventive health services.
- Section A: Create a cost benefit analysis for an update that will improve the business: structural, office equipment, or staff. You can be creative in determining what the business needs. The cost will use the full amount of funds allotted to this improvement ($2 Million), so you can only improve one of these three needs.
- Section B: Create a cost effective analysis to determine how to best spend the $8 million portion of the grant funding on education and other preventive services.
The organization currently serves the community and clientele with community education classes at schools and community centers, as well as the distribution of condoms and educational materials. They wish to expand their current services to reach the neighboring community (4,000 residents), add social media advertising and messaging to reach the younger population, distribute educational material and condoms to homeless shelters in the area, and add HIV testing to at-risk individuals. Select two of the potential services and determine how the money can be best spent to have the greatest outcome for the HIV+ population in the community.
- Based on the CDC website, analyze how cultural norms impact the risk of getting HIV. Explain one method or action on how to address this challenge.
Your initial contribution should be 250 to 300 words in length. Use proper APA formatting for in-text citations and references as outlined in the Ashford Writing Center.
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Decision makers use economic tools to analyze the financial and social costs associated with caring for the vulnerable. A cost-benefitanalysis (CBA) assigns monetary value, or dollar total, to both direct and indirect costs, then compares the costs and benefits of aproject to determine the likelihood of the project producing a positive outcome and a good return on the financial investments of theproject. The difficult part of cost-benefit analysis is assigning monetary value to abstract social costs. Here is a simplified example of acost-benefit analysis for a program that would provide free immunizations to schoolchildren:
Step 1: Assign monetary value to both direct and indirect costs.
Trained staff ($1,000 for one day)
Syringes ($0.50 per child × 300 children = $150)
Vaccinations ($5 per child × 300 children = $1,500)
Alcohol pads ($0.10 per child × 300 children = $30)
Bandages ($0.10 per child × 300 children = $30)
Total direct costs: $2,710
Missed classroom time (cost to run the school for one day = $5,000)
Total indirect costs: $5,000
Step 2: Determine the expected benefit of the program.
Children who have received the vaccine are less likely to miss school due to illness (this reduces the resources needed tocatch children up on missed schoolwork).
Teachers are less likely to catch illness from the vaccinated children and so are less likely to miss work (cost per missedday of work = $200 per teacher, per missed day). If the program lowers the average number of missed days from three totwo, the financial benefit of fewer missed work days is $12,000:
3 missed days × $200 per day × 60 teachers in the school = $36,000
2 missed days × $200 per day × 60 teachers in the school = $24,000
Step 3: Compare the costs and benefits.
Total of direct and indirect costs = $7,710
Monetary value assigned to anticipated benefit = $12,000
Total savings caused by the immunization program = $4,290
Step 4: Make a decision.
The program provides a positive return on investment, both in financial terms and in terms of the school population’shealth.
Cost-benefit analysis focuses on the value of one program. Conversely, cost-effectiveness analysis (CEA) is a method of comparing twoor more programs. Unlike cost-benefit analysis, cost-effectiveness analysis, when used correctly, assigns both monetary value and socialvalue to program outcomes. With CEA, finances are not the only determinant of a program’s value. For example:
Smoking prevention program for teenagers:
- cost to run program: $5,000
- anticipated percentage of students who will not smoke (based on available research of this program or similar ones): 75%
Smoking cessation program for adults:
- cost to run program: $2,000
- anticipated percentage of program participants who remain nonsmokers after leaving the program (based on available research ofthis program or similar ones): 20%
Now consider the cost of caring for a long-term smoker who may present with emphysema, heart disease, or cancer. Although thesmoking prevention program may initially cost more, CEA indicates that it offers better return on the financial and social investment.
Cost-effectiveness can also be expressed using a mathematical formula:
|CE ratio =||Costnew program − Costcurrent program|
|Oucomenew program − Outcomecurrent program|
The mathematical formula does not put as much weight on social value as does the listing method.
Even with cost-benefit analysis and cost-effectiveness analysis to normalize data across programs and organizations, it is still challengingto make comparisons necessary to determine resource allocation. This is partly due to the lack of standardized data reporting techniquesand a general lack of research on the cost analysis of many programs. This is especially true of programs that care for certain vulnerablepopulations, as we will discuss in the next few sections.