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Benefit-Cost Analysis and Medical Care Delivery System Change

Author

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  • Jon B. Christianson

    (University of Arizona)

  • Steven G. Bender

    (State of Montana)

Abstract

This article utilizes benefit-cost analysis to evaluate a hypothetical rural hospital closure. The estimated benefits were found to be extremely sensitive to assumptions concerning the nature of hospital marginal cost curves and less sensitive to the proportion of the hospital bill assumed to be paid directly by consumers. The net benefits of a hospital closure were largest in the case where hospital alternatives were small, under-utilized facilities. The analysis suggests that when evaluating medical delivery system change, benefit-cost techniques can be useful to policymakers in structuring the problem and identifying key assumptions. However, theoretical considerations in combination with data and resource requirements will limit its usefulness as an applied health-planning tool.

Suggested Citation

  • Jon B. Christianson & Steven G. Bender, 1982. "Benefit-Cost Analysis and Medical Care Delivery System Change," Evaluation Review, , vol. 6(4), pages 481-504, August.
    • Handle: RePEc:sae:evarev:v:6:y:1982:i:4:p:481-504
    DOI: 10.1177/0193841X8200600402
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    References listed on IDEAS

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    3. Rachel Dardis & Susan Aaronson & Ying-Nan Lin, 1978. "Cost-Benefit Analysis of Flammability Standards," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 60(4), pages 695-700.
    4. Weisbrod, Burton A, 1971. "Costs and Benefits of Medical Research: A Case Study of Poliomyelitis," Journal of Political Economy, University of Chicago Press, vol. 79(3), pages 527-544, May-June.
    5. Davis, Karen & Russell, Louise B, 1972. "The Substitution of Hospital Outpatient Care for Inpatient Care," The Review of Economics and Statistics, MIT Press, vol. 54(2), pages 109-120, May.
    6. Feldstein, Martin S, 1971. "Hospital Cost Inflation: A Study of Nonprofit Price Dynamics," American Economic Review, American Economic Association, vol. 61(5), pages 853-872, December.
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