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Box 1 The study’s perspective, timeframe and sunk costs

From: What are economic costs and when should they be used in health economic studies?

The perspective of a health economic study is the point of view adopted when deciding which types of costs and benefits are to be included [9]. Potential perspectives include the patient, a specific payer (such as a specific control programme), the healthcare provider, the healthcare sector, or the broader society as a whole (the societal perspective—where all relevant costs, regardless of who they are incurred by are included)

 

In the context of economic costs, the study’s perspective influences what resources are included and from whose point of view the opportunity costs are quantified. For example, the opportunity cost of the patients’ time to access an intervention, would not be considered under the healthcare provider perspective conventionally but would be from the perspective of the individual patient as well as under a comprehensive societal perspective. Furthermore, the opportunity cost of resources donated by global health stakeholders/donors (such as donated drugs or vaccines) could be valued based on the price of those goods in the recipient country if the healthcare provider perspective was used compared to the cost it was procured by the donor or an estimated social opportunity cost if the societal perspective was used. The difference between the financial and economic cost of an intervention and what adjustments to market prices are needed will be influenced by the chosen perspective. Importantly even if the healthcare provider perspective is used, economic costs that fall under that perspective should still be considered within economic evaluations (as opposed to only financial costs)

 

A related concept to the perspective that is important when considering opportunity costs is the timeframe of the analysis. The timeframe can influence if a resource has an opportunity cost and how economic costs should be valued. For example, it could be argued that in the short term, there are no alternative uses of healthcare facilities, and therefore the opportunity cost for the use of the building space to the healthcare provider or healthcare sector is zero. However, in the longer term, there is potential for alternative uses (such as use in other public activities, or sale to the private sector), and therefore these resources do have an opportunity cost [10]. In addition, sunk costs are costs that have already been incurred and that cannot be retrieved [7]. These should generally be ignored when considering economic costs because they will remain the same regardless of the outcome of a decision and what resources have been used in the past is not a determinant of the optimum decision of how to allocate resources moving forward [1]. However, it is important to note that there can be ongoing opportunity costs related to previously purchased resources (such as the use of building space or vehicles) if they could be used for other services within the timeframe of the study

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