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Measuring and Improving Costs, Cost-Effectiveness,
and Cost-Benefit for Substance Abuse Treatment Programs

Getting Started

Planning is essential for analyses of costs, cost-effectiveness, and cost-benefit. Building from one basic measure to a few, and from one simple analysis to several, makes the process less disruptive to treatment as well as more complete and, therefore, more accurate.


A suggested timetable for developing cost-related analyses for your program is presented in table 1. Each step begins where the arrow line starts and ends at the tip of the arrowhead. Small, brief initial steps eventually give way to longer subsequent steps.

Data Collection

Measures for cost, treatment procedures, effectiveness, and benefits are developed and tested over several weeks. The timetable includes measures to detect whether and to what extent the specific procedures of treatment were put into effect. Two weeks are allotted for development and testing of effectiveness measures because these measures are crucial to the rest of the process, because most staff want to contribute to this part of the analysis, and because there are so many measures of effectiveness.

Data collection continues for the duration of the program in order to gain a complete and accurate picture of program costs, effectiveness, and benefits.

Data Analysis

After data collection starts for each set of measures, analysis begins. Cost analysis provides the basis for the subsequent cost-effectiveness and cost-benefit analyses. Effectiveness and benefits are analyzed in separate weeks following cost analysis. Then cost and outcome data are combined for an initial cost-effectiveness analysis (during week 13) and an initial cost-benefit analysis (week 14). In week 15, monthly analyses of cost, cost-effectiveness, and cost-benefit commence.

Both cost-effectiveness analysis and cost-benefit analysis are useful. Often, benefit information can be derived directly from effectiveness findings. Deriving benefits from effectiveness measures makes cost-benefit analysis a straightforward addition to cost-effectiveness analysis. If the monetary value of your program's outcomes is relatively easy to derive from information on program effectiveness, or if direct measures of benefits are easy to come by, you may want to make the extra effort to do a cost-benefit analysis in addition to your cost-effectiveness analysis.

Table 1. Sample timetable for cost, cost-effectiveness, and cost-benefit analysis of a substance abuse treatment program

1. Identify key players interest groups and a coordinator               
2. Assign responsibilities for each step               
3. Tailor this timetable to your program               
4. Develop or refine a reporting plan               
5. Describe program components and desired outcomes               
6. Choose and test cost measures                
7. Develop and test effectiveness measures               
8. Choose and test benefit measures                
9. Implement regular collection and reporting of cost measures        
10. Regularly collect and report effectiveness measures         
11. Regularly collect and report benefit measures          
12. Perform first cost analysis                
13. Perform first effectiveness analysis                
14. Perform first benefit analysis                
15. Perform first cost- effectiveness analysis                
16. Perform first cost-benefit analysis               
17. Perform monthly analyses of cost cost-effectiveness and cost-benefit               

Progress Assessment

In your evaluation of the cost assessment process, there should be regular reconsideration of measures used, analyses performed, and reports compiled. These reconsiderations are a normal response to monthly analyses and monthly reports. This is a dynamic process that continuously produces new information. A response to the reports of cost-related analyses should include a discussion of ways to improve effectiveness and benefits while reducing costs.

Initial Steps

Identify Key Players, Interest Groups, and a Coordinator

Key players include therapists, program managers, and office staff. Your funders also should be informed of this project. Interest groups include patients and their representatives or guardians; the local police and court systems; the local primary, secondary, and higher education systems; and public health and other human services in your area. These groups may have information that you need to measure costs, effectiveness, and benefits.

The ideal coordinator for this effort may be difficult to find. Although the program manager or fiscal manager would be a natural coordinator, program politics or funding pressures may require that someone outside the treatment program coordinate the data collection and analysis effort. An outside coordinator needs special skills because some program personnel might see the collection and analysis of information on costs, cost-effectiveness, and cost-benefit as an unwarranted intrusion.

Programs with only a few staff might need to hire personnel for several hours a week to begin cost analysis and to keep it active until it becomes a routine part of the program. Larger programs may be able to distribute this work over their staff. Both small and large programs might consider hiring part-time counselors to reduce new patient load for regular staff who are assigned responsibilities for the project. Consultants also may facilitate establishment of cost, cost-effectiveness, and cost-benefit analyses as part of program operations.

The more people the work is distributed over from the beginning, the less the burden will be to everyone (and the more likely the project will keep on track when the inevitable illnesses, vacations, and departures occur).

Assign Responsibilities for Each Step

Individuals must be assigned responsibility for each step. A common mistake is to load too much responsibility on one person, usually the manager or the coordinator. We suggest that the coordinator only coordinate. Different people should be in charge of the various steps, and all individuals should report to the coordinator.

Responsibilities for each step are assigned early in the first week. Who takes which responsibility will depend on the capabilities and workloads of program staff.

Tailor the Timetable to Your Program

Some programs may not be able to move as fast as suggested in the sample timetable, and a few programs may be able to move faster. We encourage you to adapt this timetable to your own needs and capabilities. Some flexibility with deadlines also may be necessary; designing measures and testing them usually uncovers real problems and interpersonal and programmatic issues that may take time to resolve.

It is important, once you get started, to revise the timetable to match your pace. A revised timetable will decrease frustration with missed deadlines and a schedule that is not feasible. It will also reduce the chances of abandoning the project.

Develop or Refine a Reporting Plan

A plan for reporting progress on individual assignments provides a paper trail by which the development of your program analysis can be tracked. The paper trail makes it easy to pick up tasks if an unexpected delay arises. It also encourages progress and continued commitment from everyone.

We recommend that a report be submitted a day before the end of the week by each person who has been assigned a responsibility. The report should summarize the accomplishments of the week, with appendices providing any proposed instruments and other details. The reports could be reviewed by the coordinator and other key players and discussed at the end-of-the-week meeting. This is only one of several possible reporting formats for the earlier steps of the program.

Monthly reports summarizing the weekly reports might be made by the coordinator to the board of directors or other governing organization. Setting realistic weekly and monthly goals for progress makes the process feasible while sending the message that you expect regular progress.

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