The Economic Cost of Selected Public Health Core Services in Colorado

This paper presents the results of an ongoing project to assess the economic cost of providing required core public health services.  Although many different national organizations, including the Institute of Medicine, have called for the development of a minimum package of public health benefits, little is known about the cost providing essential population-based public health services. This lack of knowledge results in an inability to make a clear financial case for public health services in connection with communities, health care partners and others and limits the amount of informed decision-making that can be done by public health leaders. In our project, we identify the economic costs associated with Communicable Disease Monitoring/ Surveillance as our core activity.  To estimate the cost of the selected services, we use a micro-costing approach.  We conduct a series of key informant interviews with workflow diagrams and focus groups to identify major variable and fixed costs associated with the selected services to inform the development of a survey to collect cost data.  To calculate marginal costs, we have staff members keep daily activity logs recording their activities during each 30 minute interval of work over a two week time period. We randomly select both days and hours within each day to fill out the survey to minimize respondent burden. We augment the cost survey with a manager survey asking about the number of FTE’s associated with each activity and also the number of staff hours. We compare the cost estimations using the two methods (activity logs and manager survey) to determine the validity of the logs. Once we have an estimate of the time associated with activities, we will calculate the per-hour cost of each staff member type, including both wages and benefits using accounting data from the agency. We also estimate the capital cost associated with the program using rental costs of similar spaces (or actual rental costs, if applicable).   Methodologically, we estimate a statistical cost function using cost (from the microcosting data) as the dependent variable and difference characteristics as the independent variables, including characteristics of the agency, the community and services provided. In the cost estimation, we will use a standard log-linear model estimated using Ordinary Least Squares.  We examine the effect of different service modalities – e.g., within agency, cross-agency, contract – on the cost of delivery and whether there are particular services with economies of scale and scope. Finally, we use the data to determine the cost-minimizing approach to the delivery of core public health services. We will examine the effect of different staffing mixes, distribution of tasks within agencies, use of different technologies and other factors on the cost of delivery, controlling for program intensity and reach. We will also engage in a sensitivity analysis of our estimates. The sensitivity analysis will include a comparison of the managerial and activity-log based data and also different fixed cost allocation methods.