Cost Effectiveness Marketing and Analysis of Environmental Public Health Services

Cost Effectiveness Marketing and Analysis of Environmental Public Health Services 2009 - 2010 Environmental Public Health Leadership Institute Fellow:...
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Cost Effectiveness Marketing and Analysis of Environmental Public Health Services 2009 - 2010 Environmental Public Health Leadership Institute Fellow: John McVeigh, MBA, CHO, RS Director of Public Health, Randolph Board of Health 1 Turner lane Randolph Massachusetts 02368 (781)-961-0924 [email protected]

Mentor: John W. McLeod, R.S., MPH Director, Cuyahoga County Board of Health Environmental Health Services

Coach: Leslie M. Beitsch, MD, JD Professor of Health Policy Florida State University College of Medicine, Tallahassee, Florida

Acknowledgements: Robert S. Hasenyager, MS, RS Director Environmental Health Division Summit County Health District

Rebecca Love, MPH, CHES Maryland Department of Public Health

Jill Ann Coleman, BS Health Education and Training specialist Supervisor Childhood lead Prevention program Philadelphia Department of Public Health

2009–2010 Fellow Project

National Environmental Public Health Leadership Institute

EXECUTIVE SUMMARY: "In many cases, benefit cost analysis cannot be used to prove that the economic benefits of a decision will exceed or fall short of the costs … [but] … it can provide illuminating evidence for a decision, even if precision cannot be achieved" (Arrow et al., 1996). For six bacterial pathogens, the costs of human illness are estimated to be $9.3-$12.9 billion annually. Of these costs, $2.9-$6.7 billion are attributed to foodborne bacteria. 2 Applying benefit-cost analysis with effectiveness to local health services is vital to promote funding in challenging economic times. This project paper will propose fundamental methods that could be used to estimate the cost benefit of environmental public health programs. Many environmental public health programs offer scarce studies that articulate their true worth and the intangibles which seem to dominate this arena. We explore the savings in terms of morbidity, mortality, and costs of their reductions. We also will investigate the quality of life issues inherent with strong environmental programs. Cost-benefit effectiveness analysis tries to mimic a basic function of markets by setting an economic standard for measuring the success of the government‟s projects and programs. That is, cost-benefit analysis seeks to perform, for public policy, a calculation that markets perform for the private sector. 1 Since there are no natural prices for a healthy environment, cost-benefit effectiveness analysis requires the creation of artificial ones. Often, costs are incurred today, or in the near future, to prevent harm in the more remote future. When the analysis spans a number of years, future costs and benefits are discounted, or treated as equivalent to smaller amounts of money in today‟s dollars using Net Present Value. Many advocates of cost-benefit effectiveness analysis concede that the decision-making process must make some room for non-quantitative considerations. In it‟s simplest terms this paper seeks to explain Cost Effectiveness = Net cost/ Total cost of deleterious environmental health effects averted. The paper explores the concept of Systems Thinking Analysis that offers insight for alternate methods into solve funding problems and may also shed light into perceived fixes that backfire. In terms of ultimate cost effectiveness, prevention coupled with control through strong environmental health programs is still the best answer. Te key is for environmental public health particularly at the local level to speak its value message in terms of cost benefit analysis. “It is not a long step from „doing the most good‟ to „creating the greatest (net) benefit.‟ The same resources cannot be committed to different ends. With a limited budget, we must be certain that each project chosen has the largest possible value per dollar expended”3

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2009–2010 Fellow Project

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Introduction & background: The following paper details a plan for articulating and marketing the value of the environmental health infrastructure and the value of EH service delivery. Public Health programs have continually been underfunded and A key to marketing public health is not just classical advertising, creating a brand and story telling. A critical marketing tool is cost benefit analysis with regards to environmental programs. Allowing key stakeholders to see the monetary value as well as intangible value involved in an environmental public health program or position is critical to its success. Environmental public health deals with many complex issues that affect all of society in terms of quality of life and safety. Environmental issues have many associated costs including: Societal costs or costs of an issues impacts on the environment and society for which there may be no direct financially responsibility. Societal costs may also be referred to as external costs or externalities. These costs may be expressed, qualitatively, in physical terms (e.g., tons of releases, exposed receptors, pollution), or in dollars and cents. Adverse environmental outcomes sometimes have direct measurable costs ie ( number of cases of illness, number of hospitalizations, number of deaths, monetary valuation of health outcomes, and loss of Quality Adjusted Life Years (QALYs), reduced morbidity mortality, legal costs, healthcare cost, property values, negative reputation, recall cost) other adverse outcomes have intangible value or indirect costs Ie (quality of life, aesthetic value). 9 Many environmental programs are difficult to measure their net costs to society. Cost benefit assessment is a way of organizing information, a method for identifying all the favorable and unfavorable outcomes of a proposed action. Where necessary for complex decisions, many of these outcomes can be converted into a common set of units (usually dollars) to permit consistent comparisons of benefits and costs. Monetization may be impossible for outcomes which defy measurement. Although benefit-cost assessment is a guide to decision-makers, it does not provide the final answer to a public policy decision. Other factors such as the public‟s view of appropriate uses for a particular program or the fairness of cost impacts on particular groups are important considerations. What a benefit-cost assessment does do is provide an organized framework for information the public and rulemaking body can use in making more informed decisions.12

Problem Statement: “Why do we need to understand and how do we measure environmental public health cost benefit effectiveness, in terms of environmental risk, political will and monetary supply in promoting public health with limited funding sources?”

2009–2010 Fellow Project

National Environmental Public Health Leadership Institute

Behavior and trends over time graph:

The idea of this trend graph is to emphasize the central concept of change over time compare patterns and explore their causes. They can ask “Why?” and “What if…?” it analyzes the interdependencies among parts of a system, particularly feedback relationships (how something that was initially an “effect” ultimately becomes a “cause.. Looking at the graph below the key variables represent distinct cause or effect relations thus an interdependency is shown. The gap between the environmental problem (EP) and money supply(MS) are interdependent and the political will (PW) is an effect that fluctuates up and down relative to the causes just mentioned. These graphs tell the story of the “system” in the most visual comprehensive manner.10 key variables : 1. Political will 2. Economy 3. Money Supply (Budget) 4.Environmental Problem

EP

GAP

Variables Econ MS

PW

Time

Fig 1

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Causal loop diagrams and applicable system archetypes:

SHIFTING THE BURDEN Private investment Marketing EPH

Economy

Budget Pressure

R

Environmental Risk Communication of risk

R

Political Will Grants Donations

Quantitative Analysis: Cost Benefits of EPH Programs Programs

Fig 2

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National Environmental Public Health Leadership Institute

Shifting the burden a short-term "solution" is used to correct the problem with seemingly positive immediate results. As this correction is used more and more, more fundamental corrective measures are used less and less. Over time, the capabilities for the fundamental solution may atrophy or become disabled, leading to even greater reliance on symptomatic solution. We resort to reverting to the symptomatic solutions. Before we know it we are addicted to it, often spawning more problems down the road. The fundamental issue of under-funding environmental public health from the tax base still is not addressed and or is ignored in place of buffers and unreliable or temporary sources of funding. 11

FIXES THAT BACKFIRE

Lack of Funding EPH Alternative uses

Environmental Risk Increase

R

R

Higher taxes fees = public backlash

Better public communication

Fig 3

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National Environmental Public Health Leadership Institute

In the fixes-that-backfire systems archetype, the obvious solutions are applied to problems. However, because the perceived or obvious solution is frequently applied hastily and without a thorough understanding of the problem, the result is often unintended consequences, including a worsening of the problem.

Cost-benefit calculations and method: Calculation of classical cost benefit analysis is described with a focus on cost effectiveness analysis which has more relevance to the environmental public health argument.

Main types of cost analysis include the following. Cost-of-illness analysis: a determination of the economic impact of an illness or condition (typically on a given population, region, or country) e.g., of smoking, arthritis or bedsores, including associated treatment costs Cost-minimization analysis: a determination of the least costly among alternative interventions that are assumed to produce equivalent outcomes Cost-effectiveness analysis (CEA): a comparison of costs in monetary units with outcomes in quantitative non-monetary units, e.g., reduced mortality or morbidity Cost-utility analysis (CUA): a form of cost-effectiveness analysis that compares costs in monetary units with outcomes in terms of their utility, usually to the patient, measured, e.g., in QALYs Cost-consequence analysis: a form of cost-effectiveness analysis that presents costs and outcomes in discrete categories, without aggregating or weighting them Cost-benefit analysis (CBA): compares costs and benefits, both of which are quantified in common monetary units. 5 NIH National Information Center on Health Services Research and Health Care Technology (NICHSR)

Cost benefit equations: Cost Effectiveness = Net Cost/ Total cost adverse environmental health averted Net Cost= Cost program - reduction in cost of illness or environmental damage Dollar benefit program= Total adverse health outcomes averted x WTP willingness to pay CE Cost-Effectiveness Model.=

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Cost saved by inspections / Cost consumed by inspections

National Environmental Public Health Leadership Institute

COI cost of illness = Number of episodes x ( Direct cost per episode + Indirect cost per episode ) Where: a) Direct cost per episode = Direct outpatient costs + Direct inpatient costs + Direct homecare costs etc… b) Indirect cost per episode = Value of production x Production lost because of illness + Production lost because of caregiving etc…

The logic of a benefit-cost assessment steps: 1. Define the action

2. Determine an appropriate approach based on resources or complexity of the action

3. Identify and estimate the incremental benefits of the action

4. Identify and estimate the incremental costs of the action

5. Compare the benefits and costs of the action

6. Assess the plausibility of the results (funding, political will, public opinion)

7. Highlight the distribution of benefits and costs and financial impacts of the action

8. Integrate the assessment into other aspects of the decision making.

2009–2010 Fellow Project

National Environmental Public Health Leadership Institute

Cost Benefit Analysis :

Quadrants of Cost-Effectiveness NIH National Information Center on Health Services Research and Health Care Technology (NICHSR) 5

Fig 4

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Cost Benefit Analysis of Change—No Change Changing

Not Changing

1. More resources to accomplish environmental public health goals

Benefits

2. Better quality of life less disease. Increased environmental awareness

1. Money channeled to alternative choices or organizations

3. Retention of a qualified workforce more interest

1. Increased costs inherent with supplementing environmental public health will increase taxes

1. Negative Health Impacts will occur for the population

2. Increased cost and efforts will lessen funding to other alternative sources

2. Continued diminished environmental public health infrastructure. Loss of quality personnel.

Costs

Fig 5

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Simplified Cost Benefit Analysis Using NPV Project Name: Hire Additional Food Inspectors and Equipment

Year 0

Year 1

Year 2

Year of Project Year 3

Year 4

Year 5

0

1

2

3

4

5

($25,500) $0 $0 $0 $0

$0 ($7,000) ($3,000) $0 ($80,000)

$0 ($7,000) ($3,240) $0 ($80,000)

$0 ($7,000) ($3,499) $0 ($80,000)

$0 ($7,000) ($3,779) $0 ($80,000)

$0 ($7,000) ($4,081) $0 ($80,000)

($25,500) 1.0000 ($25,500) ($25,500)

($90,000) 0.9346 ($84,112) ($109,612)

($90,240) 0.8734 ($78,819) ($188,431)

($90,499) 0.8163 ($73,874) ($262,306)

($90,779) 0.7629 ($69,255) ($331,561)

($91,081) 0.7130 ($64,940) ($396,500)

$0

$20,000

$22,000

$24,200

$26,620

$29,282

$2,000

$5,000

$20,000

$50,000

$80,000

$120,000

$0

$20,000

$40,000

$70,000

$100,000

$120,000

$2,000 1.0000 $2,000 $2,000

$45,000 0.9346 $42,056 $44,056

$82,000 0.8734 $71,622 $115,678

$144,200 0.8163 $117,710 $233,388

$206,620 0.7629 $157,629 $391,018

$269,282 0.7130 $191,994 $583,012

($23,500) ($23,500)

($42,056) ($65,556)

($7,197) ($72,753)

$43,836 ($28,917)

$88,374 $59,457

$127,055 $186,512

TOTAL

COSTS Development Operation Maintenance Intangibles Personnel TOTAL Discount Rate @ 7% Yearly PV of Costs Cumulative PV of Costs

($396,500)

BENEFITS Increased Efficiency Intangibles( Quality life, work productivity, reputation, property values, political points) Cost Reduction (Illness Hospitalizations, re-inspections, outbreaks) TOTAL Discount Rate @ 7% Yearly PV of benefits Cumulative PV of benefits Yearly NPV Cumulative NPV Return on Investment ( ROI)

47.04%

Break-even Point

3.33

$200,000

Cumulative NPV

$150,000 $100,000 $50,000 $0 0

1

2

3

4

5

($50,000) ($100,000) Year

Fig 6

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National Environmental Public Health Leadership Institute

$583,012

$186,512

Provided that the BCR is >1.0 or net present value of benefits > 0, the project is considered economically efficient. The greater the net present value of benefits, the greater the economic returns to society. Discounting allows comparisons involving costs and benefits that flow differently over time. It is needed when most costs are realized early and most benefits are realized in later years.” Discount rates used in cost analyses are typically based on interest rates of government bonds or the market interest rates for the cost of capital whose maturity is about the same as the duration of the effective time horizon of the intervention program being evaluated”. 5 NIH

Project relevance to the 10 essential environmental health services and the three core public health functions.

Fig 7

The essential health services provides an important benchmark for departments to measure the capacity of their local environmental public health system or programs. Assessment This process encourages system or program partners to better coordinate and target their activities and is intended to provide a foundation for implementing performance improvement activities. Relevance to Cost benefit evaluation consists of use of data showing environmental problems and lack of funding for solutions or control . Identify health threats in the community and the programs needed to help. Utilize appropriate statistics, epidemiological techniques and technology to correctly gage the impact of the problem and its social monetary impact. Policy Development for environmental public health cost benefit and funding should incorporate: • Consistently bringing together key stakeholders and refining data collection and analysis to generate more refined numbers in the cost benefit analysis. • Communicate needs to key stakeholders. • Market the value of public health services in terms of prevention and the benefits involved. • Strengthened the diverse network of partners within state and local public health systems, which can lead to more cohesion among partners, better coordination of activities and resources, and less duplication of services; and • Identified strengths and weaknesses to address with quality improvement efforts. NACCHO Assurance 2009–2010 Fellow Project

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That cost benefit analysis is used for programs needs to incorporate written methodology from executive level stakeholders that accept the method and will utilize its results in budgetary decision processes. Legislative mandate to use this method for program budgetary review would be the ultimate goal.

National Goals Supported : CDC Health Protection Goals. This project is investing in prevention which is far more economically efficient than treating a wide range of acute or chronic disease that arise through poor environmental health. Translating this message to the local level on a timescale that is politically feasible is the challenge. Environmental factors play a central role in human development, health, and disease. Broadly defined, the environment, including infectious agents, is one of three primary factors that affect human health. The other two are genetic factors and personal behavior. This paper works toward assuring the CDC‟s goals of: The goal of increasing quality life years, not just life expectancy is supported by this paper a transparent cost benefit effectiveness assessment will lead to stronger well funded programs which will realize greater QALY and expectancy. The goal of reducing health disparities by. Environmental quality which is measurable and one of the Leading Health indicators Example: Increase inspectional programs involving food safety measure incidence of foodborne illness over time. Use baseline data values published at the beginning of the decade then utilize the progress quotient precentage.

The formula for the progress quotient is: most recent value – baseline value year 2020 target – baseline value

X 100

Measuring Progress in Healthy People 2010 USDHHS CDC September 2004

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National Environmental Public Health Leadership Institute

Project logic model: The project logic model details the proposed project‟s inputs, activities, outputs, outcomes and goals.

Fig 8

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Project objectives/description/deliverables:

Program Goal The goal of this program is to ensure a better model for financial decision making as it relates to environmental public health programs Health Problem Why has the environmental public health profession consistently under-funded an a low priority in the face of overwhelming evidence of preventative cost savings? Increased morbidity and mortality due to lack of strong environmental health programs. Outcome Objective by 2020 The expected outcomes of this project should include greater support for the EH infrastructure among the public and policy makers which should lower morbidity and mortality and increase the quality of life.

Determinant lack of proper utilization of cost benefits analysis in terms of macro and micro economic benefits to society. Impact Objective To create an environment where key stakeholders will realize the true benefits of environmental health programs Contributing Factors

1. Lack of understanding of methods for environmental health cost benefit analysis especially at the local level 2. Lack of or difficulty finding data to support cost benefit analysis, intangibles which are difficult to quantify. Process Objectives

By 2020, state public health departments and the majority of local health departments will have a plan and materials for marketing the value of the environmental health infrastructure. This will incorporate the cost benefit effectiveness analysis or a method similar presented in this paper Methodology: The logic model activities provide the method used to achieve stated goals     

Engage key stakeholders such as political leaders Conduct community needs assessments. Develop objectives Develop action plan assess data and trends Create cost benefit analysis models .

2009–2010 Fellow Project

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Results: Hopefully, the addition of cost benefit effectiveness analysis applied to environmental public health will achieve a greater respect and understanding of the pivotal role the profession and programs play in the greater economic security of this country. Realizing the “hidden” social benefits will enable us to market the true “value” in environmental public health. Strong funding of environmental programs will result in: reduced disease and disability, lower health care

costs, and better quality of life, general environmental benefits.15

Conclusions: To conclude this project demonstrates the need for better quantitative as well as qualitative methods to value environmental public health program. While some classic cost benefit methods exist many health departments underutilize the methods or do not understand its value. The data needed to support future cost reductions and intangible benefits is difficult to pinpoint often leading to abandoning such methods. We need to formulate a master database of national state and local benefit calculations that can be used by individual health departments to assist their cost benefit effectiveness assumptions and give them concrete numbers to argue the programs effectiveness. Although cost benefit effectiveness analysis is not a strict science with room for debate it does set the tone that thinking of future environmental public health benefits are greater than the public or politicians may perceive. Systems thinking offers a resource to visually see the “problems” main source and offers alternatives and possible solutions.

Expected outcomes: The expected outcomes of this project include: 1. A model for cost benefit effectiveness analysis 2. Better understanding of key stakeholders of cost benefit analysis. 3. Lower morbidity, mortality and better quality of life.

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Leadership development opportunities: John P. McVeigh The EPHLI provided a tremendous personal growth experience. The self self assessments (MTBI, Skillscope, CSI) was useful in negoiating my precieved strenghth and weaknesses. I am particularly impressed with the systems thinking methodology and found it a useful innovative way to find solutions and discover impasses to problems. The work at the numerous sessions helped tremendously in learning the many methods in solving complex environmental problems in terms of : assessment, policy and solutions. The interaction with prospective leadership fellows was invaluable in learning different prespectives on environmental problems and solutions. I was particularly impressed with the session staff which allowed for a well organized process and pleasant experience. The many lecturers had great command of their subject area and were leaders in their field. They engaged the groups at our various sessions and challenged our present way of thinking and problem solving. I am very grateful for the opportunity to study and participate in the EPHLI .

About the EPHLI fellow: Mr. John McVeigh holds a Bachelor of Science in Microbiology from the University of Massachusetts At Amherst, and a Master of Business from Framingham State College Massachusetts.. Mr. McVeigh has been working in the public health field for 15 years. He has worked both in the laboratory for the State Department of Public Health and the local community level. He is a Certified Health Officer and a Registered Sanitarian both with the Commonwealth of Massachusetts. Recently he was appointed by the Governor of Massachusetts to the State Board of Registered Sanitarians which oversees policy and licensure. Currently he is the Director of Public Health with the Town of Randolph Massachusetts for the last 5 years. Currently he is the Unit Leader for the Randolph area Medical Reserve Corps, run under the auspices of Federal Department of Health and Human Services, Surgeon Generals Office. When he is not at work, he enjoys music recording, sports and spending quality time with his family.

2009–2010 Fellow Project

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References:

1. Lisa Heinzerling, Frank Ackerman “Pricing the priceless Cost benefit Analysis of Environmental Protection” Georgetown Environmental Law and Policy Institute. 2. USDA’s Economic Research Service, General Data. 3. 1998, Benefit -Cost analysis Guide, Treasury Board of Canada Secretariat. 4. Cost Analysis: Cost of Illness, CDC Economic Evaluation Tutorials. 5. Cost Analysis Methods, National Information Center on Health Services Research and Health Care Technology NIH. 6. Economic Cost of Illness Due to Escherichia coli O157 Infections in the United States Journal of Food Protection, Vol. 68, No. 12, 2005, Pages 2623–2630 7. Paul D. Frenzen,1* Alison Drake,2† Frederick J. Sngulo,2 and The Emerging Infections Program Foodnet Working Group. 8. David Romer, Advanced Macroeconomics August 2005 9. Scott Farrow Michael Toman, “Using Environmental Benefit-Cost Analysis to Improve Government Performance” December 1998 Resources for the Future. 10. Goodman M, Stroh D, Immediato S, “Introduction to Systems Thinking”, Bridgeway Partners and Innovation Associates Organizational Learning. 2004 11. Senge, Peter, Art Kleiner, Charlotte Roberts, Richard Ross, Bryan Smith (1994) The Fifth Discipline Fieldbook, Doubleday, New York, New York.

12. Brian T. Yates, Ph.D., “Measuring and Improving Cost, Cost-Effectiveness, and Cost-Benefit for Substance Abuse Treatment Programs” NIH 1999. 13. Rice, D.P. 1966. Estimating the cost of illness. Health Economics Series, No. 6, Publication No.947-6. U.S. Public Health Service, Washington, D.C. 14. Mead, P.S., L. Slutsker, V. Dietz, L.F. McCaig, J.S. Bresee, C. Shapiro, P.M. Griffin, and R.V. Tauxe. (Sept.-Oct. 1999), Food-Related Illness and Death in the United States, Emerging Infectious Diseases, 5(5): 607-625. 15. Social Marketing Resource Guide, The Robert Wood Johnson Foundation Turning Point Initiative

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