Cost-benefit analysis

✅ Reviewed for accuracy and relevance by Deanna Cooper Gillingham, RN, CCM, FCM on July 22, 2025.

A cost-benefit analysis (CBA) is a process to calculate and compare the cost and benefits of interventions, services, or treatments in monetary terms. It provides a comprehensive assessment of healthcare interventions by considering both health and non-health benefits to determine whether the benefits outweigh the costs. This objective information is used to compare costs, make decisions on interventions, services, and treatments, and justify alternative treatment plans (ATP).

Elements of cost-benefit analysis

Direct costs

Expenses directly related to an intervention or program:

  • Cost of the intervention
  • Healthcare professional fees
  • Medication
  • Hospital or facility charges
  • Equipment
  • Supplies

Indirect costs

Secondary expenses:

  • Administrative expenses
  • Training for staff
  • Time spent by case managers coordinating care
  • Transportation
  • Lost productivity or wages (for the client)
  • Family caregiver time and burden

Tangible benefits

Quantifiable, measurable outcomes:

  • Reduced hospital admissions or readmissions
  • Decreased emergency department visits
  • Shorter length of stay
  • Reduced medication usage
  • Fewer complications
  • Lower healthcare utilization overall

Intangible benefits

Harder to measure, but still important:

  • Improved quality of life
  • Enhanced client satisfaction
  • Increased independence
  • Increased functional status
  • Improved health outcomes
  • Client empowerment

Application in case management

Cost-benefit analysis aids case managers in effectively advocating for interventions that have upfront costs but ultimately lead to better outcomes and lower overall expenses. When calculating a cost-benefit analysis, consider each client’s unique needs and both short-term and long-term impacts. The cheapest option is not necessarily the most cost-effective in the long run.

This article shares a portion of the information covered on cost-benefit analysis in CCM Certification Made Easy, 4th Edition by Deanna Cooper Gillingham, RN, CCM, FCM (2025). For more details on this topic including calculating return on investment and related concepts, purchase your copy at CCMCertificationMadeEasy.com