Cost Data Collection and Valuation

Cost data collection and valuation is the part of economic evaluation concerned with identifying which resources an intervention uses, measuring how much of each is used, and attaching a money value to that use. The credibility of any cost-effectiveness result depends on doing this carefully, since errors in counting or valuing resources propagate directly into the cost side of the analysis.

Definition

Cost data collection and valuation is the process of identifying the resources consumed by an intervention, measuring the quantities used, and valuing them in monetary terms—using a perspective-appropriate set of costs—to produce the cost estimates used in an economic evaluation.

Scope

The entry covers the three-step logic of costing—identification, measurement, and valuation of resource use—together with the distinction between micro-costing and gross (top-down) costing, the role of perspective in deciding which costs count, and the handling of unit costs, overheads, and discounting. It is methodological reference material, not advice on the cost of any specific intervention.

Core questions

• Which resources and costs should be included, given the chosen perspective?
• How is resource use measured—from patient records, trial case-report forms, or routine data?
• How are unit costs derived and applied, and when is micro-costing preferable to gross costing?
• How are timing, overheads, and discounting handled in valuing costs?

Key concepts

• Identification, measurement, and valuation of resources
• Analytic perspective
• Micro-costing versus gross (top-down) costing
• Unit costs and resource-use data
• Direct, indirect, and overhead costs
• Discounting of future costs
• Productivity costs
• Cost versus charge

Mechanisms

Costing proceeds in three steps. First, the relevant resource items are identified, with the analytic perspective (for example health-system or societal) determining which categories count. Second, the quantity of each resource used is measured, drawing on patient records, trial data-collection forms, surveys, or routine administrative datasets. Third, each unit of resource is valued with a unit cost, distinguishing true opportunity cost from prices or charges, adding overheads where appropriate, and discounting costs that occur in future years to present value. Micro-costing builds totals from detailed component-level data, while gross costing apportions aggregate budgets; the choice trades precision against feasibility (Drummond et al., 2005; Husereau et al., 2013; Hutubessy et al., 2003).

Clinical relevance

Cost estimates feed the economic evaluations used in health technology assessment and reimbursement, so the quality of costing affects which services are judged good value. This topic describes costing methodology and how cost evidence is produced; it is not guidance for individual clinical or treatment decisions.

Evidence & guidelines

Standard methods texts set out the identification-measurement-valuation framework and the choice of perspective, while the CHEERS reporting statement specifies how resource use, unit costs, and currency should be reported; the WHO-CHOICE framework provides guidance for costing at the population level in priority-setting analyses (Drummond et al., 2005; Husereau et al., 2013; Hutubessy et al., 2003).

History

Early economic evaluations often costed interventions informally, but as the field matured the identification-measurement-valuation framework and explicit attention to perspective became standard, codified in successive editions of Drummond and colleagues' textbook. National unit-cost compendia and routine administrative datasets later improved the consistency of valuation, and reporting standards such as CHEERS formalised expectations for documenting costing methods (Drummond et al., 2005; Husereau et al., 2013).

Debates

Which perspective should determine the costs included?

A narrow health-system perspective omits costs falling on patients, families, and other sectors, whereas a broad societal perspective includes productivity and informal-care costs that are harder to measure and value; the choice can change which interventions appear cost-effective.

Key figures

• Michael Drummond
• Mark Sculpher
• Greg Stoddart
• Don Husereau
• Tessa Tan-Torres Edejer

Seminal works

• drummond-2005
• husereau-2013-cheers

Frequently asked questions

What is the difference between micro-costing and gross costing?

Micro-costing measures and values each individual resource component used by a patient or service in detail, giving precise but data-intensive estimates; gross (top-down) costing apportions an aggregate budget or average cost to units of activity, which is quicker but less precise.

Why does the analytic perspective matter for costing?

The perspective decides which costs are counted—only those to the health system, or also costs to patients, families, and other sectors—so two analyses of the same intervention can reach different conclusions simply because they include different cost categories.