Micro-Cost Methods: Direct Measurement
A challenging element of cost-effectiveness analysis is the proper measurement of costs. While frequently costs incurred by patients in VA-sponsored studies can be determined through HERC average cost estimates, DSS, non-VA data systems and published clinical studies, in some cases these will not provide enough information. Summary administrative data cannot identify an individual person or intervention, and there may be no published studies of new interventions or those unique to the VA. When existing sources are insufficient, researchers can gather data through surveys and personal observation. This is called direct measurement. Common methods of direct measurement include the following:
- A rater observes staff members or patients to determine how much time is spent on the intervention
- A staff member fills out a log of activities relating to the intervention
- A patient completes a survey about time spent for direct care, transportation, and unpaid care at home
- A supervisor fills out a survey, estimating the number of hours spent onthe intervention by each type of staff member (nurse, physician, social worker,etc.)
Researchers may use direct measurement alone or in combination with other methods. In some cases direct measurement will be the only available source of information on an intervention, as when the intervention is new or unique to the VA. However, researchers may choose to use direct measurement for elements most important to the study outcome, balancing the high cost against the high level of precision, while using a less precise method like average costing for elements that are not central to the intervention.
The Financial Management System (FMS) and the Decision Support System can be used to find the cost of employing different types of VA staff (see FAQ C2). The cost of supplies, equipment, and other expenses must also be determined. Program volume is determined from administrative records, and average cost estimated. When units of service are not homogenous, unit costs may be estimated by an accounting approach, by applying estimates of the relative cost of each service, or via an econometric approach.
For more information on direct measurement, see the Smith and Barnett article in the downloads section.
