Economic analysis in medical education: Definition of essential terms

Abstract

Medical education is expensive. There is a growing interest in the subject of cost and value in medical education. However, in the medical education literature, terms are sometimes used loosely - and so there is a need for basic grounding in the meaning of commonly used and important terms in medical education economics. The purpose of this article is to define some terms that are frequently used in economic analysis in medical education. In this article, terms are described, and the descriptions are followed by a worked example of how the terms might be used in practice. The following terms are described: opportunity cost, total cost of ownership, sensitivity analysis, viewpoint, activity-based costing, efficiency, technical efficiency, allocative efficiency, price and transaction costs.

When Are Trainees Ready to Perform Transvaginal Ultrasound? An Observational Study

“…The equipment cost per participant was depreciated over a five-year period, assuming a constant number of trainees per year [17]. Losses in clinical production due to the use of ultrasound machines for assessment purposes were considered as 'opportunity costs' (the cost associated with the loss of one alternative when another alternative is chosen) [18].…”

New roles for cost as an outcome: opportunities and challenges

“…13 For example, prospect theory can be used to understand how individuals make decisions, 14 and the concept of opportunity cost allows us to examine the lost benefits of not investing in one of two alternatives. 15 Cost could also be used as the outcome of studies testing traditional theories to gain new perspectives on existing practices. For example, instead of only relying on knowledge, skills and attitudes as outcomes, we may explore time expenditure associated with learning (learner costs), resources used for development of instructional material (development costs) and degree of instructor involvement (instructional costs), among other costs.…”

“…Using theory in economic analyses is an opportunity to create frameworks for calculation, quantification and generalisation of these assumptions . For example, prospect theory can be used to understand how individuals make decisions, and the concept of opportunity cost allows us to examine the lost benefits of not investing in one of two alternatives . Cost could also be used as the outcome of studies testing traditional theories to gain new perspectives on existing practices.…”

The Prato Statement on cost and value in professional and interprofessional education

“…Many researchers have recognised the need for including measurements of cost and value alongside their educational research; however, this has often been done haphazardly and at times incorrectly (Walsh, 2014a(Walsh, , 2014bWalsh, Levin, Jaye, & Gazzard, 2013). This is perhaps not surprising given the relatively new attention given to this field and the subsequent lack of guiding documents and resources available for it.…”