Cost Effectiveness Analysis (CEA)
WHAT IS CEA? AND WHY DO WE DO IT?
Recent years have seen exponential increases in the operational needs, as well as the costs, of humanitarian action. Humanitarian actors are being called upon more and more to ensure efficient use of these scarce resources.
Cost-effectiveness analysis (CEA) is a method that brings together information on an intervention’s cost with an estimate of the outcomes or impact that it achieves. This method is useful to explore resource use in more detail, and to understand the value for money achieved by interventions in different settings. CEAs can provide information to guide both program management and strategic decision-making on resource allocation and priority setting.
As an operational organization, ACF conducts CEAs to improve our accountability and transparency while better understanding the resource use of our programs relative to the outcomes achieved. By conducting these analyses, we are building the evidence base on the costs of humanitarian interventions, with a focus on strategies that innovate in some way compared to standard practice. Findings from these studies will improve our understanding of intervention efficiency, with an eye towards finding more effective ways to do our work.
WHAT DO WE EXPECT FROM A CEA?
- Optimal use of scarce resources
- Understand program performance
- Improve accountability
- Use for advocacy and sustainability
WHAT DO WE WANT TO GET FROM CEAs?
- Build capacity
- Improve program quality
- Understand the cost for beneficiaries
- Understand the factors that affect cost-effectiveness
- Identify best practices
Define better and more cost-effective strategies to prevent and treat acute malnutrition. CEA is an essential component of our work towards ZERO HUNGER.
KEY ELEMENTS OF OUR METHODOLOGY
- Including community and partner inputs: Where possible, ACF conducts CEA from a societal perspective, including the costs borne by beneficiary households and communities to participate in an intervention (e.g. time spent traveling or waiting in line, fees for transportation, participation of local leaders). In this way, we can better understand which kinds of strategies are placing a greater burden on households, relative to the benefits they receive by participating. Institutional costs, from ACF and other implementing partners, are also collected to get a complete estimate of program resource use.
- Activity-based costing: To link costs more directly to program implementation, ACF conducts activity-based cost analyses. The aim of these analyses is to estimate costs per program activity rather than only per program input (e.g. personnel, transport, etc.).
- Mixed methods: Quantitative data on program costs is coupled with qualitative data, from discussions with implementing staff and beneficiaries, on implementation of and participation in the program. Quantitative and qualitative results complement each other, to provide a bigger picture on program process, efficiency, and value to communities.
- Outcome data: This data comes from our partners, usually a research or university partner, who conduct the operational research studies.
- Cost-effectiveness ratio: An important output of a CEA is the final ratio of costs to outcomes, expressed as a cost per outcome, e.g. cost per case of malnutrition averted compared to standard practice. This measure brings together all of the various data sources involved in the analysis.
- Sensitivity analysis: Final results are assessed to determine whether any particular costs or outcome variables, or any assumptions made, result in appreciable changes in the study outcomes, or change the conclusions of the analysis.
INTERPRETATION OF RESULTS:
While few cost-effectiveness cut-offs exist, interpretation of CEA results is done in the following ways:
- Comparing results with the comparator in your study
- Conducting a sensitivity analysis
- Comparing results with other similar studies measuring the same outcome
- Discussing with other stakeholders whether the resource use is reasonable for the outcome addressed
- Justification for decision-making based on CEA should always include ethical considerations alongside economic ones
PROJECTS AND PUBLICATIONS
ACF has conducted several CEAs, primarily looking at nutrition and food security outcomes. Below is a list of the studies we are currently engaged in, as well as publications from our completed analyses.
- C PROJECT
- R 2HC
- Puett C, Salpéteur C, Lacroix E, Houngbé F, Aït-Aïssa M and Israël AD. 2013. Protecting child health and nutrition status with ready-to-use food in addition to food assistance in urban Chad: a cost-effectiveness analysis. Cost Effectiveness and Resource Allocation, 11(1):27. (link)
- Puett C, Salpéteur C, Lacroix E, Zimunya SD, Israël AD and Aït-Aïssa M. 2014. Cost-effectiveness of community nutrition gardens for people living with HIV in Zimbabwe. Cost Effectiveness and Resource Allocation, 12(1):11. (link)
- Puett C. 2016. Cost-Effectiveness Analysis for Nutrition and Food Security: Pros, cons, and lessons learned within Action Against Hunger. (link)
Action Against Hunger is leading a global movement to end hunger in our lifetimes. It innovates solutions, advocate for change, and reach 25 million people every year with proven hunger prevention and treatment programs. As a nonprofit that works across 50 countries, its 8,300 dedicated staff members partner with communities to address the root causes of hunger, including climate change, conflict, inequity, and emergencies. It strives to create a world free from hunger, for everyone, for good.