Intangible costs

The health economic evaluation model and the COl model are closely related. The consumption of agents of production causes direct costs. Indirect costs are a monetary expression for the loss of economic wealth, that is, the impact of a health intervention is the reduction of indirect costs. The increase of health is reflected by the reduction of intangible costs. 

Type IV Costs Internal intangible costs Company or brand image Consumer loyalty Worker morale Worker relations Community relations... 

TypeV Costs External intangible costs Increase of housing costs Degradation of resources... 

Direct costs include both medical and nonmedical expenditures for the detection, treatment, and prevention of disease. Direct medical costs reflect resources consumed in the "production" of health care, such as pharmaceutical products and services, physician visits, and hospital care. Direct nonmedical costs reflect expenditures for products and services that are not directly related to disease treatment but are still related to patient care. Examples of direct nonmedical costs include transportation to a pharmacy or physician s office and housekeeping during the illness period. Indirect costs account for changes in productivity of an individual because of illness. The monetary value of lost or altered productivity is typically used as a measure of indirect costs. Intangible costs and consequences are nonmonetary in nature and reflect the impact of disease and its treatment on the individual s social and emotional functioning and quality of life. Table 12.2 provides examples of these types of costs and consequences. 

Along the Y axis are four points of view, or perspectives, that one may take in carrying out an analysis. One may take the point of view of society in assessing the costs and benefits of a new medical therapy. Alternatively, one may take the point of view of the patient, the payer, or the provider. Along the third axis, the Z axis, are the types of costs and benefits that can be included in economic analysis of medical care. These costs and benefits, defined below, include direct costs and benefits, productivity costs and benefits, and intangible costs and benefits. 

Costs are often separated into direct and indirect costs. Direct costs typically consist of hospitalization costs, physician fees, laboratory fees, and costs of medical treatments/medications. Direct nonmedical costs can include costs of using transportation to and from the medical facility. Thus far, only direct costs have been estimated. Indirect/opportunity costs incurred with the death of a patient or while the individual is undergoing treatment are often expressed as days lost from work and reduced productivity. The so-called intangible costs are the monetary values of the results of pain and suffering. 

Many have proposed that evaluation of drug therapy and pharmacists value-added services should include assessments of economic, clinical, and humanistic outcomes. The economic, clinical, and humanistic outcomes (ECHO) model assumes that the outcomes of medical care can be classified along the three dimensions of economic, clinical, and humanistic outcomes (Kozma, Reeder, and Schultz, 1993). Clinical outcomes are defined as medical events that occur as a result of disease or treatment. Economic outcomes are defined as the direct, indirect, and intangible costs compared with the consequences of medical treatment alternatives. Humanistic outcomes are defined as the consequences of disease or treatment on patient functional status or quality of life. All three of these outcomes need to be balanced simultaneously to assess value. 

Intangible costs Pain Suffering Inconvenience Grief... 

Intangible costs are those of other nonfinancial outcomes of disease and medical care. Examples include pain, suffering, inconvenience, and grief, and these are difficult to measure quantitatively and impossible to measure in terms of economic or financial costs. In pharmacoeconomic analyses, frequently intangible costs are identified but not quantified formally. 

All the important and relevant costs and consequences for each program or treatment alternative should be identified. The costs and consequences identified must be relevant to the study perspective(s) and measured in suitable terms using the appropriate physical units. Costs should include direct, indirect, and intangible costs. Consequences should include the positive and negative clinical and humanistic outcomes associated with the program or treatment alternative. All these costs and consequences must be valued credibly, with the data sources clearly identified. 

A more comprehensive conceptual framework, the ECHO model, places outcomes into three categories economic, clinical, and humanistic outcomes. The model covers the five D s within the clinical and humanistic outcomes and provides an added economic outcomes dimension. As described by Kozma and associates, clinical outcomes are the medical events that occur as a result of the condition or its treatment. Economic outcomes are the direct, indirect, and intangible costs compared with the consequences of a medical intervention. Along with patient satisfaction, an essential humanistic or patient-reported outcome is self-assessed function and wellbeing, or health-related quality of life (HRQOL). This chapter focuses on HRQOL as an outcome of pharmacotherapeutic interventions. 

Cost Includes tangible items such as money and equipment as well as the operational costs associated with the implementation of risk reduction options. There are also intangible costs such as loss of productivity, moral considerations, political embarrassment, and a variety of others. Costs may be borne by the... 

Costs which may be measured should cover the direct costs incurred by the health care provider and (or) the patient (i.e. costs of hospitalisation, physician services, pharmaceuticals, etc.). Indirect costs to society of the productivity lost (e.g., due to the patient seeking care or costs resulting from disability or premature death). Data collected may also include intangible costs borne by patients in terms of pain and suffering their inclusion is subject to debate [8, p. 189]. There is an ongoing debate on how to measure direct costs (i.e. marginal, variable, fixed, average, capital and shared costs), whether to included indirect... 

Full Cost Accounting (FCA) Identifies and quantifies the full range of costs throughout the life cycle of the product, product line, process, service, or activity (Spitzer et al. 1993) Identifies and quantifies (1) direct, (2) indirect, and (3) intangible costs... 

The internal intangible costs (e.g., customer loyalty and corporate image)... 

Natural interventions test the robustness and reliability of infrastructure design. The cost of earthquakes averages 4.4 billion per year (FEMA, 1999). Another intervention, space weather, was the culprit in 1998. When the Galaxy 4 satellite s attitude control system failed, radio, television, pager, bank machine, and other satellite-linked services across North America were disrupted. As an example of the cost, two pager companies that did not have backup systems in place lost 5.8 million. Indirect and intangible costs included lost credit card sales, missed market trades, inability to contact doctors and emergency medical services, and many others. 

Within intangible costs (Amat, 1995-1996), we could define the following type of costs ... 

The value of P-l-A quality costs in Spain (Amat, 1995) is on average 2.1% and 2.4% for the failure cost. Although these values are not taking into account the intangible costs, that they can increment the mean value to the 30% on the whole (Juran, 1990) (Dale Plunkett, 1991) depending on company and sector. To summarize, (Crosby, 1979)themeasurementofquality is the price of nonperformance therefore maintenance contributes with its activities directly to prevention plus appraisal costs and indirectly to failure costs. 

The costs of prevention and appraisal are easily quantifiable and, predictable according to historic and tendencies. Inside costs of failure there are some similarly quantifiable, but there are others intangible and difficultly anticipated, which reflect possible affections or impacts. We will consider that tangible costs are produced mainly in P+A costs, and intangible costs are circumscribed to failure costs such as costs ofpub-licity to restore and increment competitive position, internal motivation, image and market share due to lack of quality. 

For efficiently maintenance in term of costs, possible risks (1S027001, 2007) must be analyzed to value the magnitude of affection, consequences and probability determining the appropriate corrective actions and anticipating the necessary preventive actions. In this analysis, we will focus on intangible costs of chent impact of failures to represent company consequences as loss of image, production or persoimel motivation. We have to quantify the important risks to determine consequences. For this, distinct methods... 

In summary, we will become centered on to determine the intangible costs in DNSP companies. Instead of to realize a general smdy for the company entirely. 

We will employ the initial hypothesis as a base of this study, applying methods to relate the failures in the service to their intangible consequences in terms of costs. The intangible costs about loss of reputation or market are studied in this paragraph. 

As a result, through these equations we have a way to calculate the intangible costs as consequence of a customer complain due to an incident or fault related to maintenance of the service. But in the sector of DNSPs where contracts and standards spin aroimd of service level agreements (SLAs), it would have to align the estimated costs with these service features. This is because the quality measured has to be the perceived and demanded quality by the customer and not fix>m internal performance the costs have to reflect the price of nonperformance (Crosby, 1979). 

Thus, along the lines of the third hypothesis, the intangible costs could be measured according to the fulfilment of the service level agreements as delivery date, response time, recovery time or re-establishment time, precision in the level of service, etc. 

The quality is accepted by the customer when it is maintained inside a level of tolerance, between an upper and a lower value of the service (Fig. 3). In DNSP, the consiuner tolerance is defined by standards in the sector. So the cost of any deviation, in terms of quality, increases in a quadratic form from the target value as centre of the curve, see Fig. 3. In our case, focus only on intangible costs, the re-establishment time has been considered to reflect the maintenance impact in quality service. The Taguchi s Function Loss (TFL) is ... 

But as we have aheady introduced, it is more useful to calculate the intangible costs as an indicator over the average and variance of a set of failures. To do this, the right equation is the number (5) instead of number (4), and as example we will employ the following set of reestablishment time from different equipments of the network, see Table 2. 

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