An Economic Analysis and Approach for Health Care Preparedness in a Substate Region

Abstract

AbstractObjectiveTo demonstrate the application of economics to health care preparedness by estimating the financial return on investment in a substate regional emergency response team and to develop a financial model aimed at sustaining community-level disaster readiness.MethodsEconomic evaluation methods were applied to the experience of a regional Pennsylvania response capability. A cost-benefit analysis was performed by using information on funding of the response team and 17 real-world events the team responded to between 2008 and 2013. By use of the results of the cost-benefit analysis as well as information on the response team’s catchment area, a risk-based insurance-like membership model was built.ResultsThe cost-benefit analysis showed a positive return after 6 years of investment in the regional emergency response team. Financial modeling allowed for the calculation of premiums for 2 types of providers within the emergency response team’s catchment area: hospitals and long-term care facilities.ConclusionThe analysis indicated that preparedness activities have a positive return on their investment in this substate region. By applying economic principles, communities can estimate their return on investment to make better business decisions in an effort to increase the sustainability of emergency preparedness programs at the regional level. (Disaster Med Public Health Preparedness. 2015;9:344–348)