Economic Dynamics of Health Care Delivery Models

Section A

The company has three projects: structural repair, purchase of office equipment, or employment of one more staff. Based on the cost-benefit analysis, the structural repair should be implemented.

Step 1

Direct costs for repair (purchase of raw sand, cement, labor, paint, iron sheets, doors, windows) = $ 2M

Indirect costs: staff sickness due to poor health condition as a result of working from the unsafe building (Cost of missed work) =$ 0.8M per employee*5 employees=4M

Step 2

The expected benefit in case the employees do not fall sick=0.8M*5 employees=4M

Step 3

Costs to be incurred in structural repair =2M

Benefits in case employees do not fall sick=4M

Total savings made by carrying out structural repair=4M-2M=2M

Step 4

The structural repair program is of benefit since it has a favorable variance in terms of investment returns to the organization as well as on the employees’ health.

Section B

The company should spend the $8M to disseminate instructional materials and condoms to individuals who are homeless and also engage in HIV testing for individuals at risk of infection.

These are prevention programs which according to Li, Blount, Reid & Vaughan (2014, p.15) are more cost effective since they lower incidence rates of disease infection hence reduce the amount spent on disease treatment. In so doing, it will save a significant amount of money since the government spends approximately $ 15M in the purchase of ARV drugs and $5M in the treatment of STIs (Zulman, Yoon, Cohen, Holmes, Asch, 2015, P.89). The two programs will thus save $12M yearly.

Section C

Cultural norms like wife inheritance increase the risk of HIV infection especially when one of the partners involved in infected. Also, group male circumcision increases the probability of more infections especially when the parties are sharing circumcision equipment (Mohamed & Ziraba, 2015, P.285). Addressing these challenges calls for outreach programs to empower people on health risks involved in upholding cultural norms.




Li, X., Blount, P. L., Reid, B. J., & Vaughan, T. L. (2014). Quantification of population benefit in the evaluation of biomarkers: Practical implications for disease detection and prevention.       BMC Medical Informatics and Decision Making, 14(1), 15. Doi: 10.1186/1472-6947-115

Mohamed, S. F., & Ziraba, A. K. (2015). Influence of socio-cultural practices on HIV infection in two Nairobi slums; a cross-sectional study. International Journal of Epidemiology,      44(suppl_1), i285-i285. doi:10.1093/ije/dyv096.559

Zulman, D. M., Yoon, J., Cohen, D. M., Holmes, T. H., Asch, S. M. (2015). Multimorbidity and healthcare utilization among high-cost patients in the US veterans’ affairs health care system. BMJ Open, 5(4), e007771-e007771. Doi: 10.1136/bmjopen-2015-007771