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What are the advantages of conducting a cost-benefit analysis on a new health care service an insurance company is considering, such as screening for prostate cancer as a covered benefit?
Like any other businesses, an insurance company is also interested in making profits. As such, it is important for an insurance company to conduct cost-benefit analysis when making any decisions to as to maximize the benefits of the company and refrain from making decisions that would bring about more costs than benefits.
In this case, the company is considering conducting a cost-benefit analysis on a new healthcare service such as screening for prostate cancer as a covered benefit. Through conducting the analysis, the company can assess if the introduction of the new health care service would bring about more costs or benefits, before making the decision to or not to provide the service. For example, through conducting the cost-benefit analysis, the company can find out the cost of providing the new service. In addition, the company can also find out the potential savings they can enjoy should clients be able to detect prostate cancer early and thus the company need not give out too much compensation. By comparing the costs and benefits, the company can then decide if the introduction of the service should be carried out (“Cost-Benefit Analysis”).
In addition, through carrying out a cost-benefit analysis, the insurance will also be more aware of the risks involved in the introduction of a new health care service. As such, strategies and measures can then be put in place to mitigate those risks. This will further help to smooth out the operation of the insurance company. Therefore, while the conducting of a cost-benefit analysis may take time and effort, it offers numerous advantages for the insurance company.
“Cost-Benefit Analysis”. (n.d.). Retrieved from
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