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Financial and Economic Implications Analysis

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Population Health, Part II-Financial and Economic Implications Analysis of Diabetes

            This is the part 11 analysis of the project Population Health, Part one non-infectious disease presentation, in which I conducted an epidemiology of diabetes mellitus. In Population Health, Part 1non-infectious diseases, I did an analysis of Diabetes Mellitus particularly describing the condition, potential treatment implication and Patton-Fuller Community Hospital readiness and resources available to deal with this lifestyle disease. This project Population Health Part 11 Financial and Economic Implications Analysis will look at two financial and economic implications of diabetes mellitus

Economic Analysis of Diabetes Mellitus

In Part one analysis, Diabetes mellitus is one of the major chronic diseases in the United States, and one of the leading causes of deaths. The two financial and economic implication analysis of diabetes I will look at are

Medical Care Cost (Direct Cost)

Substantial cost to the victims and society are incurred in treatment of diabetes mellitus. Economic analysis conducted in the United States in 1980s indicate that the economic cost associated with diabetes mellitus range between $14 billion and $20 billion in

1980s-eras according to the 1980s-era dollars, this includes an estimate of $7.4-$11.6 Billion used for direct medical care expenditures. A recent study in 1992 indicated an estimate of $91.8 billion as the cost incurred by diabetes with $45.2 billion going for direct costs. Another different study found the direct costs of medical care of people with diabetes in the United States to be $85.7 billion .

Lost Economic Productivity (Indirect Cost)

Society suffers substantial indirect cost due to loss of economic productivity as a result of diabetes-related morbidity and premature mortality (Rice, 1966). The study conducted in USA in the 1980s eras found that apart from the medical care of diabetes expenditure the country incurred and an additional $6.3-$10.8 billion as a result of loss in productivity. The more recent study in 1992 found the indirect cost incurred in terms of loss in productivity in the USA was $46.4 billion.

Analysis strength and weakness


During 1980s study on the economic cost of diabetes immense caution was observed regarding the comparison between the acquired estimates from the multiple studies. Though the study estimate costs were arrived at comparative consistent estimate, different baseline years and methodologies were used to conduct analysis of diabetes. Furthermore, previous study on the cost of this illness included directly attributable or related complication of diabetes such as neuropathy and retinopathy but omitted the cost incurred with systemic comorbidities of Diabetes such as stroke, cardiovascular disease, and infection. One of this 1880 study gave a relevant example of how cost incurred as a result of the risk of comorbidities in patients with NIDDM should be included in the estimate cost of Diabetes. This analysis calculated first the etiologic fraction of each

comorbid condition for example cardiovascular disease, and stroke” attributable to diabetes (Platt, 1980). The study then multiplied these etiological fractions by the estimate cost of each diabetes associated condition.

The exclusion or inclusion of comorbid clinical conditions in the study analysis can result in significant differences in the estimate of the economic impact of diabetes. The significance of the difference depends on the prevalence of the underlying comorbid clinical. Generally, estimating the cost without including this diabetes -related condition could understate the economic implication of diabetes.


The studies faced several methodological problems in the cost estimation of economic impact of diabetes. The study experienced critical issues in the evaluation of the economic analysis. First there was the issue, of consistency and the appropriateness of the methods used to attribute the cost to the underlying condition related to diabetes. The appropriate method to value both human life and health was another issue encountered by the study and lastly the appropriate method that could be used to estimate the volume of medical services offered to patients.

Because, the study involved multiple comparisons of results from multiple results, this could have reflected on the final results if the different costs had huge differences between them. Lastly, weakness can be related to the inclusion of diabetes related conditions stroke and other chronic disease. In case the attribution of this comorbidities conditions and other chronic diseases, which are often targeted in economic analysis was done broadly in the studies, it may have led to double counting.


Personally I would recommend other analysis on the economic impact of diabetes by taking the estimate cost on the cost the victims incur due to the crucial lifestyles the doctors advise them to adhere to keenly. The patient is required to eat more fruits and vegetable and many other expensive cost. This high lifestyle cost should be included in the economic analysis. I would also recommend the labor cost incurred by people who take care of the diabetes patients. They spend a considerable amount of time taking care of diabetes patients, which they could have used for more economic development either in work or in businesses. I would greatly recommend the cost incurred by the government in terms of awareness campaigns on diabetes and other related condition to be included in the economic analysis.

Potential Effects of Economic Analysis: Patton-Fuller Community Hospital

These economic analysis, described above show that diabetes disease has a huge economic impact on the society in general. United States in 1880s and 1990s incurred billion of direct and indirect cost as a result of diabetes. From the epidemiology studies I carried in Part 1, the cases of diabetes have been on the rise as the years go by and its estimated the will rise to even more higher levels in years to come.  These results have a huge impact on the strategic planning of Patton-Fuller Community Hospital. In the epidemiology we conclude that the best strategic plan the hospital should undertake was to establish diabetes centers, which will deal with diabetes- related cases. The economic analysis of the cost of diabetes, reflect that the hospital will require to gather more funds in readiness to deal with diabetes patients and for the formation of this crucial diabetes centre. The hospital should look for donor and alternative methods of funding that will reduce the cost incurred by both the hospital and the victims of diabetes.

Considering that this results reflect that huge money is spent in medical care cost, this will affect the quality of care of diabetes patients in Patton-Fuller Community Hospital. The hospital will incur more money to meet the health care needs related to non-infectious diseases (Diabetes Mellitus) and the required resources to address those needs. To avoid spending more in treatment of diabetes the Hospital should develop good strategies aimed toward making the society aware of diabetes mellitus and the prevalence factor to the disease. The results will affect the hospital in terms of proper preparation, education training, maintenance, prevention, and treatment of Diabetes Mellitus, significantly in terms of funding and medical care. The above results depict that dealing with diabetes disease is a highly expensive task that require adequate funding. The result aid the hospital to estimate the funds it will be require to establish the diabetes centre, for paradigm modification of the resources available in the hospital for treatment of this condition.

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