Variation in Average Costs among Federally Sponsored State-Organized Cancer Detection Programs: Economies of Scale?

Abstract

The potential existence of economies of scale calls into question the assumption of a constant average cost frequently made in economic analyses of proposed public health programs. It also implies that a) differences in output level should be taken into account when comparing operating efficiency across program sites; b) conclusions from societal cost-effectiveness analyses may depend on the level of output at which the programs are evaluated; c) cost projections could be inaccurate if they do not take into account the decrease in average cost that occurs as output expands; and d) gains might be possible if similar programs with limited output potential are integrated, perhaps through cost sharing.