Introducing cost-effectiveness and cost-benefit analysis
Cost-effectiveness analysis (CEA) has long been a cornerstone of economic evaluation in global health. Traditionally, CEAs focus on service delivery and ask a straightforward question: How much does it cost to provide a specific health service to one client? Metrics such as “cost per client served” or “cost per health outcome achieved” enable policymakers and funders to compare interventions and allocate limited resources efficiently.
Similarly, Cost-benefit Analysis (CBA) provides a complementary lens by monetising both costs and outcomes, helping decision-makers assess whether the economic and social returns of an intervention outweigh its investment
But what happens when an intervention or project doesn’t directly deliver services, and therefore doesn’t fit neatly into these established frameworks?
The Challenge Initiative: a different kind of value
The Challenge Initiative (TCI) supports 214 local governments (LGs) across 13 countries to scale up high-impact family planning interventions. Its model is not about delivering services directly; instead, it aims to strengthen government stewardship, build self-reliance, and create an enabling environment for sustained increases in contraceptive use among the urban poor.
TCI’s influence is systemic: improving governance, enhancing local capacity, and fostering conditions to make health systems more effective and resilient over time. This raises an important methodological question: How do you measure cost-effectiveness and benefits when the value lies in systems-wide change rather than direct service delivery?
How we measured CEA and CBA for TCI
Itad conducted both a CEA and CBA for a sample of local governments supported by the TCI programme.
Cost‑effectiveness Analysis: We linked TCI’s expenditure to estimates of additional contraceptive users attributable to the initiative, drawing on data from a parallel impact evaluation and TCI financial records.
Cost‑benefit Analysis: The CBA was limited to estimating downstream government savings resulting from births averted due to increased contraceptive uptake and compared these to TCI expenditures. These savings included costs related to:
- primary education;
- early childhood vaccinations;
- safe motherhood;
- use of bed nets to prevent malaria.
What we found
Cost effectiveness
The cost per additional contraceptive user varied across local governments but averaged:
- $28 during Phase 1 (30 cities)
- $31 during the NextGen phase (10 cities)
Related CEAs for non‑service‑delivery programmes are rare, but a recent enabling‑environment project in Kenya reported a cost of $25 per user, suggesting TCI is within a plausible range. By contrast, CEAs for direct service delivery are substantially lower (e.g., Guttmacher estimates $7.75 per user in Africa and $3.37 in Asia), reflecting their different nature and objectives.
Cost‑benefit analysis
The CBA showed positive returns on investment. Benefit–cost ratios among sampled local governments ranged from:
- 0.33 to 3.48 in Phase 1
- 0.44 to 2.06 in NextGen
Applying these results across the sample, total TCI expenditures of $41.45 million resulted in estimated government savings of $50.20 million, meaning the programme effectively paid for itself in those localities.
Reflections on applying economic evaluation to system‑strengthening interventions
Moving beyond “Cost per Client”
Most CEAs in health measure outputs with a direct causal pathway: vaccination administered, antenatal care visits completed, clients receiving contraceptive commodities.
TCI’s systems-level approach complicates this, as “cost per new client” captures only a fraction of its value, omitting contributions such as governance improvements, better data use, stronger provider skills, and long‑term sustainability.
An analogy is transport: a service-delivery approach measures the cost per mile of driving a car. An enabling-environment model assesses investments in road infrastructure, traffic enforcement and safety, factors that reduce accidents and travel time but aren’t included in the costs of owning and driving a car such as fuel, maintenance and insurance costs.
Capturing the full value of systems approaches
It is important to remember that the outputs and outcomes of TCI-sponsored interventions go well beyond increased client uptake. By strengthening local ownership, improving data use, enhancing provider skills, and fostering supportive policy environments, TCI aims to create durable change. TCI falls within the category of other interventions that strive to improve what the World Health Organisation (WHO) calls the six “building blocks” of a health system. TCI’s impact extends across the WHO health system building blocks, only one of which is service delivery. Many of its benefits (stronger ownership, improved stewardship, more responsive service) accrue over time and are not easily monetised or captured through standard metrics. In this sense, TCI’s impact is both broader and longer-term than what traditional CEAs typically capture.
Evolving measurement frameworks
As more programmes adopt systems‑based designs, our economic evaluation tools must evolve too. The central question becomes not just “What is the cost per client today?” but “What is the value of creating a stronger, more sustainable system that will continue to support clients long into the future?”
As global health increasingly prioritises sustainability and local ownership, our economic evaluation approaches must similarly broaden so that we fully account for the deeper, more enduring value created by strengthening health systems.
