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What Is the Difference Between Cost Containment and Cost-Effectiveness? Why

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Essay

What is the difference between cost containment and cost-effectiveness? Why is cost-effectiveness important,and how do health psychologists evaluate cost-effectiveness?


Definitions:

Weighted Average

A calculation that takes into account both the quantity and the significance of each item in a set to find an average that is influenced by the size or weight of each component.

Preferred Shares

A class of ownership in a corporation that has a higher claim on its assets and earnings than common shares, often with fixed dividends and no voting rights.

Basic Earnings

Basic earnings typically refers to the net income of a company, calculated before any effects of preferred dividends, divided by the weighted average number of common shares outstanding.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue, indicating the company's financial performance over a period.

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