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Step 1 of 12

1. Define existing cost model & counterfactual

To develop a base case that demonstrates the additional value and impact delivered by the new intervention.

Main Activities

Establish a robust understanding of the existing services or the absence of provision (or the nearest alternative option).

Key Considerations

  • Assess historic outcomes and the potential value of deadweight (outcomes that would happen anyway without the new intervention).

  • Forecast the cost of the problem taking into account direct and indirect costs for the contractual period (and longer term costs if relevant to the business case) to calculate the quality of savings.

  • Measure and forecast the impact delivered by the existing or alternative service comparator (if no existing service).

  • Consider sensitivity of external events e.g. population growth, recession.

  • Consider how outcomes might alter according to variables in the service user population.

Outcomes

  1. Robust counterfactual

  2. Understanding of whole cost of the problem considering direct and indirect costs and costs to other commissioners