Dynamic cost benefit analysis for mental health reform

This paper aims to describe the application of system dynamics to enhance traditional cost benefit analysis (CBA) in planning a significant expansion of therapy capacity for mental health treatment in the UK. The aim of the initiative is to benefit the health of individuals, reduce costs to society and the exchequer and increase employment.

The paper describes a conventional CBA and comments on its merits and limitations. The development and use of a system dynamics model of the situation is then described, together with how this complements and supports the conventional analysis and its outcome.

By focussing analysis on the dynamics of people flows over time, simulation is shown to assist understanding of the issue and its potential benefits. The numbers of patients expected to benefit is shown to depend on the treatment capacity, on the sources of people presenting, the number and type of treatment channels and their parameters, the success of treatment, the provision for patients moving between treatment channels, the dynamics of the labour market and employment opportunities.

The paper is totally original and has provided decision support to a large investment on which implementation has begun. The overall methodological conclusion is that dynamic factors are often left out of CBA because they cause too much complexity for decision makers, whereas system dynamics allows these factors to be included without masking the clarity of the case. The paper suggests that CBA and system dynamics are very complementary.