Comprehensive Investment Appraisal (CIA) model changes
The CIA Model is for use by the NHS to support economic appraisals in business cases. It replaces the Generic Economic Model (GEM). We use the CIA Model and guidance should be used for economic modelling for all investment business cases.
- Includes quantitative and unmonetisable benefit and risk analysis in addition to the cost analysis
- Simplifies the risk quantification calculations register (previously known as the PFI risk register)
- Integrates optimism bias calculations (for capital costs for build schemes) into the model
- Instead of Net Present Value (NPV) it uses Net Present Social Value (NPSV) as a means of expressing within a single criterion the total cost, benefit and risk implications of developments when considered over a given appraisal period and discounted
- It splits out and specifies this discount rates to be used between Quality-Adjusted Life Year (QALY) discount rates which should be used for monetised QALY gains or losses. All other monetised values should use the non-QALY discount rates
The CIAM has four types of benefit used within the model:
- Cash Releasing Benefits (CRB)
- Non-Cash Releasing Benefits (NCRB)
- Societal Benefits (SB) being the key addition
- Unmonetisable Benefits (UB). CIAM requires the monetisation of all of the benefits. Under the GEM we would simply state for example "Option B is twice as good for staff retention as Option C" and give Option B a score of 8 and Option C a score of 4. Under CIAM we would have to monetise the saving which results from the better staff retention by calculating the total (in £) of:
- Salary saved by employing fewer HR officers (cash releasing benefit)
- Advertising costs (cash releasing benefit)
- Managers' time taken up to run interviews etc (non-cash releasing benefit)
- Non-productivity of new staff in the initial working period (non-cash releasing benefit) greater continuity of staff-patient relationships (societal benefit)
CIA Model and Generic Economic Model (GEM) consistencies
- All costs in economic appraisals are expressed in “real” terms, so future costs are converted into current values and reflect the prevailing general price level and remove the effect of general inflation is removed and the real changes in values are isolated from inflationary impacts.
- Costs and benefits are estimated in ‘real’ base year prices (i.e. the first year of the proposal)
- Sunk costs (already been incurred and cannot be recovered even if the project ceases; demolition costs) are excluded from economic appraisals.
- Opportunity costs, however, are included. They represent the value that might have been obtained if the resources were used for some other purpose (their alternative, next best use). In NHS appraisals, opportunity costs are most commonly relevant to the existing value of property or land (e.g. the opportunity cost of building a new A&E Department would be the next best alternative use, which may be gaining income from the sale of the land that the department is proposed to be built on.)
- Both modelling approaches for economic appraisal are seeking to assess the relative value for money of options (comparative economic, effectiveness and efficiency as compared to the base ‘do nothing/ do minimum’ )