# Why are cost per output and cost per outcome calculations valuable to a human service agency?

## Cost per output and cost per outcome calculations are valuable to a human service agency because they provide important information about the efficiency and effectiveness of the agency's programs and services. These calculations help the agency understand how efficiently it is using its resources to provide services and the results it is achieving with those resources. Here's how to calculate these measures:

1. Cost per Output: Cost per output is calculated by dividing the total cost of providing a particular service or program by the number of outputs or units of service delivered. Outputs are measurable units of service, such as the number of counseling sessions provided or the number of meals served. The formula for cost per output is:

Cost per Output = Total Cost / Number of Outputs

For example, if a human service agency spends \$100,000 on a particular program and delivers 1,000 counseling sessions, the cost per output would be \$100.

Cost per output helps the agency understand how much it costs to deliver each unit of service. It allows them to compare costs across different programs or services and identify areas where cost efficiencies can be achieved.

2. Cost per Outcome: Cost per outcome goes beyond measuring outputs and focuses on the outcomes or results achieved by the agency's programs or services. Outcomes are the desired changes or improvements in the lives of the individuals or communities served. To calculate cost per outcome, follow these steps:

a. Identify the desired outcomes: Define the specific outcomes that the program or service aims to achieve, such as improved health, increased employment, reduced homelessness, etc.

b. Measure the outcomes: Determine a consistent and meaningful way to measure the outcomes. This could involve surveys, assessments, or tracking data.

c. Assign costs to outcomes: Allocate the costs associated with delivering the program or service to the specific outcomes achieved. This can be done using cost allocation methods, such as activity-based costing or cost drivers analysis.

d. Calculate the cost per outcome: Divide the total costs allocated to achieving the desired outcomes by the number of individuals or cases that achieved those outcomes. The formula for cost per outcome is:

Cost per Outcome = Total Costs allocated to Outcomes / Number of Outcomes achieved

Cost per outcome helps the agency understand the cost-effectiveness of its programs or services in achieving the desired results. It helps identify programs that are delivering outcomes efficiently and those that may require improvements. It also enables comparisons across different programs or interventions to determine the most effective use of resources.

Overall, cost per output and cost per outcome calculations provide valuable insights to a human service agency, allowing them to optimize resource allocation, prioritize interventions, and demonstrate accountability to funders and stakeholders.