Economic Evaluation of an Investment in Medical Websites and Medical Web-Based Services

23 Assessing the “Costs”

Table : Daily traffic flow and cost of the top 10 medical websites of the sample

The average daily traffic flow of the medical websites sample is 1,569,860 visits and the cost for the medical website to buy this traffic flow is $3,257,168 or £2,073,298.64⁴. This price of £2,073,298.64 is considered to be the minimum cost — monetary units — that somebody needs to offer in order to acquire and manage the medical website.

24 Cost Benefit Analysis and Return on Investment Estimation

24.1Cost-Benefit Analysis of the Medical Websites Offering Medical Web-Based Services

As it was aforementioned Cost-Benefit Analysis (CBA) is one of the most comprehensive methods of economic evaluation that has as objective to compare cost and benefits/effects of a project by attaching monetary values on them (Robinson R., 1993). CBA is used in the decision making because analysts using CBA are concerned with the economy as a whole (Mishan E.J., 1972). The analysts are not focusing on the individuals or smaller groups of economy but they want to have a complete perspective. The main characteristic of this method reporting that Cost Benefit Analysis is based on the identification of all the results/effects of a project measured in a unit that can be compared with the aggregated costs in order to end up with rational results from the evaluation process. Thus CBA is considered to have a more social perspective since in general tries to measure welfare changes and according to the potential Pareto Improvement Criterion⁵.


Traffic willing to pay: 1,569,860 x 74.7% = 1,172,685.42

In order to estimate the Cost-Benefit ratio it is required to identify the cost and benefit values. There is no need to discount either the “benefits” or the “costs” since they are current for the purpose of the research (estimated May 2013) and also estimated at the same period. As benefit it will be used the average value that was estimated from the WTP survey. Since the participants were asked to state their maximum WTP under specific scenario/considerations it is assumed that this price is what they consider that they are receiving as benefit from the use of the medical websites and the medical web-based services. Two different estimations of the participants WTP will be used, one based on the average Maximum WTP price and the other on the more optimistic approach suggested by Ryan M. et al. (1997) and Mitchell and Carson (1989). In any case the average price will be multiplied with the traffic of the medical website after the traffic is multiplied with the percentage of the participants that are willing to pay and then multiplied again with the percentage of the participants who are having a high level of certainty (sure/very sure) for their monetary unit choice. In this way the outcomes of the WTP survey will be projected in the real world case. The average daily traffic flow of the medical websites sample is 1,569,860 visits and the traffic that we assume that will be willing to pay to use the medical services and applications offered by the medical website in case these are not offered for free it will be:

Traffic surely willing to pay: 1,172,685.42 x 66.25% = 776,904

The percentage of the participants, who had used a medical website and had subscribed or were willing to subscribe to a medical web application, and responded that they are willing to pay if these services were not offered for free was 74.7%. If this traffic of 1,172,685.42 multiplied with the percentage of the participants that have a high certainty level that would really pay that amount of monetary units in order to use the medical services/applications provided by the medical website, the final “clean” traffic to be used in benefit estimation will be:


776,904 x £6.44 = £ 5,003,261.76 (a)

776,904 x £9= £ 6,992,136 (b)

By multiplying this with the average price (optimistic and conservative approach) coming from the WTP survey the results are:

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Net Benefit.

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Net Benefit.


Applying Cost-Benefit Analysis the estimation of the CB ratio is:
The Cost-Benefit Ratio provides information on whether or not and how much profitability will result from an investment consisting an accurate profitability index. It is calculated by dividing the net present value of expected future cash flows from an investment and dividing by the investment's original cost (Groot, W. & Brink, 2008). As it is obvious ratio above one indicates that the investment will be profitable while a ratio below one means that it will not. In both (a) and (b) scenarios this profitability index is well above 1 showing a strong profitability from the investment in a medical website. Of course the success of an investment in a medical website is influenced also by the quality and the accuracy of the content as well of the accreditations of the medical website under acquisition. These factors were considered universally applicably in any business/economic sector so it was considered that the public view and engagement that identified through the WTP survey was the main factor that can influence the investment’s results while the other quality oriented factors are influencing the more long-term investment results.

24.2Return on Investment of the Medical Websites Offering Medical Web-Based Services

Return on investment is the ratio of net benefits that a program produces to the costs that it needs in order to operate and achieve the benefits for its stakeholders (Endogmus et al, (2004) or in other word it can be defined as “the ratio of money saved to money consumed , expressed as an percentage” (Stone, 2005). During the ROI calculation the cost of the programs implementation are subtracted from the benefits, creating an adjusted benefits to costs ratio that is the ROI percentage.

After having identified the cost and the gains/benefits for the CBA, applying the ROI formula for the scope of this research the results are:

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