Introduction

Life cycle cost analysis - introduction

Life cycle costing (LCC) is a method for assessing the total cost of ownership of a healthcare product, service, or infrastructure over its entire life cycle. It captures all relevant costs incurred from planning, acquisition, installation, operation, maintenance, replacement, and end-of-life disposal.

In the healthcare sector, LCC is particularly important because decisions concerning infrastructure, medical equipment, and support systems often involve high capital expenditures and long-term operational implications. A narrow focus on acquisition cost alone may overlook significant downstream costs, such as maintenance, energy use, consumables, staffing, compliance, and disposal.

The LCC process supports more informed decision-making by helping healthcare organizations compare alternatives on the basis of total life-cycle cost rather than initial purchase price alone. It also contributes to more sustainable planning by enabling the evaluation of trade-offs among investment choices over time.

When applied together with environmental Life Cycle Assessment (LCA) and Social Life Cycle Assessment (S-LCA), LCC enables an integrated evaluation of economic, environmental, and social dimensions. This alignment is essential to ensure that all assessments refer to the same system boundaries, functional unit, scenarios, geographic context, and time frame.

A typical LCC study includes the following broad steps:

• Step One: Definition of the goal and scope
• Step Two: Definition of the Life Cycle Inventory
• Step Three: Assessment with inventory analysis
• Step Four: Interpretation, including reporting and review

The purpose of this LCC guidance is to support the healthcare sector in carrying out structured, transparent, and comparable cost assessments over the full life cycle of healthcare assets and services.