A short primer on cost-effectiveness analysis
- Peter A L Bonis, MD
Peter A L Bonis, MD
- Chief Medical Officer of Clinical Effectiveness (UpToDate, Clinical Drug Information, and Emmi Solutions)
- Deputy Editor — Gastroenterology/Hepatology
- Adjunct Professor of Medicine
- Tufts University School of Medicine
- John B Wong, MD
John B Wong, MD
- Chief, Division of Clinical Decision Making
- Professor of Medicine
- Tufts University School of Medicine
- Section Editors
- Joann G Elmore, MD, MPH
Joann G Elmore, MD, MPH
- Editor-in-Chief — Primary Care (Adult)
- Section Editor — General Medicine
- Professor of Medicine, Adjunct Professor of Epidemiology
- University of Washington School of Medicine
- David M Rind, MD
David M Rind, MD
- Section Editor — General Medicine
- Chief Medical Officer
- Institute for Clinical and Economic Review
- Assistant Professor of Medicine, Part-time
- Harvard Medical School
Health care advances such as new drugs, devices, or screening and diagnostic tests must demonstrate safety and efficacy to be approved for clinical use. However, because of rising health care costs and limited budgets, questions may remain about their value . Cost-effectiveness analysis is one approach to determining value and refers to a method for assessing the comparative costs and health benefits of different interventions . Assuming that health budgets cannot meet all of the possible demand, cost-effectiveness evaluation can assist decision-makers in allocating resources to maximize the net public health benefit when choosing among options in the care of patients [2-7].
Although cost-effectiveness analysis has become a fundamental research method in health and medicine, it also has great potential to be misunderstood because of methodological complexity in definitions, measurement, and interpretation . The term "cost-effective" itself is frequently misused as an adjective (eg, an intervention is "cost-effective") without providing a point of reference.
This topic review will provide a basic overview of the principles of cost-effectiveness analysis while highlighting some of the controversies. The Second Panel on Cost-Effectiveness in Health and Medicine provide a detailed review of the state of the field and revised recommendations [9-11].
Four types of economic analysis have been applied to health care.
●Cost-effectiveness analysis or cost-utility analysis (a type of cost-effectiveness analysis) is most commonly used for performing economic analyses in health care. In these analyses, monetary and health outcomes are measured separately and the relative value of an intervention is measured as the additional cost to achieve an incremental health benefit such as dollars to prevent a case of cancer. In cost-utility analysis, the effectiveness metric becomes life expectancy adjusted for the morbidity or quality of life associated with the alternative strategies.To continue reading this article, you must log in with your personal, hospital, or group practice subscription. For more information on subscription options, click below on the option that best describes you:
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