Costeffectiveness Analysis

A method of comparing the opportunity costs of various alternative courses of action having the same benefit or in terms of a common unit of output, outcome or other measure of accomplishment. This procedure is used when benefits are difficult to value monetarily, when those that are measurable are not commensurable, or when the objectives are set in terms of health itself. It is similar to cost-benefit analysis except that benefit, instead of being expressed in monetary terms or in terms of several non-commensurable benefits, is expressed in terms of a homogeneous index of results achieved. These may be natural units such as the number of lives saved or number of days free from disease, they may be units that are specific to the procedures being compared (like the speed of healing of a wound), or they may be generic (like quality-adjusted life-years) thus enabling comparisons of cost-effectiveness to be made across many different technologies and patient groups. Some gurus advocate the use of the term cost-utility analysis for this latter type of analysis, though there seems to be little practical advantage in so doing. Many of the issues that arise in cost-benefit analysis, such as those of perspective, scope of consequences, discount rate, sensitivity analysis and modelling, also arise in cost-effectiveness analysis.

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