Health Economics
This section contains
the following:
Introduction
Economic evaluation is defined as the comparative analysis of
alternative courses of action in terms of both their costs and
consequences (Drummond et al, 1997). The aim of an economic
evaluation is to determine the value of the good or service in order
to aid the decision making process.
The scarcity of resources in low and middle income countries
requires that limited public funds be used in the most cos-effective
manner. Resource use at any level involves an opportunity costs
i.e. their use for one purpose prevents their use for an alternative
purpose. This is of particular concern in low and middle income
countries where public funds are severely limited.
Back to top
Types of economic evaluation
Whilst an economic evaluation can take many different forms, the tasks
involved remain very similar, to identify, measure, and value the
relevant costs and consequences of the programme or intervention being
analyses. Types of economic evaluation include:
- Cost-effectiveness analysis (CEA) - CEA analysis
measures costs in monetary terms and measures the health benefits in
natural units such as: life years saved, maternal deaths averted,
perinatal deaths averted etc. The results are often presented in terms
of incremental costs effectiveness ratios e.g. the incremental (or
extra) costs per additional life saved.
- Cost consequence analysis - Analysis where the costs
and several different measures of effects are calculated but
cost-effectiveness ratios are generated.
- Cost-utility analysis (CUA) - Cost-utility analysis is a
variation of CEA, the primary difference between the two techniques is
that QALYs (see measurement of benefits section) are used as the
measure of health outcome,
- Cost-benefit analysis (CBA) - Using CBA the costs and
benefits of the programme are measured in monetary units.
Back to top
References
Drummond MF, O’Brien B, Stoddart GL, Torrance GW. (1997) Methods
for the Economic Evaluation of Health Care Programmes, 2nd edition. OU
Press, New York.
This page was last updated September 2008.