Question

Explain the 6 circumstances in which cost benefit analysis is likely to be most useful in health care

Answer 1

a)Cost-benefit analysis is a method for assessing the gains in health relative to the costs of different health interventions. The basic calculation involves dividing the cost of an intervention into monetary units by the expected health gain measured in natural units such as the number of lives saved.

b)analytic techniques used for economic evaluation in healthcare are designed to compare alternative courses of action, in terms of cost and outcomes. These are cost-effective analysis and cost- consequences analysis.

c) Quality-adjusted life years (QALYs) measure health as a combination of the duration of life and the health-related

quality of life.

d) The primary outcome of a cost-utility analysis is the cost per QALY, or incremental cost-effectiveness ratio (ICER), which is calculated as the difference in the expected cost of two intervention, divided by the difference in the expected QALYs produced by the two interventions.

e)The results of the cost-utility analysis are compared with a threshold ICER, interventions with an ICER below this threshold are funded, whereas those with an ICER above the threshold tend not to be.

f) A cost-utility analysis was developed to help decision makers compare the value of alternative interventions that have very different health benefits, and it facilitates these comparisons without recourse to placing monetary values on different health states. It specifies what value is attached to specific health states.