Cost–Benefit Analysis and Health Care Evaluations, Second Edition

Cost–Benefit Analysis and Health Care Evaluations, Second Edition

Robert J. Brent

Cost–benefit analysis is the only method of economic evaluation that can effectively indicate whether a health care treatment or intervention is worthwhile. In this thoroughly updated and revised second edition, Robert Brent expands the scope of the field by including the latest concepts and applications throughout all regions of the world. This book attempts to strengthen the link between cost–benefit analysis and the mainstream health care evaluation field, which is dominated by non-economists. The need to build a bridge between the two is more important than ever before, as the general understanding of cost-benefit analysis appears to have regressed.

Chapter 6: Fundamentals of cost-effectiveness analysis

Robert J. Brent

Subjects: economics and finance, health policy and economics, valuation, environment, valuation, social policy and sociology, health policy and economics


Here we start with the first of two chapters on CEA, focusing on the basic principles. Unlike a CM, which only deals with costs, a CEA includes effects as well as costs. The two are related by forming a cost-to-effects ratio. What to include in this ratio is the first topic under discussion. This is followed by a presentation of the underlying CEA decision-making model which illustrates how cost-effectiveness calculations are to be made and interpreted. As a randomized controlled trial (RCT) is generally viewed as the best way to quantify the effects of a health care intervention, we devote a section examining the strengths and weakness of this approach to estimation. Because of the inherent shortcomings of CEA as an evaluation method, we quickly turn our attention to ways of converting CEA into CBA. The case studies are primarily devoted to showing how these conversion methods have been put into practice.

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