Cost–Benefit Analysis and Health Care Evaluations

Cost–Benefit Analysis and Health Care Evaluations

Robert J. Brent

Cost–benefit analysis is the only method of economic evaluation which can effectively indicate whether a health care treatment or intervention is worthwhile. This book attempts to build a bridge between cost–benefit analysis, as developed by economists, and the health care evaluation literature which relies on other evaluation approaches such as cost-minimization, cost-effectiveness analysis and cost–utility analysis.

Chapter 9: Measuring Utilities in Cost–Utility Analysis

Robert J. Brent

Subjects: economics and finance, health policy and economics, public finance, social policy and sociology, health policy and economics


9.1 INTRODUCTION The number of QALYs associated with any health state can be expressed as the product of the number of years T (for time) in that state and the average quality of a year in that state, which will be denoted as U, i.e., QALYsϭU.T. We will (unlike some of the literature) use the term quality interchangeably with utility and value. This chapter is devoted to explaining, comparing and contrasting the three main methods for deriving estimates for U. By a method we mean the type of question asked to a person to extract his / her preferences and the way this gets recorded as a number (usually) between 0 and 1. We will not be referring to alternative statistical estimation techniques as different methods. The three methods covered are: the category rating scale (RS), the standard gamble (SG), and the time trade-off model (TTO). We make comparisons in terms of both theory and practice. Before explaining each method in detail, and then presenting the applications, we cover some background issues. 9.1.1 Measurement Stages In order to measure utilities for a particular study, there are four stages that need to be recognized: 1. The first stage involves identifying the relevant health states. For example, in a study of kidney transplants, there were four health outcomes, viz.: kidney transplant, hospital dialysis, home dialysis, and death. The second stage involves providing descriptions of the health states identified. In order to extract people’s preferences, they need to know what...

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