Chapter 6: Fundamentals of cost-effectiveness analysis
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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