Chapter 6: Fundamentals of Cost-Effectiveness Analysis
6. Fundamentals of cost-eﬀectiveness analysis 6.1 INTRODUCTION 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. Then we present the underlying CEA decision-making model and illustrate how cost-eﬀectiveness calculations are to be made and interpreted. Because of the inherent shortcomings of CEA, we quickly turn 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. 6.1.1 CEA as an Approach to Evaluation Unlike a CM study, a CEA looks at both the consequences (eﬀects) and costs of a procedure. A CEA looks at the amount of cost per unit of eﬀect: C / E. One can now compare across (some) programs. Moreover, one can allow for the fact that diﬀerent programs achieve their objectives to diﬀerent degrees. Thus, for instance, the cost per case detected can be used to make comparisons of screening programs for diﬀerent diseases. If one screening program can detect more cases than another, this is allowed for in the comparison. For CM one must have a given / ﬁxed level of output. On the other hand, there is a fundamental problem with a costeﬀectiveness (and cost–utility)...
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