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Health Economic Evaluation

Economic evaluation in healthcare is the systematic analysis of the costs and effects of alternative interventions to support decision-making regarding their reimbursement or implementation for a defined population. This analysis considers both the immediate costs and health effects, as well as their downstream consequences, such as future events averted. The primary outcome of an economic evaluation is typically an incremental cost-effectiveness ratio (ICER), which compares the additional cost of an intervention to its additional health benefits and is often evaluated against a threshold value representing willingness to pay for a unit of health outcome.

Economic evaluations are classified based on the type of outcomes they measure:

Cost-Effectiveness Analysis (CEA): Measures health effects in natural units (e.g., life years gained).

Cost-Utility Analysis (CUA): Measures outcomes in quality-adjusted life years (QALYs).

Cost-Benefit Analysis (CBA): Expresses outcomes in monetary terms.

Comparisons in economic evaluations typically involve treatment strategies, encompassing diagnostic work-up, treatment, monitoring, and management of consequences. Key considerations in conducting an economic evaluation include the perspective (whose costs are considered), the time horizon (the period over which costs and effects are evaluated), and the metric of outcome/effect used.

Most economic evaluations utilize modelling to synthesize outputs from various studies, though some are directly based on trials or comparative studies. An essential component of economic evaluation is sensitivity analysis, which assesses the robustness of the results to variations in input values or underlying assumptions. Advanced evaluations may also examine indirect impacts (e.g., effects on family members or broader economic implications), distributional consequences (equity considerations), and the value of collecting additional information to reduce uncertainty (value of information analysis).

By providing a comprehensive assessment of the economic implications of healthcare interventions, economic evaluations help policymakers, healthcare providers, and stakeholders make informed decisions that optimize health outcomes and resource allocation.

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