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Cost-effectiveness analysis: are the outputs worth the inputs?

Naylor D. ACP J Club. 1996; 124(1):A12-4.


Thomas Carlyle (1795 to 1881) once tagged economists as the "respectable professors of the dismal science." Dismal it may be, but in health care, economic analysis is here to stay. Policymakers, prepayment plan managers, and hospital administrators already make informal use of cost-effectiveness criteria to assess new technologies and clinical strategies. The rush to embrace cost-effectiveness analysis is understandable. For many nations, public sector indebtedness has created an affordability crisis in health care. Open-ended fee-for-service payment plans are being pushed aside. Instead, global budget caps in publicly administered or privately managed care systems are used to contain overall levels of expenditure. A tight budget in a health care system, however, is like a tight budget in a household: It underscores the severity of the trade-offs that must be made when weighing alternative uses of the same resources. Enter the health economists, holding aloft tables of various interventions and their comparative cost-effectiveness ratios. The health care planner or clinician-qua-administrator somehow is supposed to examine these ratios and decide on the shopping basket of services that will maximize the health outcomes of patients in a local hospital, entire populations of patients in managed care chains, or even national health systems. There are 7 good reasons why clinicians should maintain a healthy skepticism about the results of cost-effectiveness analysis and the usefulness of these results in purchasing and planning decisions.

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Keywords: Health care costs Comparative effectiveness

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