Economic evaluation

Healthcare economic evaluation is a comparative analytical process used to inform choices about allocating resources to healthcare interventions. It examines both the costs and the health effects (and their future consequences) of alternative strategies within a defined patient population. The core output is generally an incremental cost-effectiveness ratio, which may be compared with a threshold value (willingness to pay for a unit of health outcome). There are different types of economic evaluations, and the choice between each depends on the type of output required:
* Cost-effectiveness analysis (CEA), the overarching category, quantifies health outcomes in relevant clinical units.
* Cost-utility analysis is a specialised form of CEA where health outcomes are specifically measured as quality-adjusted life years or other preference-based metrics, allowing for comparisons across diverse health conditions.
* Cost-benefit analysis, less common in health technology assessment, expresses all outcomes, including health, in monetary terms.
Key elements that guide an evaluation’s scope are the perspective (e.g. healthcare system, societal), the time horizon for capturing effects, and the chosen health outcome metric. While some evaluations are based directly on trials or other comparative studies, most economic evaluations synthesise evidence via modelling. An important part of an economic evaluation is a sensitivity analysis, which identifies the robustness of the results when input values or underlying assumptions are varied. More sophisticated evaluations may include the assessment of indirect impacts (e.g. on other family members), distributional consequences (equity), or the value of collecting more information to reduce the uncertainty of the economic result (value of information analysis).