The opportunity cost of an intervention is what is foregone as a consequence of adopting a new intervention. In a fixed budget health care system where increased costs will displace other health care services already provided, the opportunity cost is measured as the health lost as a result of the displacement of activities to fund the selected intervention. In terms of choosing to fund intervention A over intervention B, the opportunity cost of choosing A would be the potential value or the difference (incremental benefits) of A compared to B and the difference in cost (incremental cost) of A compared to B. Often, when a new costly intervention is adopted within a health system, the opportunity cost (i.e. the health benefits displaced) will be unknown and unrelated to the intervention being adopted.

How to cite: Opportunity Cost [online]. (2016). York; York Health Economics Consortium; 2016. https://www.yhec.co.uk/glossary/opportunity-cost/

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