Module Three Assignment 09092023
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Purdue University *
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N678
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Health Science
Date
Dec 6, 2023
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docx
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2
Uploaded by chang541
Running head: ECONOMIC EVALUATION IN HEALTH CARE
1
1 Cost-benefit analysis (CBA) and cost-effectiveness analysis (CEA) are two distinct
approaches used in economic evaluation. CBA differs from CEA in several ways. CBA involves
quantifying both the costs and benefits of intervention in monetary terms, with the objective of
determining whether the benefits outweigh the costs (Henderson, 2023). This often requires
assigning monetary values to health outcomes, which can be challenging and subjective.
On the other hand, CEA focuses on comparing the differences in costs and health
outcomes between two or more treatment options without converting these outcomes into
monetary values (Centers for Disease Control and Prevention, 2021). Instead, it calculates the
incremental cost-effectiveness ratio (ICER), which represents the additional cost per unit of
health improvement achieved by one treatment compared to another. It is preferred by health
economists as it provides a more practical approach to evaluating healthcare interventions and
avoids the complexities and subjectivity associated with assigning monetary values to health
outcomes, making it a more accessible and widely applicable method in healthcare decision-
making (Henderson, 2023).
2 Economic evaluations in healthcare decision-making occurs at two levels: individual
provider-patient interactions and policymaking for broader populations or communities. There
are three primary types of economic evaluation in medical decision-making:
a. Cost-benefit analysis (CBA): it involves the valuation of both the costs and benefits of
a healthcare intervention in monetary terms. It provides a comprehensive assessment of whether
the benefits of interventions justify its costs. CBA is a valuable tool for policymakers, as it
allows for a holistic evaluation of resource allocation decisions; however, it can be challenging
due to the need to assign monetary values to health outcomes, which can be subjective and
contentious (Turner, 2021).
b. Cost-effectiveness analysis (CEA): it compares the differences in costs and health
outcomes between different treatment options without converting these outcomes into monetary
values. The calculated ICER represents the additional cost per unit of health improvement
achieved by one treatment compared to another. CEA is widely favored due to its simplicity and
practicality as it informs resource allocation decisions effectively while avoiding the
complexities of assigning monetary values to health benefits (Kim & Basu, 2021).
c. Comparative effectiveness research: This approach evaluates the benefits and harms of
various healthcare interventions or strategies to improve care delivery, focusing primarily on
clinical effectiveness (Williams et al. 2016). It helps inform treatment guidelines and policy
decisions based on the relative performance of different interventions. However, it may not
explicitly consider cost-effectiveness, potentially leading to resource allocation challenges in
healthcare policy decisions.
Each method has pros and cons. CBA provides a comprehensive view but involves the
challenging task of assigning monetary values to health outcomes. CEA is straightforward and
applicable but does not assign a monetary value to health benefits. Comparative effectiveness
research focuses on clinical effectiveness but may not directly address cost-effectiveness
concerns, potentially leading to resource allocation challenges in healthcare policy decisions.
ECONOMIC EVALUATION IN HEALTH CARE
2
References
Centers for Diseases Control and Prevention. (2021). Cost-effectiveness analysis.
https://www.cdc.gov/policy/polaris/economics/cost-effectiveness/index.html
Henderson, James W. (2023).
Health Economics and Policy
. Cengage Learning.
Kim, D., & Basu, A. (2021). Does cost-effectiveness analysis inform health care decisions?
AMA
Journal of Ethics, 23
(8), E639-647. DOI: 10.1001/amajethics.2021.639.
Turner, H. C., Archer, R. A., Downey,
L. E., Isaranuwatchai, W., Chalkidou, K., Jit, M., &
Teerawattananon, Y. (2021). An introduction to the main types of economic evaluations
used for informing priority setting and resource allocation in healthcare: Key features,
uses, and limitations.
Frontier Public Health, 2021
(9), 722927. DOI:
10.3389/fpubh.2021.722927.
Williams, C. M., Skinner,
E. H., James,
A. M., Cook,
J. L., McPhail,
S. M., Haines, T. P.
(2016). Comparative effectiveness research for the clinician researcher: A framework for
making a methodological design choice.
Trials, 17
(1), 406. doi: 10.1186/s13063-016-
1535-6.
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