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National Information Center on Health Services Research and Health Care Technology (NICHSR)

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Health Economics Information Resources: A Self-Study Course

Module 4: An Introduction to the Principles of Critical Appraisal of Health Economic Evaluation Studies

Key areas for critical appraisal - 1. The question

We need to ask ourselves two questions about the question the economic evaluation study seeks to address:
a) Is the type of analysis used appropriate to the question?
b) What is the perspective of the analysis?
These questions are related as they determine the type of analysis which should have been performed and the type of costs and benefits which should be collected. Each question is broken down into several sub-questions, presented below.

1a) Is the type of analysis appropriate to the question asked?

Economic evaluation can be used to assess:

The best way of achieving a given goal within a given budget. This is a technical efficiency question that can be measured by cost-effectiveness analysis or cost-utility analysis.

Is it worthwhile achieving a given goal?

This is an allocative efficiency question that can be measured by cost-utility analysis or cost-benefit analysis.

The crucial point for appraisal is whether the correct methodology has been chosen for a specific question.

There are three basic types of economic evaluation methodology:

Cost-effectiveness analysis (CEA)

CEA relates costs to a single clinical or natural measure of effectiveness; i.e., a unidimensional outcome, e.g., pain reduction, activities of daily living.

CEA is best suited to measuring technical efficiency as it is difficult to compare treatments with different outcomes.

CEA can sometimes be used to provide limited information on allocative efficiency through a ratio of extra cost to extra benefit produced (incremental cost-efficiency analysis).

Cost-utility analysis (CUA)

Cost-utility analysis relates costs to a multidimensional measure of effectiveness which takes into account the valuation of benefits; i.e., a measure of utility.

CUA can be used to measure technical efficiency.

CUA can be used for allocative efficiency but only within the health care sector where health care costs only are included.

Cost-benefit analysis (CBA)

CBA relates costs to a valuation of benefits in commensurate (having a common or equal unit of measure), usually monetary, terms.

CBA can be used to measure both technical and allocative efficiency questions. It can be measured either within the health care sector or across other sectors of the economy.

1b) What is the perspective of the analysis?

Perspective is important as it determines which costs and benefits are collected.

Possible perspectives that should be considered are:

  • a specific provider or provider institution
  • a patient or patient group
  • a health care purchaser (or third party payer)
  • society at large

As a general rule CEA and CUA require only health care costs to be collected.

CBA requires all costs and benefits to be collected, no matter on whom they fall.


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