Central Premise

The impact of health and health care costs on economic growth has long been described. Given rising health care needs and an increased cost consciousness, health economics as a service has received considerable attention.  In its broad definition, health economics comprises an organized and systemic analysis of the trade-offs between costs and units of effectiveness.  Deployment of resources necessarily represents an opportunity cost, for the same amount directed toward one area (e.g., personnel, time, facilities, treatments) invariably cannot be spent on a different one.  Given that such resources are finite and costs are complex, health economic evaluation helps to inform decision-makers on efficient and equitable allocation choices.  Health economic evaluation is the name given to methods that compare the ratios between cost and effect, which can occur using retrospective data or, where possible, prospective clinical trial data.  Doshi et al. reported in Value in Health that in 2003 alone, fully 115 RCTs were performed based on the analysis of cost and effect at the patient level.  Moreover, with more than 35,000 peer-reviewed papers to date in the field (Wagstaff and Culyer, 2011), as a methodology, health economic evaluation is a well-established field.  Measures of economic effect traditionally range from proxy outcomes such as blood pressure, to final outcomes, such as survival. Performing the effectiveness component of a health economic evaluation thus entails identifying a meaningful measure of effect over an appropriate period of time and evaluating the difference in effect between comparator treatment arms.  Performing the cost component of a health economic evaluation then entails the following three sequential stages: (1) identifying resources, (2) measuring those resources using appropriate physical units, and (3) valuing resources in a consistent manner that can be replicated. These steps, when combined, provide the foundational platform for a health economic evaluation that follows either standard or novel analytical approaches.