Using Cost-Effectiveness Analysis for Setting Health Priorities

http://www.dcp2.org/file/150/

Governments around the world face budget constraints that
compel them to make tough decisions about how best to invest
funds for public health. They need a way to evaluate which
investments will address the most pressing health problems and
bring the greatest health gains. Cost-effectiveness analysis is an
essential evaluation tool that allows policymakers and health
planners to compare the health gains that various interventions
can achieve with a given level of inputs. Getting the most value
for money has been a central thrust in the analysis presented in
Disease Control Priorities in Developing Countries, 2nd edition
(DCP2). The basic concepts underlying the analysis, as well as
needed improvements, are described here.

What Is Cost-Effectiveness Analysis?

Cost-effectiveness analysis is the primary tool for comparing
the cost of a health intervention with the expected health gains.
An intervention can be understood to be any activity, using
human, financial, and other inputs, that aims to improve health.
The health gain might be reducing the risk of a health problem,
reducing the severity or duration of an illness or disability, or
preventing death.

If the health outcome is the same, say preventing death from
measles either by immunizing a child or by treating the
disease, then analysts need only compare the costs of different
interventions that can achieve that outcome. The result is a costeffectiveness ratio, expressed as cost per outcome, which can
be compared across various types of services or various service
locations that perform the same function. The ratio is always
discussed in relative terms, as there is no “best” or absolute level
of cost-effectiveness.

The cost-effectiveness of an intervention can vary greatly
depending on a program’s size and scope. Typically, as program
coverage expands and more people are served, the cost per
outcome drops. For example, if more children can be immunized
with the same fixed costs like nurses and clinics, then each
additional immunization will be cheaper until the service
approaches full capacity.

On the other hand, costs can rise as coverage expands if
it becomes harder to reach additional patients. Therefore,
depending on the comparison undertaken, an analyst might
look at the average cost-effectiveness ratio or the incremental
cost-effectiveness ratio. The average cost-effectiveness ratio
looks at total costs and total results, starting from zero, while
the incremental ratio compares additional costs and additional
results, starting from the current level of coverage or services.
Using child immunizations as an example, the incremental
cost of adding mobile vaccination teams might be lower than
expanding fixed clinic services, particularly if the unvaccinated
children are dispersed and hard to reach.

In Figure 1, several alternatives might be available for expanding
the coverage of a current intervention (the status quo shown
at point “X”). If an alternative is more effective and less costly,
decisionmakers should usually opt in favor of adopting it, while
they should abandon options that are more costly and less
effective. The trade-offs are less clear in the unmarked quadrants,
requiring decisionmakers to weigh whether the benefits that
might be gained merit a change in strategy.