ABSTRACT
Cost-effectiveness analysis follows a process similar to evidence-based medicine (EBM). This chapter overviews these major points and introduces some crucial issues. Cost-effectiveness analysis is a process for demonstrating the potential relative value of alternative medical interventions. This process includes: identification and bounding of the problem, constructing a decision tree or other model, gathering the data to fill the model, analysis, sensitivity analysis, discounting, and reporting. The aim of the analysis is to produce a measure of the programme’s cost-effectiveness – usually presented as an incremental cost-effectiveness ratio. The average cost-effectiveness is misleading as it is non-comparative and therefore useless in making a medical decision. The first part of a cost-effectiveness analysis is to identify and bound the problem. The bounded problem is expressed symbolically as a decision tree. The structuring of the problem is key to the solution. However, it is possible to see that with more than one outcome and several treatments the problem structures can become very complex.
