Cost-benefit analysis (health care)

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In health care, a cost-benefit analysis is a "method of comparing the cost of a program with its expected monetary benefits. The benefit-to-cost ratio is a measure of total return expected per unit of money spent. This analysis generally excludes consideration of factors that are not measured ultimately in economic terms. Cost effectiveness compares alternative ways to achieve a specific set of results."[1]

Metrics used in cost-benefit analyses

Variations on incremental cost-effectiveness ratio (ICER):

  • Cost per year of life saved[2] The definition of an acceptable cost per year of life saves ranges from $50,000 to $200,000.[3]
  • Cost of Preventing an Event (COPE)[4]. For example, to prevent a major vascular event n a high-risk adult , the number needed to treat is 19, the number of years of treatment are 5, and the daily cost of the generic drug is 68 cents. The COPE is 19 * 5 * ( 365 * .68) which equals $23,579 in the United States.
  • Years (or months or days) of life saved (QALYs, QALDs). "A gain in life expectancy of a month from a preventive intervention targeted at populations at average risk and a gain of a year from a preventive intervention targeted at populations at elevated risk can both be considered large."[5]
  • Per person cost and benefit ( QALDs)[6]

Standards in conducting a cost-benefit analysis

Standards have been developed for the conduct of cost-benefit analyses[7][7] and for systematic reviews of cost-benefit analyses[8].

The two most common problems in publications of cost-benefit analyses are not stating the study perspective (e.g. is the cost born by the patient, health case system, or society) and not disclosing the funding source.[9]

Difficulties in cost-benefit analyses

The costs saved by successful treatment of one disease may be offset by greater longevity leading to increased costs from other disease.[10]

Recommendations have bee published on how to read and interpret a cost-benefit analysis.[11][12][13][14]


  1. Anonymous (2023), Cost-benefit analysis (health care) (English). Medical Subject Headings. U.S. National Library of Medicine.
  2. Tengs TO et al (1995). "Five-hundred life-saving interventions and their cost-effectiveness". Risk Anal 15: 369–90. PMID 7604170[e]
  3. Cutler DM, Rosen AB, Vijan S (2006). "The value of medical spending in the United States, 1960-2000". N. Engl. J. Med. 355 (9): 920-7. DOI:10.1056/NEJMsa054744. PMID 16943404. Research Blogging.
  4. Maharaj R (2008). "Adding cost to NNT: the COPE statistic". ACP J. Club 148 (1): A8. PMID 18170986[e]
  5. Wright JC, Weinstein MC (1998). "Gains in life expectancy from medical interventions--standardizing data on outcomes". N Engl J Med 339: 380–6. PMID 9691106[e]
  6. Template:Err (2011 [last update]). PLoS Medicine: Individualized Cost-Effectiveness Analysis. Retrieved on July 12, 2011.
  7. 7.0 7.1 Siegel JE, Weinstein MC, Russell LB, Gold MR (1996). "Recommendations for reporting cost-effectiveness analyses. Panel on Cost-Effectiveness in Health and Medicine". JAMA 276 (16): 1339–41. PMID 8861994[e] Cite error: Invalid <ref> tag; name "pmid8861994" defined multiple times with different content
  8. Jefferson T, Demicheli V, Vale L (2002). "Quality of systematic reviews of economic evaluations in health care". JAMA 287 (21): 2809-12. PMID 12038919[e]
  9. Neumann PJ, Stone PW, Chapman RH, Sandberg EA, Bell CM (2000). "The quality of reporting in published cost-utility analyses, 1976-1997". Ann. Intern. Med. 132 (12): 964-72. PMID 10858180[e]
  10. van Baal PH, Polder JJ, de Wit GA, et al (2008). "Lifetime Medical Costs of Obesity: Prevention No Cure for Increasing Health Expenditure". PLoS Med. 5 (2): e29. DOI:10.1371/journal.pmed.0050029. PMID 18254654. Research Blogging.
  11. Drummond MF, Richardson WS, O'Brien BJ, Levine M, Heyland D (1997). "Users' guides to the medical literature. XIII. How to use an article on economic analysis of clinical practice. A. Are the results of the study valid? Evidence-Based Medicine Working Group". JAMA 277 (19): 1552-7. PMID 9153371[e]
  12. O'Brien BJ, Heyland D, Richardson WS, Levine M, Drummond MF (1997). "Users' guides to the medical literature. XIII. How to use an article on economic analysis of clinical practice. B. What are the results and will they help me in caring for my patients? Evidence-Based Medicine Working Group". JAMA 277 (22): 1802-6. PMID 9178794[e]
  13. Greenhalgh T (1997). "How to read a paper. Papers that tell you what things cost (economic analyses)". BMJ 315 (7108): 596-9. PMID 9302961[e]
  14. Detsky AS, Naglie IG (1990). "A clinician's guide to cost-effectiveness analysis". Ann. Intern. Med. 113 (2): 147-54. PMID 2113784[e]