Benefit-Cost Analysis: Valuing Life and Health Executive and Continuing Professional Education Harvard T H. Chan School of Public Health
Further, a systematic assessment of the application of current government economic evaluation guidelines was out of scope for this study and should be the focus of future research. Framework recommendation The options for appraisal, assumptions and inputs used in the analysis with reference to evidence should be accurately and transparently documented. Results should be disaggregated by sector to enable the translation of results from a CBA to a CUA/CEA framework. Full what is a cost benefit analysis documentation of sensitivity analyses and distributional impacts should be included, with accurate interpretation of findings. All reviewed CBA guidance documents [4, 7, 8, 33, 37, 45, 48] report that the social net benefit of a programme should be demonstrated using measures of either net present value (NPV), benefit–cost ratio (BCR) or both. However, there is disagreement on the outcome of choice when the ranking of interventions differs between the two metrics.
In this context, the theme of cost and effectiveness is technically adequate and viable to analyze these alternatives. Analyzing the history of research development on the topic and identifying its gaps is thus an essential step in facing this challenge. Therefore, the objective of this study was to modestly contribute to a bibliometric examination of scientific production based on the theme of cost-effectiveness to guide future research, despite the maturity of the theme, and as well as its future challenges. One of the most important factors identified is the absence of the theme applied to contemporary topics in health, such as telemedicine, telehealth, robotics, artificial intelligence, new drugs and medicines, and new healthcare protocols.
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However, there are several inconsistencies and issues that need to be resolved to improve the comparability of CBA across various sectors. Firstly, parameters such as the VSL/VSLY that are key drivers of CBA results [86,87,88] should be the focus of parameter harmonization efforts. The Framework recommends using results from a recent systematic review [76]; however, this needs to be deliberated by the departments that currently use varying values. Developing a parameter database that is regularly updated may be an effective way to ensure consistency of parameter values; it may also assist analysts in incorporating intersectoral impacts into CBA. Secondly, discrepancies in typology can cause confusion, particularly when communicating results to varied audiences. But, when the perspective is social, meaning everyone in society, whether they be family members, third parties or taxpayers is involved, and a budget has not been allocated, a CEA is completely insufficient for deciding priorities as to which interventions, if any, should be funded.
- This article is presented as a fundamental part in the construction of applied research to analyze cost-effectiveness in health sector, corroborated, at this stage, by the theoretical understanding of the theme CEA.
- Earnings or productivity gains are often valued using salary rates based on the human capital approach.
- For example, if the ROI value of your product was greater than £1 for every £1 invested in it, this would indicate that the value generated by your product was greater than its cost.
- In the absence of a pre-specified budget constraint, the main role of CEA as an intervention evaluation method is to indicate which dementia interventions can be eliminated from consideration and therefore not to be financed.
- Queensland Treasury reports that the discount rate should be project-specific and needs to be determined in consultation between Treasury and the specific agency [53].
- Thus far, the function of the analyses estimated by CEA is to identify cost-effective alternatives.
We then broadened the outcome to consider a comprehensive measure, that of a QALY, that can be adopted for the evaluation of any type of healthcare intervention. Finally, from the perspective of a CBA, which supplies the most valid and general method to use for an economic evaluation, one is not at all limited in the type of effect one employs as long as the effect https://www.bookstime.com/ can be priced. We start the analysis by viewing CEA as a method of economic evaluation in its classical form, which involves covering mutually exclusive interventions with, and without, a budget constraint. This leads the analysis to CBA proper which, unlike CEA, can be applied to any type of healthcare intervention to assess whether it is socially worthwhile.
Lost production: Conventional production-based approaches
Framework recommendation Given the time and expense involved in evaluating a long list of options, the principle that the CBA should be commensurate to the size of the investment can be used to limit the number of options evaluated for preventive health interventions [8]. To be consistent with Treasury guidance [4, 51,52,53] while still keeping the number of options tractable, it is recommended that health strategy documents underpin option selection [37]. A manageable list of options should be assessed, potentially using multi-criteria analysis (MCA) as recommended by Infrastructure Australia [48]. MCA can be used to quantitatively and qualitatively assess how well each of the options meets specific criteria. The results can then be used to guide decision-making on the shorter list of options for CBA appraisal. Undertaking MCA using criteria commonly used in preventive health decision-making (e.g. evidence of intervention effectiveness [54, 55]) will increase the tractability of this task.
- The outcome of the CEA would identify what combination of resources for an intervention would produce a given effect quantity for the lowest cost.
- The Preventive Health CBA Framework was developed using the NSW government as an example; however, the findings from this study have broader application.
- The PBAC, an Australian federal government agency [31], recommends a lower discount rate than the OBPR [33], also an Australian federal government agency.
- In our study, productivity loss estimates under the HC approach were 29 times higher than that under the FC approach.
- In this article the aim was to highlight the strengths and weaknesses of CEA from a societal perspective as a method of economic evaluation in healthcare.
- Although it does not capture all relevant concerns, CEA is a systematic and explicit way of assessing a given decision’s opportunity cost.
- Like the time horizon, the discount rate has a considerable impact on preventive health interventions, where the benefits are likely to occur several years into the future.