Rural E-Health Infrastructure Development - E-Healthcare Systems and Wireless Communications - page 200

Cost - effectiveness analysis implies that the
consequences of health programmers as measured
using the most appropriate natural effects of
physical units such as life years gained or cases
correctly diagnosed. In this case there is no attempt
to value consequences as it just considered that
the output of a program is worth having. In its
classical form, it considers just a single measure
of output and thus the results are expressed in the
form of a cost - effectiveness ratio (e. g. 1000$ per
life year gained). Newer approaches use an array
of output measures, but do not give any relative
importance for each of these. This approach is
usually called cost - consequence analysis (Drum-
mond, Sculpher, Torrance, O'Brien & Stoddard,
2005, p. 3). The decision makers need to decide
what hierarchy to attribute to the output measures,
as they are not relatively valued.
Cost - utility analysis, on the other hand, as-
sumes that cost of the programs is adjusted by
preference scored of the health state of the popula-
tion. These preference scores are actually utility
weights. The states of health are value relative to
each other, quality can be assessed as well, not
just the numbers. The most common measure of
cost - utility analysis is quality- adjusted life-years
(QALY). QALY is simply defined as the product
of length of life (LOL) and quality of life (QOL)
(Morris, Devlin & Parkin, 2007, p. 292). What
is method offers extra compared to the previous
two is valuation. Although QALY is criticized for
valuing LOL independently from QOL and not

including uncertainty, it remains a very descriptive
method of evaluation (Morris et al., 2007, p. 286).
Cost - benefit analysis values the consequences
of programmers in monetary units in order to
make them commensurate with the costs. It is the
broadest form of analysis described so far where
it is established if the beneficial consequences
justify or not the costs. The range of benefits that
can be valued in monetary units is rather limited.
These distinctions between different types of
analysis are rather blurred in reality. It is rather
difficult to choose the most appropriate form of
analysis at the beginning of a project. Although
economic evaluation provides important in-
formation to decision makers, it addresses just
one dimension of analysis. Therefore, it has to
be proceeded by three other types of evaluation
(Drummond et al., 2005, pp. 7-8):

• Efficacy: Can it work? Does it do more

good than harm to the parts implicated?

• Effectiveness: Does it work? Does it offer

efficacy and acceptance?

• Availability: Is it reaching those who need

it?

All these three questions reveal the need for
economic modeling of a complex process. All
economic evaluation of health care is conducted
in this elaborate manner for two reasons:

Table 1. Measurement of costs and consequences in economic evaluation of health care

Type of study Measurement/ valuation of

costs

Identification of consequences Measurement of consequences

Cost analysis Monetary units None None

Cost - effectiveness
analysis

Monetary units There a single effect of interest, common

to costs and consequences

Natural units such as life-years
gained, disability days saved

Cost - utility analysis Monetary units Single or multiple effects for both costs

and consequences

Healthy years (the standard mea-
sure is quality-adjusted life years
(QALY))

Cost - benefit analysis Monetary units Single or multiple effects for both costs

and consequences

Monetary units