Economic Aspects of Evaluation - Evaluation Methods in Biomedical Informatics - page 316

FIGURE 11.2. The cost-effectiveness (CE) plane. Compared to the costs and effects
of a baseline program, a new strategy can be either more or less expensive or more
or less effective that the current strategy. This divides the CE plane into four quad-
rants. The upper left quadrant represents those strategies that are both less effec-
tive and more expensive that the existing program; these programs require no choice
and are clearly dominated by the current strategy. Similarly, no analysis is required
for strategies that fall in the right lower quadrant. Projects in this quadrant are
cheaper and better than the existing strategy, and should simply be adopted. The
real benefit of cost-effectiveness analysis (CEA) is in the right upper quadrant
(where strategies are more expensive but produce better outcomes) and in the left
lower quadrant (where strategies are cheaper, but do not produce equivalent out-
comes). It is in these areas that a trade-off exists between cost and effectiveness, the
condition required for a CEA.

The global outcome measure that defines cost-effectiveness analysis is
the incremental cost-effectiveness ratio (ICER). It represents the ratio of
the net costs that will be expended by implementing a particular program
divided by the net benefit, measured as an appropriate clinical outcome. It
is defined as

Cost -

-

Cost

B A

Effectiveness Effectiveness

B A

or the net costs of moving to strategy B from strategy A divided by the net
benefits (measured as a clinical outcome) of choosing strategy B over A.
The units of the ICER are dollars per unit outcome, which represents the
cost of an additional unit of the particular outcome measure. For example,
if the outcome of an intervention is measured in lives saved, the ICER
would be in units of dollars per life saved.