Economic Aspects of Evaluation - Evaluation Methods in Biomedical Informatics - page 317

TABLE 11.3. Example of cost-effectiveness (CE) analysis of several lifesaving
interventions.

Outcome Incremental

Strategy Cost (year of life) Net cost Net effect CE ratio

Strategy A $10,000 3.5 n/a n/a n/a

Strategy B $20,000 4.5 $10,000 1 year $10,000/yr

Strategy C $35,000 5.0 $15,000 0.5 years $30,000/yr

Note: For each strategy, the table provides the cost of the strategy and the outcome in life-
years gained. The net costs are calculated as the difference in costs from the previous strat-
egy, and the net effects are the difference in outcomes for a strategy compared to the next
least effective. The incremental cost-effectiveness ratio (ICER) is simply the net cost divided
by the net effects.

To illustrate, we first examine a completely generic example, with hypo-
thetical programs that both cost resources and save lives. Although this may
not be the most common outcome measure used in CEA studies in bio-
medical informatics, it represents the most common application of CEA in
health care, and is a reasonable starting point to develop an understanding
of the technique.

Example 2: A Series of Lifesaving Therapies
A simple CEA is illustrated in Table 11.3 and displayed graphically in
Figure 11.3. In the figure, only the upper right quadrant of Figure 11.2 is

FIGURE 11.3. The cost-effectiveness plane. Assume the baseline strategy is A; the
graph depicts the net (incremental) costs required to purchase the next best strate-
gies B and then C, as well as the net or incremental gains that the strategy would
provide.