Cost effectiveness. How should it be determined?
The purpose of this article is to compare three commonly used indices of cost-effectiveness: the cost-effectiveness ratio, the cost-benefit ratio, and net benefit. We show that these indices can be interpreted to be consistent with one another and consistent with the traditional economic definition of cost-effectiveness. Further, we show that the relative cost-effectiveness of competing strategies cannot be determined by simply comparing their respective cost-benefit or cost-effectiveness ratios, but can be determined by comparing their respective net benefits. Finally, we show that cost-effectiveness ratios cannot be properly interpreted without consideration of the dollar value of health benefits.
D000043:Abstracting and Indexing; D003362:Cost-Benefit Analysis / Q000379:methods*; D006302:Health Services Research / Q000191:economics*; D008962:Models, Theoretical; D014481:United States; D026712:Value of Life