CBA CEA

Definition Full economic evaluation measuring cost and Full economic evaluation compares two or
outcome/benefits both in monetary terms more alternative interventions in relative
costs and consequences, measured in a
single natural unit.
Purpose Compares monetary returns on investments in Evaluates the relative costs and outcomes
health with returns in other areas of the economy. (effects) of different courses of action.
Outcome -Both costs and outcomes are expressed in Measures outcomes in natural units (e.g.,
monetary terms. life years gained, cases prevented), not in
- Provides a net benefit (benefits minus costs) monetary terms.
and/or a benefit-cost ratio (benefits divided by - Provides a cost per unit of effect (e.g.,
costs). cost per life year saved).
- Usually expressed in Incremental cost
effectiveness ratio (ICER) = Difference in
cost/ Difference in outcomes.
Application -Evaluates total costs versus total benefits, Evaluates different
quantified in monetary terms. programs/test/intervention to determine
which identifies the most cases per RM
spent/reduce more pain score per
RM/Highest QOL improvement per RM
Example Evaluating the implementation of a new hospital Evaluating different cancer screening
wing by comparing the total costs of construction programs to determine which one
and operation against the total benefits, including identifies the most cases per RM spent.
improved patient outcomes and reduced waiting
times.
Usefulness for 1) Evaluating health policy/interventions where the 1) Useful when a stakeholder is
health outcome metrics are not suitable interested in a particular output
eg: [Implementation of Health Information metric or when do not need to
Systems] When considering the implementation of compare the outcome to other
electronic health records (EHRs), a CBA can monetize interventions program
benefits like improved efficiency, reduced errors, Vaccination Programs:
and better patient outcomes. This provides a Example: A public health department
comprehensive view of the potential economic wants to determine the most cost-effective
return compared to the initial investment and vaccine for preventing influenza. A CEA can
operational costs. compare the cost per life year saved or
2) facilitates cross-sector comparison cost per case prevented for different
eg: looking at if other government spending should vaccines, focusing on the specific health
be reallocated to the healthcare sector outcome without needing to translate
3) Useful in certain complex intervention contexts benefits into monetary terms or compare
(such as interlinked packages of care where with non-health interventions.
maximising health is not the only objective.
Eg: [Community Health Initiatives]
A CBA of a community-based intervention aimed at
improving both health and social outcomes (e.g., a
program combining health education, vocational
training, and social support). This analysis can
capture the monetary value of diverse benefits like
improved employment rates, reduced crime, better
educational outcomes, and enhanced community
 well-being, offering a comprehensive assessment of
the initiative’s overall value.
Decision  Choose the option with the highest net benefit  Choose the option with the lowest cost
making or highest benefit-cost ratio per unit of effect assuming the effect is
 BCR> 1 is worthwhile program desirable and comparable.
 Consider the optimal allocation of resources in  Only concerned with how to use
its broadest sense because once the benefits healthcare resources in a way that
have been converted into monetary terms, the maximises their output for the cost.
net economic benefit of different activities can  Identify option that provide maximal
be compared (including to those outside of health care for a given cost
healthcare sector → Allocative efficiency across  Deliver a certain service at a minimal
different sectors/ society cost
Advantages  Can compare the economic benefit to  Easier application when benefits
investments outside of the healthcare sector cannot be easily quantified in
→Therefore consider allocative efficiency of monetary terms
resource allocation across different  Useful for comparing interventions
sectors/society achieving the same outcome.
 Potential to value a wider range of benefits.  The cost effectiveness threshold can be
 A monetary output is desirable to a range of a way of capturing how much health is
stakeholders expected to be foregone if the
resources/ budget constraint.
Disadvantages  Difficulties in quantifying and monetizing all  Does not provide a measure of overall
benefits and costs net benefit,
 potential bias in valuing non-market impacts;  Cannot compare interventions with
Challenges in accurately valuing non-market different types of outcomes.
impacts, such as the psychological benefits of  Limited potential in considering
improved mental health or the societal benefits allocative efficiency beyond the
of increased vaccination rates healthcare sector
 Less commonly performed than CEA, ethical  Still associated with equity and ethical
concerns in monetizing health benefits issues