What is the Origin of Cost-Effectiveness of Healthcare?

This concept is foundational to the field of health economics, which gained significant traction globally in the late 20th century as healthcare expenditures began to escalate. The methodology formalizes the societal trade-off between increasing healthcare spending and the corresponding marginal health benefit achieved. Its roots lie in utilitarian philosophy applied to public resource distribution.

What is the Mechanism of Cost-Effectiveness of Healthcare?

The process involves calculating the net cost of an intervention compared to a standard alternative, and dividing this cost difference by the difference in health effects, typically measured in QALYs. By establishing a threshold value for acceptable cost per QALY gained, healthcare systems can rationally determine which treatments offer the best value for money. This mechanism ensures that clinical practice guidelines and coverage decisions are informed by both clinical efficacy and economic sustainability.

Cost-Effectiveness of Healthcare

Meaning

A form of economic evaluation that assesses the value of a healthcare intervention by comparing its cost with the health outcomes it produces. Outcomes are frequently measured in natural units like life years gained or in quality-adjusted life years (QALYs), yielding an incremental cost-effectiveness ratio (ICER). This metric provides a crucial benchmark for clinical and policy decision-makers in prioritizing resource allocation within constrained budgets.