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Cost-Effectiveness Analysis 

Image by Natasha Spencer

What is it? 

Most used economic evaluation, particularly used in the health field. It compares the cost of two or more interventions dealing with health units. Health outcomes include heart attacks, deaths, etc. If the net cost, or cost of an intervention minus medical and productivity costs, is positive then it means a more effective intervention is also more costly. A ratio is found by dividing net cost by the change in health outcomes. If the result is negative, then the most effective intervention is less costly. The goal is to save costs while finding the intervention that will improve health outcomes. 

How to Calculate CEA

1. Calculate net cost

             Costs of implementation (testing and treatment)

      -     Cost averted (cost of treatment for health outcome)

             Net Costs: + is money spent; - is money saved

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2. Identify the change in the health outcome(s)

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3. Calculate cost-effectiveness ratio

                          Net Costs                  

              Change in health outcome 

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Example

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