Incremental Cost Effectiveness Ratio Calculations Examples

Explanation and tour of the incremental cost effectiveness ratio. It represents the average incremental cost associated with 1 additional unit of the measure of effect.

Using Cost Effectiveness Analysis To Address Health Equity

Incremental cost e ectiveness ratio icer once we have a measure of bene t we can calculate the icer among alternatives reminder.

Incremental cost effectiveness ratio calculations examples. Cost effectiveness analysis is sometimes called cost utility analysis. An incremental cost effectiveness ratio is a summary measure representing the economic value of an intervention compared with an alternative comparator. Incremental cost effectiveness ratio icer 900 0 1 9000.

Incremental cost 100 1000 900. It is defined by the difference in cost between two possible interventions divided by the difference in their effect. Each unit of effectiveness saves 9000 with the new intervention strategy.

The incremental cost effectiveness ratio icer is a statistic used in cost effectiveness analysis to summarise the cost effectiveness of a health care intervention. Two or more programs affecting the same health outcome can be compared in terms of incremental net costs of one program compared to another divided by incremental net effects of one program compared to another. For example if the outcome is preventing one case of hiv you could assign a monetary value to this by adding up the average healthcare costs for an hiv patient.

As previously stated an icer includes the calculation of upfront and downstream cost differences as well as near term and or long term i e life expectancy outcome differences. Statistical methods for cea have been developed and a measure called the incremental cost effectiveness ratio icer has been widely adopted by researchers and policy makers weinstein and stason 1977. In cost benefit analysis the outcome is described in monetary terms.

The cost effectiveness ratio is most useful when expressed as dollars per life year gained with appropriate adjustments for quality. An icer is calculated by dividing the difference in total costs incremental cost by the difference in the chosen measure. It is usually the main output or result of an economic evaluation.

To view text subtitles for the audio portion click the cc button on the bottom right of the video viewer. Incremental effectiveness 0 9 0 8 0 1. In this example if the cost effectiveness ratio were 35 000 per life year gained one would expect to gain one more life year for each additional 35 000 that was spent testing children for hypercholesterolemia.

Cost effectiveness ratios can be an average. It is different to cost benefit analysis. Icer c 1 c 2 e 1 e 2 c e c i and e i are the costs and e ectiveness measure of alternative i the purpose is to compare the incremental costs to the incremental bene ts the result is the incremental cost per unit.

An incremental or marginal cost effectiveness ratio includes a comparison of the differences in cost and effectiveness of more than one imaging modality. The icer is expressed as the ratio of the difference in costs between two strategies to the difference in effectiveness. One intervention at a time is assessed in terms of net costs divided by net effects.

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