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How Does Cost-Effectiveness Analysis in New Medical Treatments Work?

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Cost-effectiveness analysis (CEA) is a type of economic evaluation that compares the relative costs and health outcomes (effects) of two or more interventions. CEA is a complex topic, and there are many different ways to do it. In this post, we’ll give an overview of the basics of CEA and how it can be used in healthcare decision-making.

What is cost-effectiveness analysis in healthcare?

Cost-effectiveness analysis (CEA) is a tool used in healthcare to compare the costs and effectiveness of two or more medical treatments in order to determine which one should be offered. This tool is especially useful for comparing treatments to the status quo.

CEA not only determines the cost but also assigns a value to the outcome. The updated recommendations from the U.S. Public Health Service (PHS) Task Force include the following:

  1. Estimating costs from two reference case perspectives.
  2. Discounting costs and benefits at a 3% annual rate, using modeling to estimate costs and benefits over the patient’s lifetime.
  3. Estimating the statistical significance of cost-effectiveness findings.

What are the benefits of cost-effectiveness analysis in healthcare?

1. It allows for the comparison of different treatments or interventions based on their cost and effectiveness.

Cost-effectiveness analysis (CEA) helps to compare different treatments or interventions by measuring the cost of achieving a given health outcome. CEA allows decision-makers to compare the cost of different interventions in terms of their cost per unit of health gained. This enables decision-makers to identify cost-effective interventions that may provide more benefits over a lower price.

2. It allows for the identification of the most cost-effective treatment options, which can then be implemented in a healthcare system.

Cost-effectiveness analysis is a valuable tool for helping healthcare managers make informed decisions about implementing treatment options in a healthcare system. This analysis aims to find the most cost-effective solution to meet the needs of health services and patients.

3. It allows for the identification of treatments or interventions that may not be worth the cost.

Cost-effectiveness analysis helps identify treatments or interventions that may not be worth the cost by comparing the cost of the intervention with the expected health outcomes. It measures the amount of health benefit that can be gained for a given cost and can help identify interventions that may be too costly to justify given the amount of health benefit they are expected to produce.

4. It allows for a more informed decision-making process regarding the allocation of healthcare resources.

Cost-effectiveness analysis is a tool used to inform the decision-making process regarding the allocation of healthcare resources. This process helps to identify the most cost-efficient option among a set of alternatives by comparing the costs with the effectiveness of different treatments. By analyzing the direct and indirect costs, this process provides a comprehensive assessment of the value of different treatments, allowing health administrators and managers to make informed decisions regarding resource allocation.

5. It can help to improve the transparency and accountability of healthcare systems

Cost-effectiveness analysis can help improve the transparency and accountability of healthcare systems by providing a useful tool for assessing the relative efficiency of different interventions and treatments. This type of analysis can be used to quantify the costs and benefits of different interventions, taking into account both economic and health outcomes.

6. It allows for the measurement of the impact of a particular treatment or intervention, allowing for future projections of outcomes.

Cost-effectiveness analysis (CEA) can measure the impact of a particular treatment or intervention by looking at the changes in health outcomes and the net cost per unit of health gained relative to other available treatments or interventions. CEA takes into account the following:

  1. The existing burden of diseases
  2. The current coverage of health interventions
  3. The overall capacity of the health system and contextual factors

7. It can help to identify synergies between cost-effectiveness and other metrics, such as quality, safety, and patient satisfaction.

Cost-effectiveness analysis can help identify synergies between cost-effectiveness and other metrics using the extra-welfarist approach, where the objective is to maximize contributions to societal health measured as the sum of individual health status.

What are the steps involved in conducting a cost-effectiveness analysis?

Here are the steps to conduct a cost-effective analysis in healthcare:

  1. Define the research strategy. Determine the research question, the type of cost-effectiveness analysis (cost-consequence, cost-minimization, cost-effectiveness, cost-utility, or cost-benefit analysis), the population of interest, and the resources available for the study.
  2. Collect and analyze data. Gather data from databases, such as the Web of Science (WoS) platform and other sources. Perform a content analysis of the research listed, focusing on the application of bibliometrics in a very specific way in certain pathologies, and identify patterns and factors of relevance. Use Vosviewer software to analyze the relevance of universities.
  3. Evaluate the country of origin of the study and analyze publications by universities and authors.
  4. Perform a cost-benefit analysis. Make sure to begin with an exhaustive list of all the different costs and benefits that could arise, and conduct a sensitivity analysis to test the robustness of the CBA result to changes in some of the key numbers.
  5. Analyze scenarios, trends, and practical implications. Identify factors such as the conceptualization, purpose, and objective within public and private institutions, identifying its main authors, universities, reference countries, funding institutions, authors’ relationship networks, and related themes.
  6. Apply the results. Take into consideration the results when making decisions about the cost-effectiveness of different healthcare options and programs.
  7. Present the results. Present the results clearly and concisely in a way that is easily understandable to stakeholders.

How reliable Is cost-effectiveness analysis?

Cost-effectiveness analysis is a valuable tool for assessing the value of a particular intervention by comparing its cost to its effectiveness. However, some uncertainty is involved in making these assessments, as the accuracy of the measures of cost and effectiveness varies.

This uncertainty is mainly due to random sampling error, which can be evaluated by looking at the distribution of the incremental cost-effectiveness ratio (ICER) when patient-level data are available. Additionally, it is important to consider the appropriateness of the control group used, as this decision can heavily influence the ICER. Despite these sources of uncertainty, cost-effectiveness analysis can provide valuable insights into the cost and effectiveness of interventions and is, therefore, a reliable tool for making medical decisions and allocating resources.


In conclusion, cost-effectiveness analysis is a powerful tool in healthcare decision-making that helps to identify the most efficient use of resources while ensuring optimal patient outcomes. By carefully evaluating the costs and benefits of different treatment options, healthcare providers and policymakers can make informed decisions that improve patients’ overall quality of care.

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