Cost-consequence analysis

Three evaluative modes are discussed here cost-benefit analysis, cost-effectiveness analysis (and its recently distinguished variant cost-consequences analysis) and cost-utility analysis. Books by Drummond et al (1997) and Gold et al (1996)—the two most respected and widely cited texts on health economics evaluations—give excellent accounts of these modes of economic evaluation, and interested readers are referred to them for more advanced discussions. 

Cost-benefit analysis Cost-effectiveness analysis Cost-consequences analysis Cost-utility analysis Cost-offset analysis Comprehensive Comprehensive Comprehensive Comprehensive Comprehensive Monetary valuation of outcomes One outcome only Multiple outcomes measured Summary utility score of outcomes No outcomes measured... 

Cost-consequence analysis Categorized list Categorized list of... 

Table 12.1 summarizes five major types of pharmacoeconomic evaluations cost-consequence, cost-benefit, cost-effectiveness, cost-minimization, and cost-utility (Drummond et al., 1997 Kielhorn and Graf von der Schulenburg, 2000). In a cost-consequence analysis, a comprehensive list of relevant costs and outcomes (consequences) of alternative therapeutic approaches are presented in tabular form. Costs and outcomes are typically organized according to their relationship to cost (direct and indirect), quality of life, patient preferences, and clinical outcomes (see taxonomy below). No attempt is made to combine the costs and outcomes into an economic ratio, and the interpretation of the analysis is left in large part to the reader. 

The underlying premise of pharmacoeconomic analyses is that fiscal resources are scarce and that there is a need to make decisions based on the relative value of different interventions in creating better health and/or longer life. There are five main analytical techniques used to evaluate the incremental value of products. These are cost-consequence analysis (CCA) cost-effectiveness analysis (CEA) cost-benefit analysis (CBA) cost-minimisation analysis (CMA) and cost-utility analysis (CUA). Although the identification and valuation of the cost component (numerator) of these analyses are similar, it is the identification and valuation of the consequences (denominator) that truly differentiate these analytic techniques. A brief description of each of these techniques follows. 

Cost consequences analysis (CCA)—A range of outcome measures is presented alongside costs but no ratio of cost per unit of outcome is presented. 

Partial economic evaluations may include simple descriptive tabulations of outcomes or resources consumed and thus require a minimum of time and effort. If only the consequences or only the costs of a program, service, or treatment are described, the evaluation illustrates an outcome or cost description. A cost-outcome or cost-consequence analysis (CCA) describes the costs and consequences of an alternative but does not provide a comparison with other treatment options.Another partial evaluation is a cost analysis that compares the costs of two or more alternatives without regard to outcome. 

AWP average wholesale price B/C ratio beneht-to-cost ratio CAP community-acquired pneumonia CBA cost-beneht analysis CCA cost-consequence analysis CEA cost-effectiveness analysis COI cost of illness CMA cost-minimization analysis CUA cost-utility analysis... 

Cost-minimization analysis compares costs for identical outcomes. Cost-consequence analysis establishes consequences and costs of a therapy but leaves the synthesis to the decision maker. Cost-effectiveness analysis uses natural medical units, such as life years gained, and costs them. Cost-utility analysis converts all effects into some common utility measure. Cost-benefit analysis converts everything, including medical outcomes, to a monetary equivalent. 

Cost-consequence analysis. An evaluation in which costs and therapeutic effects of a therapy are measured but no decision synthesis is attempted by the evaluator, this... 

Process Hazards Analysis. Analysis of processes for unrecogni2ed or inadequately controUed ha2ards (see Hazard analysis and risk assessment) is required by OSHA (36). The principal methods of analysis, in an approximate ascending order of intensity, are what-if checklist failure modes and effects ha2ard and operabiHty (HAZOP) and fault-tree analysis. Other complementary methods include human error prediction and cost/benefit analysis. The HAZOP method is the most popular as of 1995 because it can be used to identify ha2ards, pinpoint their causes and consequences, and disclose the need for protective systems. Fault-tree analysis is the method to be used if a quantitative evaluation of operational safety is needed to justify the implementation of process improvements. 

In any case, like frequency analysis, examining the uncertainties and sensitivities of the results to changes in boundary conditions and assumptions provides greater perspective. The level of effort required for a consequence analysis will be a function of the number of different accident scenarios being analyzed the number of effects the accident sequence produces and the detail with which the release, dispersion, and effects on the targets of interest is estimated. The cost of the consequence analysis can typically be 25% to 50% of the total cost of a large QRA. 

Consider the consequences of possible errors for risk assessment or for cost-benefit analysis when considering alternative ERS. 

Cost-benefit analysis uses monetary valuations of the morbidity and mortality consequences of diseases or interventions. This allows estimation of the absolute and relative net social benefit of intervention, calculated as the monetary value of the consequences of an intervention minus the direct costs. Any health or social care intervention with a net social benefit greater than zero (i.e. the benefits are greater than the costs) is worth undertaking. Two approaches have typically been used to value outcomes in monetary values. The first is the human capital approach, where the monetary value of benefit represents the value of changes in the amount or type of work done or use of leisure time as... 

In a cost-benefit analysis, both costs and consequences are valued in dollars and the ratio of cost to benefit (or more commonly benefit to cost) is computed. Cost-benefit analysis has been used for many years to assess the value of investing in a number of different opportunities, including investments (or expenditure) for health care services. Cost-effectiveness analysis attempts to overcome (or avoid) the difficulties in cost-benefit analysis of valuing health outcomes in dollars by using nonmonetary outcomes such as life-years saved or percentage change in biomarkers like serum cholesterol levels. Cost-minimization analysis is a special case of cost-effectiveness analysis in which the outcomes are considered to be identical or clinically equivalent. In this case, the analysis defaults to selecting the lowest-cost treatment alternative. Cost-utility analysis is another special case of cost-effectiveness analysis in which the value of the outcome is adjusted for differences in patients preferences (utilities) for the outcomes. Cost-utility analyses are most appropriate when quality of life is a very important consideration in the therapeutic decision. 

Decision analysis provides a formal theory for choosing among alternatives whose consequences are uncertain. The key idea in decision analysis is the use of judgmental probability as a general way to quantify uncertainty. Decision analysis has been widely taught and practiced in the business community for more than a decade (2 -4). It provides a natural way to extend cost-benefit analysis to include uncertainty. 

Economic evaluation compares costs and consequences of alternative health care treatments or programs (Drummond et al. 2005). In one form of economic evaluation, cost-benefit analysis, all costs and consequences are valued in monetary terms. However, in health care it is much more common to use cost-effectiveness analysis, where the difference in cost between alternatives is compared with the difference in outcomes measured in units such as life years gained or quality-adjusted life years (QALYs) gained. 

AspenTech has developed and applied quantitative cost-benefit analysis for engineering systems, including applied thermodynamics. The analysis, provided by Aspen Value Process (AVP), is a collaborative process yielding multi-level, broad commitment for business process changes enabled by software solutions. A key outcome of AVP is the customers validation of the estimated value. The financial information is highly sensitive and consequently there are no published cases available. Here, we present the basic approach and give typical quantitative assessment results. One could either carry out an extrapolation of this analysis to assess the industry-wide benefits (as is done below), or, alternatively, carry out a series of these assessments with specific producers. 

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