Health Economics: Types of Economic Analysis in Healthcare

This article discusses the four types of economic analysis in healthcare: cost-benefit analysis, cost minimization analysis, cost-effective analysis, and cost-utility analysis. It explains how each type differs from the others and explores their impacts on healthcare decisions. The article also provides references for further reading.

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Introduction
Economic evaluation refers to the process of identifying, measuring and assessment of
inputs and outputs of two substitute events and the scrutiny of these alternatives. Economic
appraisal is meant to identify the best course of action.
1. There are four types of economic analysis in healthcare;
a) Cost-benefit analysis
b) Cost minimization analysis
C) Cost-effective analysis
d) Cost-utility analysis (Quah & Haldane, 2017).
2. Describe how they differ from one another
Cost-Benefit Analysis
This is a process of appraisal whereby the budget of interposition is evaluated by
comparing it with the profits got from the intervention. The costs and benefits in CBA are
measured in monetary terms. The net benefit of CBA is calculated as Net profits= profits –costs.
Thus, in a case whereby the benefits surpass the cost sustained in times of intervention, then
there should be a continuation of intervention (Layard, 2016).
Cost Minimization Analysis (CMA)
This is a process of calculating the costs to project the least cost. It is used often in the
evaluation of specific drugs. It is only used when comparing two drugs that are equivalent in
their dosage and the therapeutic impacts. In most cases, there is no equivalence in these two
products and if equivalence cannot be manifested, then the therapeutic equivalence cannot be
demonstrated and hence cost minimization is not effective (Reinsch & Beswick, 2016). Here, all
present and future costs of healthcare are relevant to the patient and the states of diseases are

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related to each relaxing policy. Here, there is no major difference in health status and the
treatment strategies that are assumed. This analysis requires minimal data and can enable the
assessment of the methodological effectiveness in every policy. The analysis assumes that there
are identical outcomes of these diseases and that the handlings that are being compared are
supposed to be robust (Paré, Sicotte, & St.-Jules, 2015).
Cost-Effective Analysis (CEA)
This is whereby the cost is measured contrary to efficacy in the final impact. The impacts
of comparing inventions in CEA are different. However, these impacts are articulated in ordinary
units like the added value or the number of years gained (Weinstein & Stason, 2014). The CEA
is hard to associate the intercessions with the natural impacts that are different from one another.
For instance, the interventions that are focused on the life years that are hoarded cannot be
compared with the interventions that are concentrated on the improvement of the physical
functioning. It is also in this case whereby both the present and future costs of healthcare are
pertinent to the patient (Paré, Sicotte, & St.-Jules, 2015). The disease state here is also compared
to each therapeutic strategy. This analysis uses the normally assessed health consequences such
as blood pressure and renal function among others.
Cost-Utility Analysis
This is whereby the costs sustained in the intrusion are calculated against the efficacy that
is related to health. Utility, in this case, refers to the quality-adjusted life years and disability-
attuned life years. It is a method which is utilized in case there are numerous purposes of the
package and when both qualities of life and quantity of life need to be known it is a method
utilized in making policy level decisions (Paré, Sicotte, & St.-Jules, 2015). In this case, both
present, and future healthcare costs are relevant to the patient. This analysis requires a greater

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amount of data over all types of analysis. It requires several assumptions during the estimation of
health-related quality of life.
3. Impacts on the Possible Questions
CBA answers critical questions like whether we can rely on it to decide about the quality
of life parameters and also answers on whether the decisions based on CBA are ethical enough.
The CUA on the other hand answers questions related to the quality of life and the economic
aspect of healthcare. CMA tries to answer the question of whether the cost of treatment being
compared should be robust or not. Cost-effectiveness analysis tries to answer questions on the
effectiveness of different magnitudes and this discussion considers the impacts that CEA has on
various interventions.
Conclusion
As discussed above, The CEA recounts the cost of management with the healing efficacy
and this is based on the available results of health. Here, the costs per unit obtained from the
analysis are hard to interpret since it is not possible to interpret between disease and population.
The CBA on the other hand is used to measure and compare the costs and benefits while the
CUA is used to show utility that is related to health.

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References
Layard, P. R. (2016). Cost-benefit analysis. London: Cambridge University Press.
Paré, G., Sicotte, C., & St.-Jules, D. (2015). Cost-minimization analysis of a telehomecare
program for patients with chronic obstructive pulmonary disease. Telemedicine Journal
& e-Health, 45(6), 132-156.
Quah, E., & Haldane, J. B. (2017). Cost-benefit analysis. London: Routledge.
Reinsch , J. N., & Beswick, R. W. (2016). Voice mail versus conventional channels: A cost
minimization analysis of individuals' preferences. Academy of Management Journal,
33(4), 80-96.
Weinstein , M. C., & Stason, W. B. (2014). Foundations of cost-effectiveness analysis for health
and medical practices. New England journal of medicine, 33(4), 132-148.