Health Economics: Types of Economic Analysis in Healthcare

Running Head: HEALTH ECONOMICS
HEALTH ECONOMICS
Name
Professor
Institution

HEALTH ECONOMICS 2
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