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Incremental Cost-Effectiveness in Medicine


In healthcare, analysis of healthcare resource expenditure relative to the expected medical benefits is helpful in setting priorities and healthcare decision-making. It involves a systematic analysis of the costs, benefits and effectiveness of public health investment alternatives. Cost-effectiveness analysis is important in the determination of efficient medical choices and in medical decision-making.

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Cost-effectiveness analysis is used to assess whether the benefits of a new treatment or any other healthcare program match its cost. However, cost-effectiveness analysis alone cannot be used to adequately assess the allotment efficiency of a treatment program; that is, whether the extra costs relative to the status quo are worth the benefits expected (Donaldson, Currie, & Mitten, 2002, p.234). Relevant data on the effectiveness of a proposed treatment program and its corresponding cost can be considered jointly in a matrix. The program is worth undertaking if costs are saved with greater effectiveness achieved relative to the existing care (Huang, Zhang, Sydney, Melinda, David, & Marshall, 2007, p.2179). In this regard, the cost-effective analysis should involve neither comparisons of different population subgroups nor the element of the incremental cost-effectiveness ratio. Otherwise, it raises issues about opportunity costs and allocative efficiency (Trueman, Drummond, & Hutton, 2001, p.609).

The aforementioned reasoning provides insights into the cost-effectiveness considerations prior to the adoption or rejection of a particular intervention program (Litvak, Long, & Schwartz, 2000, p.254). For instance, a study conducted by Kim and Goldie on the cost-effectiveness of including boys in vaccination program established that the program was not cost-effective considering the incremental cost-effectiveness ratios was not included initially (2009, p.97). In contrast, a study conducted by Huang et al. established that the HDC program was found to be cost-effective considering when incremental cost-effectiveness ratio parameter is considered.


Donaldson et al.’s rationale has implications on current policy and potential change in policy. With regard to efficiency and resource allocation, the cost-effectiveness of an intervention program can be determined by evaluating the expected increase in output or efficiency relative to the further resources required.

Reference List

Alligood, M., & Marinner-Tomey, A. (2005). Nursing Theory: Utilization and application. St. Louis, MO: Mosby.

Donaldson, C., Currie, G., & Mitton, C. (2002). Cost-Effectiveness Analysis in Health Care: contraindications. BMJ, 325, 233-235.

Gordon, M. (2007). Nursing Diagnoses. Sudbury, MA: Jones & Battet.

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Huang, E., Zhang, Q., Sydney, E., Melinda, L., David, O., & Marshall, C. (2007). The Cost-Effectiveness of Improving Diabetes Care in U.S. Federally Qualified Community Health Centers. Health Services Research, 42(6), 2174-2193.

Kim, J., & Goldie, S. (2009). Cost-effectiveness analysis of including boys in a human Papillomavirus vaccination program in the United States BMJ Research, 27(6), 97-101.

Litvak, E., Long, M., & Schwartz, S. (2000). Cost-effectiveness analysis under Managed care: not yet ready for prime time? Am J Manag Care, 6, 254-256.

Meleis, A. (2006). Theoretical Nursing: Development and Progress. Philadelphia: Lippincott, Williams & Wilkins.

Trueman, P., Drummond, M., & Hutton, J. (2001) Developing guidance for budget Impact analysis. Pharmacoeconomics, 19(5), 605-607.

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