An introduction to clinical microeconomic analysis: purposes and analytic methods

The recent concern with health care economics has fostered the development of a new discipline that is generally called clinical microeconomics. This is a discipline in which microeconomic methods are used to study the economics of specific medical therapies. It is possible to perform stand alone cost analyses, but more profound insight into the medical decision making process may be accomplished by combining cost studies with measures of outcome. This is most often accomplished with cost-effectiveness or cost-utility studies. In cost-effectiveness studies there is one measure of outcome, often death. In cost-utility studies there are multiple measures of outcome, which must be grouped together to give an overall picture of outcome or utility. There are theoretical limitations to the determination of utility that must be accepted to perform this type of analysis. A summary statement of outcome is quality adjusted life years (QALYs), which is utility time socially discounted survival. Discounting is used because people value a year of future life less than a year of present life. Costs are made up of in-hospital direct, professional, follow-up direct, and follow-up indirect costs. Direct costs are for medical services. Indirect costs reflect opportunity costs such as lost time at work. Cost estimates are often based on marginal costs, or the cost for one additional procedure of the same type. Finally an overall statistic may be generated as cost per unit increase in effectiveness, such as dollars per QALY.(ABSTRACT TRUNCATED AT 250 WORDS)