Costs, true costs, and whose costs in economic analyses in medicine?

Cost-effectiveness analyses of clinical practices are becoming more common in the development of health policy. However, such analyses can be based on misconceptions and flawed assumptions, leading to flawed policies. We argue that such is the case with the recent recommendations for routine measurement of umbilical cord gases at delivery, a policy based on the assumption that this clinical strategy will pay for itself by reduced malpractice awards. As we demonstrate, this argument reflects the physician's perspective, not that of society or of patients. It also ignores the fact that malpractice awards are largely transfer payments, not cost of healthcare.