The economic evaluation of health care

Economic evaluation is the comparative analysis of alternative courses of action in terms of both costs and consequences. Economic evaluation can also be called economic appraisal or the cost-benefit approach. The basis of economic evaluation lies in comparing costs and benefits of an intervention, program or service. The most important reasons for undertaking an economic evaluation are that resources (e.g., money, time, staff, equipment) are scarce compared with the demands made on them, and that such resource constraints require choices to be made. In this paper, four types of economic evaluations (cost-minimisation, cost-effectiveness, cost-utility and cost-benefit analyses) are described.