Dealing with Bad Risk in Cost-Effectiveness Analysis: The Cost-Effectiveness Risk-Aversion Curve

Area of Science:

• Health economics
• Decision analysis
• Risk management in healthcare

Background:

• Cost-effectiveness analysis (CEA) is crucial for healthcare resource allocation.
• Uncertainty in CEA is typically addressed using cost-effectiveness acceptability curves (CEACs).
• CEACs can obscure uncertainty in individual program costs and effects, which is vital for risk-averse decision-makers.

Purpose of the Study:

• To propose a novel method for evaluating healthcare interventions that accounts for downside risk.
• To introduce a new metric, the cost-effectiveness risk-aversion curve (CERAC), for risk-averse decision-making.
• To provide a tool that preserves individual program uncertainty in CEA.

Main Methods:

• Penalizing expected net monetary benefit (NMB) by downside risk.
• Introducing the cost-effectiveness risk-aversion curve (CERAC).
• Calculating the net benefit-to-risk ratio across various threshold ratios.

Main Results:

• The proposed method ranks programs based on risk-adjusted NMB.
• CERAC provides a measure of net benefit relative to risk.
• CERAC can be easily derived from existing CEA results.

Conclusions:

• CERAC is a valuable tool for risk-averse decision-makers in healthcare.
• This approach enhances CEA by incorporating risk preferences.
• CERAC complements existing methods like CEAC for comprehensive decision support.