Cutting Costs, Saving Lives: A Surgeon's Guide to the Foundations of Cost-Effectiveness Analysis

As surgical care faces increasing financial scrutiny, there is a growing need for clinicians to understand the economic value of interventions. Cost-effectiveness analysis (CEA) provides a structured approach to comparing clinical strategies in terms of both outcomes and costs; however, these methods remain underutilized and underappreciated in many surgical disciplines.

This article introduces foundational concepts in CEA, including comparative evaluation, quality-adjusted and disability-adjusted life years, cost estimation, incremental cost-effectiveness ratios, and modeling techniques such as decision trees, Markov models, and microsimulation. We also explain the role of sensitivity analyses in addressing uncertainty. Concepts are illustrated with examples relevant to surgical and policy decision-making.

The explainer provides a structured framework for interpreting and critiquing CEAs, highlighting how model structure, perspective, and assumptions affect conclusions about value. It provides guidance for critically appraising published CEAs and understanding their implications for clinical practice, resource allocation, and guideline development.

This article serves as a practical entry point for clinicians, researchers, and decision-makers seeking to understand and apply cost-effectiveness methods. It is intended to build foundational fluency in economic evaluation and support more informed engagement with value-based care, policy design, and evidence appraisal.