Cost Effectiveness in Health Care

In health care being cost effective is important because of the strict budget guidelines and the importance of providing good health care services. Cost effectiveness is utilizing resources to the best of their ability and creating a good health care outcome. There are many different ways to use cost effective techniques to bring change into a facility. The practice of using cost effective methods is important to know because it has a direct relationship to the evaluation of health services and outcomes.

Robinson defines cost-effectiveness analysis as, “a form of economic evaluation in which the costs of alternative procedures or programmes are compared with outcomes measured in natural units-for example, cost per life year saved, cost per case cured, cost per symptom free day” (1993, p. 307). Simply put, “cost-effectiveness analysis and cost-utility analysis provide information about the differences in outcomes in relation to differences in costs” (Hicks, 2014, p.342).

This comparison is important in many health care organizations because as new technology and medical procedures come out, it is important to know if a change from the current tools and practices should be made to the new ones. To be effective in providing good medical care an organization has to know if a new procedure will improve health outcomes or not. If an organization does not pay attention to the costs of adding new technology, then it can create a deficit in the budget and push back regular activities the organization could have normally provided; had it not used up the money set aside for those tasks.

Detsky, & Laupacis state that a cost effective analysis, “requires allocating a fixed budget across all competing programs and is specifically aimed at ...

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...5-D Health-Related Quality of Life Index can help measure the person’s quality of life by using various factors called dimensions. These dimensions can include: breathing, speech, mental functioning, hearing, eating, eliminating, sleeping, mobility, vision etc. This index helps in cost effectiveness because it allow for the evaluation of health services. The organization can see the value of adding new technology or procedures and decide the effectiveness of utilizing the procedure or not.

In conclusion, cost effectiveness is important to understand because of the effect it has on the evaluation of health services. Two tools that are used in evaluating cost-effectiveness include QALY and the 15-D Health-Related Quality of Life Index. The organization benefits by being cost-effective because then they can provide services that a produce a good outcome.