What every doctor should know about economics: Part 2. The benefits of economic appraisal

In this article we have discussed a number of aspects of economic appraisal. Economic evaluation considers both costs and benefits. Cost-benefit analysis requires the evaluation of health in dollar terms but allows the comparison of health programmes with other programmes or the evaluation of one project alone. Because of the problems that are associated with placing a monetary value on life and health, cost-benefit analysis has not been used in the health field as extensively as has cost-effectiveness analysis. Cost-effectiveness analysis is used to compare alternative programmes with the same health goal. The importance of quality as well as length of life as health outcomes has led to the development of cost-utility analysis. Finally, a good economic evaluation of health care requires the collaboration of clinicians and health economists.