Purpose: Cost-effectiveness analysis has traditionally been seen as a means of satisfying an explicit social objective subject to a fixed budget constraint. As a result, existing methods largely ignore budget impact considerations in health systems where budgets are not fixed. In particular, none of the traditional methods of presenting results – such as the cost-effectiveness plane, incremental cost-effectiveness ratios (ICERs), and cost-effectiveness acceptability curves (CEACs) – can be used to summarize the results of a cost-effectiveness analysis and budget impact assessment simultaneously. Our objective was to develop such a method in a way which is useful for decision makers.
Method: We present a novel method for combining cost-effectiveness and budget impact considerations into a single analysis. To do this, we disaggregate the incremental costs of the health technology into those costs which fall on the health budget and displace other health activities and those costs which result in an expansion of the health budget. The net health benefit of the technology is then compared directly against the net budget impact.
Result: Our method clearly reveals the trade-off between the cost-effectiveness and budget impact of the health technology across a range of possible values of the cost-effectiveness threshold.
Conclusion: Our method aids decision makers by making the trade-off between the cost-effectiveness and budget impact of new health technologies explicit. Our method also allows analysts to provide meaningful information to decision makers on the cost-effectiveness and budget impact of new health technologies.
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