Non-linearity in the cost-effectiveness frontier
Conventional cost-effectiveness decision rules rely on the assumptions that all health care programmes are divisible and exhibit constant returns to scale for a homogeneous population; hence, the path between adjacent programmes on a cost-effectiveness frontier must be linear. In this paper we build a framework to analyse non-linear 'expansion' paths. We model the impact of two key sources of non-linearity: economies of scale or scope in the production of health care; and prioritisation of patients who are most likely to benefit from more expensive and more effective treatments. We conclude that the expansion path might be linear, convex or concave, depending on the situation. The path might also exhibit vertical discontinuity due to fixed costs or horizontal discontinuity due to indivisibility. The efficiency of resource allocation might be improved by empirical estimation of expansion paths. We discuss the advantages and disadvantages of this approach compared with a standard stratified analysis. Copyright © 2006 John Wiley & Sons, Ltd.
Volume (Year): 15 (2006)
Issue (Month): 6 ()
|Contact details of provider:|| Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- repec:spr:pharme:v:17:y:2000:i:5:p:479-500 is not listed on IDEAS
- Alvarez, Luis H. R. & Stenbacka, Rune, 2001. "Adoption of uncertain multi-stage technology projects: a real options approach," Journal of Mathematical Economics, Elsevier, vol. 35(1), pages 71-97, February.
- Elamin H. Elbasha & Mark L. Messonnier, 2004. "Cost-effectiveness analysis and health care resource allocation: decision rules under variable returns to scale," Health Economics, John Wiley & Sons, Ltd., vol. 13(1), pages 21-35.
- Stevens, Warren & Normand, Charles, 2004. "Optimisation versus certainty: understanding the issue of heterogeneity in economic evaluation," Social Science & Medicine, Elsevier, vol. 58(2), pages 315-320, January.
- Nancy Devlin & David Parkin, 2004. "Does NICE have a cost-effectiveness threshold and what other factors influence its decisions? A binary choice analysis," Health Economics, John Wiley & Sons, Ltd., vol. 13(5), pages 437-452.
- Ben-Zion, Uri & Gafni, Amiram, 1983. "Evaluation of public investment in health care : Is the risk irrelevant?," Journal of Health Economics, Elsevier, vol. 2(2), pages 161-165, August.
- Palmer, Stephen & Smith, Peter C., 2000. "Incorporating option values into the economic evaluation of health care technologies," Journal of Health Economics, Elsevier, vol. 19(5), pages 755-766, September.
- Andre Ament & Rob Baltussen, 1997. "The Interpretation of results of economic evaluation: explicating the value of health," Health Economics, John Wiley & Sons, Ltd., vol. 6(6), pages 625-635.
- Birch, Stephen & Gafni, Amiram, 1993. "Changing the problem to fit the solution: Johannesson and Weinstein's (mis) application of economics to real world problems," Journal of Health Economics, Elsevier, vol. 12(4), pages 469-476, December.
- Brouwer, Werner B. F. & Koopmanschap, Marc A., 2000. "On the economic foundations of CEA. Ladies and gentlemen, take your positions!," Journal of Health Economics, Elsevier, vol. 19(4), pages 439-459, July.
- Johannesson, Magnus, 1995. "The relationship between cost-effectiveness analysis and cost-benefit analysis," Social Science & Medicine, Elsevier, vol. 41(4), pages 483-489, August.
- Johannesson, Magnus & Weinstein, Milton C., 1993. "On the decision rules of cost-effectiveness analysis," Journal of Health Economics, Elsevier, vol. 12(4), pages 459-467, December.
- Ubel, Peter A. & Jepson, Christopher & Baron, Jonathan & Hershey, John C. & Asch, David A., 2003. "The influence of cost-effectiveness information on physicians' cancer screening recommendations," Social Science & Medicine, Elsevier, vol. 56(8), pages 1727-1736, April.
- Douglas Coyle & Martin J. Buxton & Bernie J. O'Brien, 2003. "Stratified cost-effectiveness analysis: a framework for establishing efficient limited use criteria," Health Economics, John Wiley & Sons, Ltd., vol. 12(5), pages 421-427.
When requesting a correction, please mention this item's handle: RePEc:wly:hlthec:v:15:y:2006:i:6:p:565-577. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.