Clinicians: Beware the Claim of Cost-Effectiveness

Brad Spellberg, MD

Disclosures

February 28, 2017

Cost-Effective or Cost-Reducing?

Several aspects of these analyses can be confusing. Most important, "cost-effective" is very different from "cost-reducing."

I have often reviewed physician-generated requests at the hospital or formulary level that propose adding a new technology, with the justification that it will save the hospital money because the intervention is cost-effective. This belief reflects a fundamental misunderstanding of the difference between "cost-effective" and "cost-reducing." Adding a cost-effective new technology generally does not reduce costs or save money.[5]

Adding a cost-effective new technology generally does not reduce costs or save money.

Interventions that are cost-reducing have negative values for cost per QALY saved or ICERs. Such interventions are exceedingly rare. Almost all interventions have positive values for cost per QALY saved or ICERs—that is, they increase costs. Companies intentionally price their products to reach the upper limit of the cost per QALY saved or the ICER that society deems acceptable.

If you are considering adopting a new intervention because it is cost-effective, but not cost-reducing (ie, the cost per QALY saved or the ICER is greater than zero), use of the technology will increase, rather than reduce, healthcare costs. It will add costs by an amount that society has arbitrarily deemed worth paying to get the benefit of the technology. Furthermore, even in the rare circumstance in which societal costs are reduced by the technology (ie, the cost per QALY saved or the ICER is negative), this does not necessarily mean that the patient's or provider's out-of-pocket costs will be reduced.

This brings us to a second confusing point about cost-efficacy analyses: The costs considered usually take a societal perspective,[3,4] rather than the perspective of the individual provider or patient, or the hospital or office where care is being delivered.

Comments

3090D553-9492-4563-8681-AD288FA52ACE
Comments on Medscape are moderated and should be professional in tone and on topic. You must declare any conflicts of interest related to your comments and responses. Please see our Commenting Guide for further information. We reserve the right to remove posts at our sole discretion.
Post as:

processing....