Costs and health economics

Cost-effectiveness is in vogue. The search for cost-effectiveness (or ‘value for money’ or ‘efficiency’) is being conducted at all levels of government, in most health care systems, and from a number of perspectives. All such searches are examples or special cases of economic evaluation. The search for cost-effectiveness is not confined to national health care strategies and systems’ reorganisations, but is actively under way at both the programme level and systems level. Creating the right incentives and the right micro- and macro-systems for effective and cost-effective delivery of mental health care must be a fundamental objective.

By repute, cost-effectiveness analysis-or economic evaluation more generally-is neither simple nor uncontroversial. In fact, it is merely ‘an effort to bridge the gap between a conceptual modeltheoretic welfare economics - and actual social policy’ (Weisbrod & Helming, 1980). Welfare economics is that branch of economics concerned with the relationship between an economic system and the wellbeing of individuals. It has developed the techniques of economic evaluation as means of appraising efficiency in contexts where markets either do not exist or cannot be relied on to generate efficiency automatically. Where economic evaluation differs from other evaluative techniques is in its examination of a fuller range of causes and effects. The common theme of all evaluative research is to enquire whether a particular project or course of action is worthwhile. The difference between economic and other evaluations is the meaning attached to the term ‘worthwhile’: economic evaluations add the cost dimension.

Economic evaluation does not seek to replace the sound or educated judgement of the decision maker. Final decisions will be made by politicians (at the systems level) or clinicians (at the programme level), advised by administrators and interpreted by managers, in the light of available information. It is the principal aim of all evaluative research, and economic evaluation is certainly no exception, to provide a more considered and sound information base for policy decisions. Some years ago, Weisbrod (1979) made the important point that this technique will never ‘make decisions’, but if it is vigorously pursued it will ‘make decisions better informed’.