The basic components of a cost–effectiveness analysis are demonstration of the relative effectiveness of the new technology compared to the old, conversion of the effectiveness of the new technology into a common unit of measurement of benefit in order to make this measurement comparable to that of other, competing technologies, and the measurement of the incremental costs. This chapter focuses on the quality of the evidence supporting the effectiveness of the new technology compared to older technologies; that is, the measurement of incremental effectiveness (Effect). Later chapters will review the principles of measuring costs and converting estimates of effectiveness into common units of measurement such as utility and benefit.

Nature of the evidence

Assessing relative effectiveness of a new technology

To understand the nature of the evidence supporting the effectiveness of new health care technologies, it is useful to review the types of health care technologies under consideration. A health care technology includes all interventions that require the use of both labor (e.g., clinicians) and nonlabor (e.g., pharmaceutical products or diagnostic equipment) resources. A wide variety of health care technologies is aimed at reducing the burden of disease, including pharmaceutical products, surgical techniques, diagnostic equipment, diagnosis and development and delivery of treatment plans, counseling services, and interdisciplinary programs involving combinations of all of the above. Measurements of effectiveness require demonstration that the new technology does more good than harm compared with the older technology when applied to a target group of patients and provided by a particular group of providers.