Douglas K. Owens, MD, MS; Amir Qaseem, MD, PhD, MHA; Roger Chou, MD; Paul Shekelle, MD, PhD; for the Clinical Guidelines Committee of the American College of Physicians
Health care costs in the United States are increasing unsustainably, and further efforts to control costs are inevitable and essential. Efforts to control expenditures should focus on the value, in addition to the costs, of health care interventions. Whether an intervention provides high value depends on assessing whether its health benefits justify its costs. High-cost interventions may provide good value because they are highly beneficial; conversely, low-cost interventions may have little or no value if they provide little benefit.
Thus, the challenge becomes determining how to slow the rate of increase in costs while preserving high-value, high-quality care. A first step is to decrease or eliminate care that provides no benefit and may even be harmful. A second step is to provide medical interventions that provide good value: medical benefits that are commensurate with their costs.
This article discusses 3 key concepts for understanding how to assess the value of health care interventions. First, assessing the benefits, harms, and costs of an intervention is essential to understand whether it provides good value. Second, assessing the cost of an intervention should include not only the cost of the intervention itself but also any downstream costs that occur because the intervention was performed. Third, the incremental cost-effectiveness ratio estimates the additional cost required to obtain additional health benefits and provides a key measure of the value of a health care intervention.
As the line between interventions becomes more horizontal, the cost-effectiveness ratio becomes less favorable because costs are increasing faster than benefits are. The slope of the line between 2 interventions represents the reciprocal of the cost-effectiveness ratio. A lower incremental cost-effectiveness ratio denotes more favorable cost-effectiveness. The lines between interventions A, B, and C are called the cost-effectiveness frontier. Any intervention with costs and QALYs below and to the right of the cost-effectiveness frontier would be dominated (such as intervention D), or less cost-effective than interventions on the frontier. QALY = quality-adjusted life-year.
The cost-effectiveness ratios of interventions are shown on the lines between the interventions. Intervention E costs $35 000 per QALY gained relative to intervention A. Intervention B costs $15 000 per QALY gained relative to intervention E. Intervention D is dominated. Intervention E can be eliminated through extended dominance. QALY = quality-adjusted life-year.
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Owens DK, Qaseem A, Chou R, Shekelle P, for the Clinical Guidelines Committee of the American College of Physicians. High-Value, Cost-Conscious Health Care: Concepts for Clinicians to Evaluate the Benefits, Harms, and Costs of Medical Interventions. Ann Intern Med. 2011;154:174–180. doi: 10.7326/0003-4819-154-3-201102010-00007
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Published: Ann Intern Med. 2011;154(3):174-180.
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