Economic Evaluation of Advanced Technology in Healthcare

Economic Evaluation of Advanced Technology in Healthcare


EconomicEvaluation of Advanced Technology in Healthcare




EconomicEvaluation of Advanced Technology in Healthcare

Economicevaluation can be defined as the process of determining theefficiency of a program or project in term of costs incurred andbenefits achieved (Hoomansand Severens, 2014). Technology advancement has created the need forthe healthcare sector to embrace technology to enhance the quality ofthe care given to patients. For the last twenty years, variouschanges have implemented in the healthcare sector to integrate theuse of technology to ensure efficiency. For health care programs suchas advanced technology, costs can be defined as the finances andother resources required for sustaining the program (McBrien andManns, 2013). Benefits can be described as the positive effects ofthe program on the healthcare sector as a whole and most importantlyto the patients.

McBrienand Manns argue that there are two concepts crucial to monetaryassessment: opportunity expenditure and effectiveness. The firstconcept is determined by values of insufficiency and alternatives.Since resources are limited to meet all the needs of the society,people are expected to make the right choices. In health care, theoptions include selecting programs worth of utilizing the limitedresources. On the other hand, are effectiveness stands for thebenefits derived from implementing the selected health care programs(McBrien and Manns, 2013). The paper aims to discuss the threeeconomic tools used in evaluating advanced technology in health care.

EconomicTools for Assessing Advanced Technology in Healthcare

Economicevaluation is categorized into three tools: cost-effectivenessevaluation, cost-utility assessment, and cost-benefit evaluation. Allthe three tools measure costs in similar ways but measures healthbenefits differently (Cairns,1998).

  1. Cost-effectiveness evaluation

Thistool is used in analyzing the technical efficiency of the use ofadvanced technology in healthcare. The outcomes of the programs aremeasured in units such as the number of deaths prevented or thereduction in the number of patients suffering from a cardiovascularcondition, among others(Hoomans and Severens, 2014).According to Grol,et al., (2013), the main reason the healthcare sector, especially inthe United States, embraces advanced technology is to improve patientcare. One of the outcomes of improved healthcare as a result ofadvanced technology is a reduction in maternal deaths. Therefore,cost-effective analysis can be carried out to determine the benefitsof the program in reducing maternal deaths.

Theexpenses incurred and the benefits derived are presented in acost-effectiveness ratio. The ratio presents the expenses incurredper unit of health benefit. According to Napper and Newland (2003),if the expense incurred in implementing a health program surpassesthe benefits, then there is a need for cost minimization orimplementing strategies to improve its efficiency. According toHoomans and Severens, (2014), the cost-minimization analysis is aform of cost-effectiveness evaluation, involving the comparison oftwo or more health interventions. When the health outcomes of two ormore interventions are assumed to be similar, the interventions arecompared to determine which is cost-effective. However, according toNapper and Newland (2003), it is rare for two technologies to havethe exact clinical outcomes. Current analysis indicates that the useof advanced technology in healthcare is cost-effective, and thisexplains the positive trend of this intervention.

  1. Cost-utility evaluation

Thiskind of the assessment is carried out with an aim of maximizing thebenefits derived from a health program across a population. In thiscase, the outcomes of advanced technology are measured on twodifferent groups. For instance, advanced technology is used toimprove palliative care for patients in the last stage of livercancer and the management of diabetes. These are two groups that canbe used to evaluate the cost-utility of advanced technology inhealthcare settings. The primary goal of the first program targetinglast stage liver cancer patients is to improve the quality ofpalliative care while the second program`s goal is to reducecomplications associated with diabetes. Despite the fact that thehealth outcomes of the two programs vary, they can be interpreted asenhancement in life expectations and life expectancy and value ofexistence. Therefore, their expenses can be calculated in financialentities, allowing the comparison of the two programs using the sameformula and method (Hoomansand Severens, 2014).

Thecost-utility analysis allows the comparison between two or morehealth programs by weighing the impacts on health using a scale scalethat works on utility (McBrienand Manns, 2013). The most commonly used scale is referred to asquality-adjusted-life-year (QALY). The scale evaluates impacts onwellbeing by measuring the life span and its value. The scale rangesfrom 0, which is comparable to death to 1, corresponding to idealhealth. QALY is highly resourceful in measuring the clinicaloutcomes of the use of advanced technology. First, the evaluationscale allows the comparison of clinical outcomes of different health,programs. This is important in the case of advanced technology sincetechnology is used in almost all health care programs. Secondly, thescale allows the consideration of values that the society place onhealth outcomes (McBrien and Manns, 2013).

  1. Cost-benefit analysis

Cost-benefitevaluation puts into consideration the values that the society placeson health outcomes (Grol,et al., 2013). However, this form of analysis presents the ideals ofclinical outcomes in fiscal units. Similar to cost-efficiencyassessment, cost-benefit evaluation measures the effectiveness ofadvanced technology by weighing the costs incurred against thebenefits. However, cost-benefit is broader than cost-effectivenessanalysis since it measures both the health and non-health benefits(Hoomans and Severens, 2014).Non-health benefits include convenience, reduced workloads,sustainable resource utilization among others.

CommonFactors in All the Three Economic Analysis Tools

Thereare factors that an evaluator should put under consideration whethercarrying out the cost-effectiveness, cost utility or cost-benefitevaluation. The factors guide the evaluator in determining theapplicability of the chosen assessment tool to the patient populationtargeted by a program (Grol, et al., 2013). The common factors foreconomic evaluation include:

  • Target population-The patients targeted by the health program

  • Comparators- The interventions under study

  • Perspective- The point of view from which health outcomes are measured

  • Time horizon- The time taken in estimating the expenses and benefits of a health program

  • Findings- The results or effects of the health intervention

  • Data inputs- The data to be used in measuring the outcomes

  • Discounting- Evaluation of future costs and benefits of a health program

  • Results- The total expenses and advantages of each comparator

  • Sensitivity Analysis- Identifies a gap in evidence and ambiguity in a model.


Takinginto account the emphasis on the use of advanced technology inhealthcare settings, there is a great need for economic evaluation ofthis intervention. Cost-effectiveness, cost-utility, andcost-benefit are the three economic assessment tools that are used indetermining the effectiveness of advanced technology in healthcaresettings. From the paper, it is clear that the three economicassessment tools are resourceful in determining the practicability ofadvanced technology in healthcare. The assessment tools also enablethe improvement of advanced technology interventions through costminimization and benefits maximization.


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