v. Cost-Effectiveness and Clinical Preventive Services

Documented effectiveness is-or generally should be-the most basic 
requirement for providing a health care service. It is a particularly 
important prerequisite for preventive services, where the clinician has a 
compelling responsibility to do no harm to healthy patients. The 
fundamental role of effectiveness for clinical decisions motivated the U.S. 
Preventive Services Task Force effort to evaluate the evidence of 
effectiveness for clinical preventive services, and the Task Force 
recommendations in the following chapters are reflections of this 
evidence.

Effectiveness alone, however, is not a sufficient basis to initiate services 
in most practical health care contexts. Factors other than effectiveness, 
reflecting the immediate trade-offs and broad implications of providing a 
service, are relevant to the goals and the practical constraints confronted 
by every decision maker. Chapter i describes several of these factors, 
and they are cited in the subsequent chapters when they are likely to be 
relevant to a clinicians decision. The present chapter focuses on a single 
approach, cost-effectiveness analysis, that can combine information on 
the health benefits, health risks, and costs of health care services. 

Although cost-effectiveness analysis was not the basis of 
recommendations in this edition of the Guide, this chapter should alert 
readers that the Task Force believes such analyses should have an 
increasing role in individual and public policy decisions about providing 
preventive services as the analytic methodology matures.
Properly used, cost-effectiveness analysis incorporates and complements 
evidence of effectiveness to inform recommendations on clinical 
preventive and other health care services. It is intended not to substitute 
mechanically for complex decision-making processes but rather to be 
used in combination with other evidence. Efforts to enable cost-
effectiveness analysis to be more easily, systematically, and usefully 
considered in policy decisions are under way. The work of the Panel on 
Cost-Effectiveness in Health and Medicine (PCEHM), convened in 1993, 
complements the work of the Task Force in the area of cost-effectiveness 
analysis. The PCEHM is working to standardize methodology, provide 
guidelines for cost-effectiveness analysis, and resolve technical 
differences among studies to improve their quality and comparability. The 
work of this group will be an important resource for those organizations 
formulating policy related to clinical preventive services.

Assessing the Cost-Effectiveness of Interventions

Cost-effectiveness analysis is a method for assessing and summarizing 
the value of a medical technology, practice, or policy.<1,2> Underlying 
the methodology is the assumption that the resources available to spend 
on health care are constrained, whether from the societal, organizational, 
practitioner, or patient point of view. Cost-effectiveness information is 
intended to inform decisions about health care investments within this 
finite budget. The cost-effectiveness ratio summarizes information on cost 
and effect, allowing interventions to be compared on the basis of their 
worth and priority to the patient, society in general, or some other 
constituency. Although the cost-effectiveness ratio takes the form of a 
price-that is, a dollar cost per unit of effect-it is generally interpreted in the 
inverse manner, as a measure of the benefit achievable for a given level 
of resources.

The cost-effectiveness ratio encapsulates a defined set of information.<3> 
The numerator of the ratio summarizes the costs and financial savings 
associated with the intervention, including the costs of the intervention 
itself, side effects, and savings from avoided illness and disability. These 
costs consist of both medical costs (e.g., physician visits, hospitalization, 
treatment) and nonmedical costs (e.g., transportation, caretaker) 
associated with the intervention or the illness.

The denominator of the cost-effectiveness ratio reflects the health effect 
of the intervention. This feature of cost-effectiveness analysis 
distinguishes it from cost-benefit analysis, in which health benefits are 
translated into dollars. The year of life saved is probably the most 
commonly used measure of the health effect. Years of life saved may be 
adjusted for the quality of life of those years, reflecting the effects of 
medical interventions on morbidity as well as the length of life. Analyses 
that incorporate quality of life adjustment are sometimes categorized as 
cost-utility analyses.

The measurement, estimation, and valuation of the elements contained in 
a cost-effectiveness analysis is a complex undertaking. Chapter ii 
provides detail on the issues related to assessing the effect of 
interventions. The assessment of cost can be equally difficult. Issues 
include the management of indirect costs, such as hospital overhead; the 
identification of costs as distinct from charges, which often contain 
elements of profit or costs shifted among patients; and the generalizability 
of costs from one practice or region to other areas. The measurement of 
quality of life is also complex and has developed into a specialized field of 
study.<4>

Contexts for the Use of Cost-Effectiveness Analysis: Societal and Clinical

Cost-effectiveness analysis frequently takes a societal view in analyzing 
health care interventions. Although there is no single societal decision 
maker, various organizations and individuals make decisions that do or 
should reflect a range of societal goals. Public and private health 
insurance systems, hospitals and other providers, and government 
advisory and regulatory bodies set policies and develop 
recommendations that influence or determine aspects of clinical practice.
The standard argument for the use of cost-effectiveness analysis in these 
contexts is the need to allocate resources efficiently, obtaining the most 
desirable set of services for a given budgetary outlay. This objective 
should be distinguished from that of saving money-a purpose often 
incorrectly ascribed to cost-effectiveness analysis.<5> Although cost-
effectiveness analysis is seldom used in the textbook fashion of ranking 
interventions and selecting the most cost-effective set, it can offer 
important guidance to decision makers. It can be used to screen out new 
procedures or technologies that are poor uses of medical resources. It 
can illuminate the trade-offs involved in service delivery, such as by 
outlining the costs and returns for more frequent screening or for applying 
certain treatments or preventive interventions to particular population 
groups.

As interest in prioritizing uses of health care resources increases, a range 
of public and private efforts is focusing on the development and 
refinement of practical cost-effectiveness applications. Several countries 
are developing systems for incorporating cost-effectiveness analysis into 
decisions whether to include drugs in government formularies or for 
marketing approval.<6,7> In 1993, the World Bank introduced the 
disability adjusted life year (DALY) in its World Development Report: 
Investing in Health, spurring interest in the use of cost-effectiveness 
criteria for allocating health care resources in developing countries.<8>

The clinical setting is clearly a primary location for the implementation of 
policies guided by cost-effectiveness analysis, but its use in this setting is 
controversial. Medical care policies, including those based on cost-
effectiveness considerations, have the potential to constrain the 
clinicians traditional freedom to select among treatment alternatives. 
Debate also arises from the primacy of the clinicians advocacy role, 
which could be jeopardized if the clinician were charged with making 
decisions to achieve societal priorities that conflict with individual patient 
choices.

The degree to which the clinician can or should be responsive to general 
societal welfare as against individual concerns is likely to remain a topic 
of debate for some time. However, it is both reasonable and necessary for 
clinicians to consider cost-effectiveness in many cases, weighing whether 
the marginal benefit to an individual patient of a test, procedure, or 
treatment as compared to an alternative justifies its additional cost to the 
patient or to society as a whole.

Cost-Effectiveness Analysis as a Supplement to Information on 
Effectiveness

Cost-effectiveness analysis supplements information on effectiveness in 
two ways: by addressing the value of an intervention, and by clarifying 
and aggregating information related to effectiveness and cost. As noted 
earlier, it does not address all additional factors of interest to a decision 
maker. For example, neither an assessment of effectiveness nor of cost-
effectiveness will address a policys effect on the relative well-being of 
different socioeconomic groups, so-called distributional equity effects.
Value. Cost-effectiveness information can be used to assess whether an 
intervention is a good buy compared to others or to some formal or 
informal standard. The cost-effectiveness ratio is a form of price in this 
sense. More technically, the incremental cost-effectiveness ratio indicates 
the additional quantity of resources that must be devoted to an 
intervention, compared to a less expensive but less effective alternative, 
in order to obtain a given additional benefit. It thus demonstrates the 
opportunity cost-the value of the foregone alternative use-of the 
investment.

For example, if a prostate cancer screening program is implemented, the 
opportunity cost incurred is the health benefit that could have been 
obtained had the funds been spent on a different program. Cost-
effectiveness analysis summarizes the costs per unit of benefit for 
comparison with the alternatives, or simply for making a judgment about 
the overall price of the programs benefits.

In the clinical setting, the opportunity costs of clinicians time and other 
resources are also relevant for the setting of priorities. Limits to such 
requisites as office space, the duration of the office visit, and the patients 
ability to assimilate medical advice during a given visit are particularly 
evident for interventions such as counseling and patient teaching. To 
maximize the value of the visit to the patient, the clinician must consider 
the opportunity cost of various uses of the available resources and 
prioritize the interventions to be included.

A primary component of value is the magnitude of the benefit offered by 
an intervention. To be desirable, an intervention must be more than 
effective; its effect must be important enough to justify the risks and costs 
associated with it. An effective intervention may be clinically 
inconsequential, or it may help so few of the individuals to whom it is 
offered that it is not worth implementing. Cost-effectiveness analysis 
provides an insight to the magnitude of the benefit an intervention 
provides. Frequently, analyses report the magnitude of the benefit 
directly. In almost all cases, however, the cost-effectiveness ratio 
provides an indirect indication. If it imposes any meaningful cost, an 
intervention with minimal effectiveness will have a very high ratio of cost 
to effectiveness, alerting the decision maker to the need to examine the 
desirability of the intervention.

Aggregation of Effects. The ability of cost-effectiveness models to account 
for a wide range of an interventions effects offers a particular advantage 
to decision makers in determining the value of a service. The full effect of 
health care policy decisions is difficult to assess intuitively, involving 
benefits and costs that accrue to different persons or groups and occur at 
different times. Cost-effectiveness analysis offers a systematic approach 
to documenting and aggregating these effects.

Cost-Effectiveness Analysis and Recommendations for Clinical 
Preventive Services

Cost-effectiveness analysis has direct relevance for policies concerning 
clinical preventive services. An example is that of screening and 
vaccination to prevent the complications of rubella during pregnancy (see 
Chapter 32). On the basis of evidence of rubella vaccine effectiveness, 
the Task Force recommends screening all women of childbearing age and 
vaccinating susceptible women or, alternatively, routine vaccination of all 
women in this age group.

Should this recommendation be implemented? If so, under what protocol? 
Preventable rubella cases occur; an average of 7 cases of congenital 
rubella syndrome occurred in the U.S. each year during the 1980s, and a 
larger number during the rubella outbreak in the early 1990s.9 Screening 
and vaccination strategies could likely prevent some cases, although not 
all, in upcoming years.

From a broad perspective, the relevant issue is the opportunity cost of 
implementing this effort. If the resources available for health services 
were unlimited, there would be no opportunity cost and no reason to 
question the implementation of rubella vaccination for women of 
childbearing age. In fact, more intensive strategies than those the Task 
Force recommends, such as repeated vaccination of adult women, might 
be an even surer way of eliminating as many cases of rubella in 
pregnancy as possible. Because the level of health care spending by 
business, government, health care institutions, and individuals ultimately 
affects quality of life both directly and indirectly, however, it becomes 
necessary to assess whether the benefit of an intervention like rubella 
vaccination of adult women-or of one vaccination protocol versus another-
is worth its cost.

On its face, the case of rubella vaccination prompts several questions 
related to cost-effectiveness. The total cost of fully implementing the Task 
Force recommendation would be significant because of the large 
population involved: some 60 million women aged 15 to 44. In addition, 
the attainable benefit is limited by the low incidence of preventable rubella 
in pregnancy. Childhood vaccination has already markedly decreased the 
overall incidence of the disease, and benefit is further limited in the case 
of a screening strategy by the occurrence of rubella infection in women 
with apparent immunity on screening.<10> Finally, if a rubella vaccination 
policy were to be implemented, a strategy or protocol would need to be 
chosen. Routine vaccination is presumably more effective but may be 
more costly than screening followed by selective vaccination. Would the 
added benefit justify the difference in cost?

Similar issues arise in considering many of the clinical preventive 
services discussed in this volume. The recommended screening of all 
persons over age 50 for colorectal cancer (see Chapter 8) would 
potentially add billions of dollars to health system costs and should be 
considered in light of the benefit it could provide.<11> Recommended 
counseling interventions for young adults would compete for time during 
office visits and should be prioritized in terms of their demands on 
practitioner and patient time and the benefit they offer. Recommended 
protocols-the frequency of interventions and the populations targeted to 
receive them-can greatly affect the outcomes and costs of an intervention 
and should be determined with regard for cost-effectiveness 
considerations.

In general, the policy questions regarding these interventions do not 
concern their inherent desirability. The effectiveness and risks of 
interventions recommended by the Task Force have been carefully 
evaluated. Instead, the question is whether there are likely to be other 
interventions that are more desirable-other uses of resources that are 
preferable. While the opportunity cost of a given service often is not 
apparent, the overall pressure of resource constraints in all domains of 
health care is becoming increasingly obvious. In many areas of medical 
technology, large additional expenditures have been shown to produce 
only small, marginal gains in health status or outcome at our current 
levels of health care technology.

Use of Cost-Effectiveness Analysis in the Absence of Data 
on Effectiveness

Evidence of effectiveness, although always desirable, is not always 
available. Research documenting effectiveness is frequently complex, 
time-consuming, and expensive. As a result, the effectiveness of many 
services remains to be established. For others, evidence of effectiveness 
is equivocal. Cost-effectiveness analysis cannot provide evidence of 
effectiveness where none exists. However, it can distinguish critical gaps 
in existing knowledge from questions that are less important for future 
research because a decision is not influenced by the existing uncertainty. 
Cost-effectiveness analysis can also illuminate dimensions of the trade-
off between action and inaction.

For example, the Task Force has found insufficient evidence to 
recommend for or against providers counseling their patients to engage in 
physical activity (see Chapter 55). Cost-effectiveness analysis could 
summarize the conflicting considerations entering into a decision on this 
intervention, including the implications of both a decision to implement 
and not to implement exercise counseling.

In general, the decision to provide a service that has not been proven 
effective must consider the extent of potential benefit, the likelihood that 
the intervention is effective, and the type of evidence indicating probable 
effectiveness. These decisions must also weigh the costs and untoward 
effects of the intervention, including the societal costs of institutionalizing 
an unproven practice. Because of the possibility for harm and the cost, 
the provision of an unproven intervention to an asymptomatic and healthy 
population is seldom justified. When a probably effective intervention 
imposes little or no cost and is safe, its implementation may be warranted.
Cost-Effectiveness of Preventive versus Curative Services
Prevention is still commonly promoted on the basis of claims that it saves 
money, although screening, counseling, and other preventive services 
often cost more than they save, just as other medical services do. Given 
this tendency, efforts to document the cost-effectiveness of preventive 
measures may be interpreted to imply that the value of preventive 
services should be examined closely, while curative services are 
subjected to no such test.

Preventive and curative services should be held to the same basic 
standard of cost-effectiveness. A preventive service may be more cost-
effective than many curative services and be a good use of health care 
funds, even if it is not as cost-effective as other preventive services.

Current Limits on Use of Cost-Effectiveness Analysis

Cost-effectiveness studies are currently available on many health care 
services. The weight of the cost-effectiveness evidence is convincing for 
a limited number of these, most of which are clearly cost-effective or 
clearly cost-ineffective in any realistic scenario.

A much larger group of services remains for which cost-effectiveness is 
not yet established. Information on costs and outcomes is inadequate for 
many interventions. For others, the cost-effectiveness analyses have not 
been done, or their quality is insufficient to provide conclusive evidence. 
Finally, the variation in cost-effectiveness analysis methodology often 
makes it difficult to take cost-effectiveness results at face value.
Decision makers today should consider cost-effectiveness results where 
adequate analysis has been done. Care should be taken in evaluating the 
methodology used. The reader should examine challenges to the studys 
validity, such as the choice of costs included in the analysis and the 
quality and representativeness of data on costs and effectiveness. In 
addition to providing specific information, cost-effectiveness analysis 
raises important questions about the opportunity costs of alternative 
choices that decision-makers should consider.

Cost-Effectiveness and Task Force Recommendations on Effectiveness

The Task Force recommendations in this Guide reflect the evidence of 
effectiveness of interventions. They are intended to inform clinicians 
about a basic and important aspect of clinical preventive services and 
contribute to the process of evaluating the priority of these services. The 
recommendations do not systematically incorporate other decision 
factors, such as cost-effectiveness or the ethical implications of 
recommendations, and therefore should not be viewed as comprehensive 
societal guidelines for clinical preventive services. Evidence of 
effectiveness should be supplemented when possible by information on 
cost-effectiveness in any decision-making context in which available 
resources can be used for multiple purposes.

The draft of this chapter was prepared for the U.S. Preventive Services 
Task Force by Joanna E. Siegel, ScD, and Donald M. Berwick, MD, MPP.

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