Net Benefit

Definition

Health Economics

  • An approach to cost-effectiveness that eschews the incremental cost-effectiveness ratio in favour of the net benefit attributed to alternative health care technologies. It employs the difference between the present value of (monetized) benefits and costs in a cost-benefit analysis. In a cost-effectiveness analysis, the incremental cost-effectiveness ratio in real terms (e.g. Δcosts/ΔQALYs) of two interventions can be turned into a net benefit criterion, thus: net benefit = |ΔQALYs - Δcosts, where | is the money value of a QALY gained or lost. If | is set at the threshold rate set by some authoritative body a positive net benefit suggests (with a few side-conditions) that the technology in question may be efficient.
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