Economic evaluations of complex services for older people

At its simplest, health economics compares the costs and benefits of an intervention. A specific treatment is said to be ‘cost-effective’ if it gives greater health gain than could be achieved by using the resources in other ways. An intervention may be better and cheaper (economically dominant), better but at a cost, or cheaper with worse outcomes (in which case costs and benefits must be quantified to guide policy makers on where to invest resources). As costs and outcomes are usually imprecise or uncertain, economists undertake sophisticated mathematical modelling to generate cost-effectiveness acceptability curves, so the output becomes the probability that an intervention will be cost effective, assuming a given level of willingness to pay. In a socialised health-care system, costs are shared across the population, and there must be limits on what any one individual can receive. This suggests the utilitarian ethic of ‘the greatest good for the greatest number’. Costing is relatively straightforward, if not without controversy (whose perspective?—the health service? health and social care? or private provision and informal care costs as well?). The big problem lies with defining and measuring outcomes. What is health care for? On the basis that it aims to improve length and quality of life, we often use a global quality of life scale, typically the Euroqol EQ5D [1]. This is a five-item scale that estimates the value or worth (utility) of a state of health given by the general population. UK research funders routinely request inclusion of an economic component in grant proposals. The data generated are influential in prioritising decisions by bodies such as the UK National Institute of Health and Clinical Excellence (NICE).