Cost-Utility Analysis

  • Mojca Z. Dernovsek
  • Valentina Prevolnik-Rupel
  • Rok Tavcar


Cost-utility analysis is a method which is most often used when benefits cannot be expressed in monetary (profit) or metric values (days of sick leave). The utilities in cost-utility analyses are in fact preferences of each person, a selected group, or the whole population. Since quality of life is one of the preferences, estimation of quality of life is frequently used in health economics. The results of cost-utility analyses are expressed in QALY – quality adjusted life years. QALY indicates the average number of years of quality life which a person with a defined health status will be able to live in a case that a certain intervention is carried out. This indicator therefore shows the cost of intervention with regard to a specific outcome, life in quality. In psychiatry the measurements of health outcome like survival, disability, sick leave, quality of life, satisfaction of clients, etc., were traditionally important but in the recent years the awareness of costs associated with any health intervention has grown. In studying mental disorders the situation seems somewhat specific since traditional outcome indicators do not always reflect the many (complex) faces of mental disorder. Although the methodology is appropriate to compare health economic issues of different mental disorders these studies are scarce, probably due to a complicated design. It is much easier to conduct an outcome study with a single diagnostic category. On the other hand there were many studies that were comparing costs and other outcomes of different preventive and therapeutic interventions in a single diagnostic category. The results of cost-utility analyses are useful in many situations: planning of service development, resource allocations, to find out the best available intervention for persons with a certain health status, etc.

This chapter provides a short introduction to economic analysis giving a special emphasis to a cost-utility analysis and defining its place among other methods in health economics. Beside theoretical considerations, several practical applications of cost-utility analysis using QALYs are discussed

Key words

Cost-utility analysis effectiveness QALY health States 


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Copyright information

© springer 2007

Authors and Affiliations

  • Mojca Z. Dernovsek
    • 1
    • 2
  • Valentina Prevolnik-Rupel
    • 3
  • Rok Tavcar
    • 1
    • 4
  1. 1.University Psychiatric HospitalSI-1260 Ljubljana-Polje
  2. 2.Institute of Public Health of Republic of SloveniaSlovenia
  3. 3.Ministry of Health of Republic of SloveniaSlovenia
  4. 4.School of Medicine, Chair of PsychiatryUniversity of LjubljanaSlovenia

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