The role of study perspective in health economic evaluation

The role of study perspective in health economic evaluation

What is economic evaluation and why is it important? 

Economic evaluation seeks to inform a range of very different but unavoidable decisions in healthcare. Regardless of the activities to which it is applied, it has two features. Firstly, it deals with both the inputs and outputs, which can be described as the costs and consequences of alternative courses of action. Few of us would be prepared to pay a specific price for a package whose contents were unknown. Conversely, few of us would accept a package, even if its contents were known and desired, until we knew the specific price being asked. In both cases, it is the linkage of costs and consequences that allows us to reach our decision.

Secondly, economic evaluation concerns itself with choices. Resources are limited, and our consequent inability to produce all desired outputs means that choices must, and will, be made in all areas of human activity. These choices are made on the basis of many criteria, sometimes explicit but often implicit, especially when decisions are made on our own behalf using our own resources. Economic evaluation aims to identify and to make explicit the criteria that are applied when decisions are made on behalf of others. These two characteristics lead research to define economic evaluation as the comparative analysis of alternative courses of action in terms of both their costs and consequences (Figure 1) (Rudmik and Drummond 2013). 

Figure 1: Economic evaluation always involves a comparative analysis of alternative courses of action (Drummond et al. 2015)
Economic evaluation always involves a comparative analysis of alternative courses of action
Study perspective

The study perspective is the point of view adopted when deciding which types of costs and health benefits are to be included in an economic evaluation. It is essential to specify this because an item may be a cost from one point of view but not a cost from another. For example, patients’ travel costs are a cost from the patient’s point of view and from society’s point of view, but not a cost from the Department of Health’s point of view. Workers’ compensation payments are a cost to the paying government, a gain to the patient, and neither a cost nor a gain to society (Drummond et al. 2015). The importance of applying an appropriate study perspective was highlighted by Byford et al. (2003) in their study of treatments for recurrent deliberate self-harm. The relative costs of each treatment were dependent on the perspective adopted. From a healthcare perspective, the annual costs per patient of the two programmers were similar; £2,395 for a new intervention and £2,502 for treatment as usual. However, when a societal perspective was applied, the annual cost difference per patient was £838 higher for treatment as usual. The following are the perspectives that may be included in an economic evaluation (Kim et al. 2020):

  •  Healthcare payer: This perspective includes only those monetary costs (e.g. costs of treatment and other health service resource use associated with disease management) incurred by a (generally third party) healthcare payer (e.g. Medicare/Medicaid, British NHS, etc.).

  •  Healthcare sector: This perspective is similar to the above point of view (healthcare payer). However, it accounts for all monetary costs of healthcare, irrespective of who bears the cost. A fundamental distinction between the healthcare sector and healthcare payer perspectives is that the healthcare sector includes patients’ out of pocket costs.

  •  Limited societal: This perspective considers cost components that are not captured by the healthcare sector perspective. This includes patient time, patient transportation, unpaid caregiver time and productivity loss. It excludes spill-over impacts on non-healthcare sectors, such as education. 

  •  Societal: This perspective is broader than the limited societal perspective. It represents the overall public interest by including all resources that could be used for other purposes. It accounts for cost impacts affecting at least one of these other sectors; environment, education or the justice system. 

  •  Not stated/could not be determined: This indicates that the authors did not provide sufficient information to determine the costs or benefits included in the analysis. 


Rudmik, L., Drummond, M. 2013. ‘Health economic evaluation: Important principles and methodology’ Laryngoscope.

Drummond et al. 2015. Methods for the Economic Evaluation of Health Care Programmes. London: Oxford University Press.

Byford, S., Knapp, M., Greenshields, J., Ukoummune, O.C., Jones, V., Thompson, S., Tyrer, P., Schmidt, U. and Davidson, K. 2003. ‘Cost-effectiveness of brief cognitive behaviour therapy versus treatment as usual in recurrent deliberate self-harm: A decision-making approach’ Psychological Medicine.

Kim, D.D., Silver, M.C., Kunst, N., Cohen, J.T., Ollendorf, D.A. and Neumann, P.J., (2020). ‘Perspective and costing in cost-effectiveness analysis, 1974–2018’ PharmacoEconomics

Fiachra Doyle

Intern, Health Economics and Outcomes Research

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