How to obtain confidence intervals for cost-effectiveness ratios is complicated by the statistical problems of obtaining a confidence interval for a ratio of random variables. Different approaches have been suggested in the literature, but no consensus has been reached. We propose an alternative simple solution to this problem. By multiplying the effectiveness units by the price per effectiveness unit, both costs and benefits can be expressed in monetary terms and standard statistical techniques can be used to estimate a confidence interval for net benefits. This approach avoids the ratio estimation problem and explicitly recognizes that the price per effectiveness unit has to be known to provide cost-effectiveness analysis with a useful decision rule.

Based on the model and the assumptions used, our results suggest that omalizumab provides cost offsets, improves quality of life and may have an attractive ICER in treating the severe allergic asthma population.

No consensus has yet been reached on how to analyse uncertainty in economic evaluation studies where individual patient data are available for costs and health effects. This paper summarises the available results regarding the analysis of uncertainty on the cost-effectiveness plane and argues for using the net-benefit approach when analysing uncertainty in cost-effectiveness studies. The net-benefit approach avoids the interpretation and statistical problems related to the incremental cost effectiveness ratio and implies several advantages. First, traditional statistical methods can be used for confidence-interval estimation and hypothesis testing. Second, calculation of the optimal sample size and the power of the study are facilitated allowing the correlation between costs and effects to vary within and between patient groups. Third, the use of a Bayesian approach to cost-effectiveness analysis is facilitated. Fourth, a formal relation between cost-effectiveness acceptability curves and statistical inference is provided. Finally, the net-benefit approach gives the Fieller's limits of the confidence interval for the incremental cost-effectiveness ratio in the cost-effectiveness plane. Based on these advantages the net-benefit approach should strongly be considered when analysing uncertainty in cost-effectiveness analyses.

This paper has two purposes. The first purpose is methodological and aims to extend previous work on efficiency analysis by implementing a multiple-output stochastic ray frontier production function model. This model generalizes the single-output stochastic frontier model to multiple-input, multiple-output technologies and allows simultaneous estimation of technical efficiency and analysis of influential variables on efficiency. The second, empirical, purpose is to test for existence and magnitude of the effect of purchaser/provider split combined with new reimbursement schemes on technical efficiency in the Swedish public hospital system. The analysis is carried out with a panel data set covering the total population of 26 Swedish County Councils from 1989 to 1995. Our empirical results support the frontier model specification and indicate that output-based reimbursement improves technical efficiency. The potential saving in costs due to a switch from budget-based allocation to output-based allocation is estimated to be almost 10%.

A purchaser/provider split together with output-based reimbursement were recently introduced by several Swedish county councils. These changes have been motivated by arguments of efficiency and consumer choice. This paper tests the null hypothesis that hospital services are provided as efficiently by county councils with internal markets and output-based reimbursement as by county councils with budget reimbursement. We first estimate technical efficiency using data envelopment analysis and then we regress the efficiency scores as the dependent variable on new internal organizations in a multiple regression by use of pooled cross-section data for the 26 county councils for two years (1993 and 1994). The results reject our null hypothesis and we conclude that the organizational changes in the county councils improve health care efficiency. Our results further indicate that the potential savings in costs due to a hypothetical switch from budget based allocation to an output based allocation is about 13%. We also found some evidence indicating that county councils with a nonsocialist political majority are relatively more efficient than those with a socialist regime and that large county councils are more efficient than small county councils.