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Keywords:

  • cost-benefit analysis;
  • evaluation studies;
  • health economics;
  • programme evaluation;
  • psychiatry

Objective: A consequence of the integration of psychiatry into acute and public health medicine is that psychiatrists are being asked to evaluate their services. There is pressure on mental health-care systems because it is recognized that funds should be directed where they can provide the best health outcomes, and also because there are resource constraints which limit our capacity to meet all demands for health care. This pressure can be responded to by evaluation which demonstrates the effectiveness and efficiency of psychiatric treatment. This paper seeks to remind psychiatrists of the fundamental principles of economic evaluation in the hope that these will enable psychiatrists to understand the methods used in evaluation and to work comfortably with evaluators.

Method: The paper reviews the basic principles behind economic evaluation, illustrating these with reference to case studies. It describes: (i) the cost of the burden of illness and treatment, and how these costs are measured; (ii) the measurement of treatment outcomes, both as changes in health status and as resources saved; and (iii) the various types of economic evaluation, including cost-minimization, cost-effectiveness, cost-utility and cost–benefit analysis.

Results: The advice in the paper provides psychiatrists with the necessary background to work closely with evaluators. A checklist of the critical questions to be addressed is provided as a guide for those undertaking economic evaluations.

Conclusions: If psychiatrists are willing to learn the basic principles of economic evaluation and to apply these, they can respond to the challenges of evaluation.