Resource Allocation between the Optimal Threshold Value and Budget: Methods for Developing a Cost-Effectiveness Threshold Value

Since modern healthcare systems are increasingly faced with financial restrictions and limitations, it is crucial to develop new approaches for ensuring equity, effectiveness and efficiency within the system. It is generally agreed that, in the scope of publicly funded healthcare, only services that are affordable and that will considerably benefit society should be offered. Objective: Although evalution methods in the field of healthcare economics are constantly progressing, the value at which a specific medical procedure can be considered cost-effective, and, therefore, should be publicly funded, still remains uncertain. With this as background, the cost-effectiveness threshold value concept will be discussed in this article. Methodology: In order to determine the value of a life year gained (LYG) or quality-adjusted life year (QALY), six different approaches to defining the cost-effectiveness threshold value will be introduced and discussed. Results: Two of these six approaches, the shadow- price concept and opportunity-cost concept, are based upon explicit budget constraints and permit the definition of an optimal threshold value. In contrast, the other four concepts -rule of thumb, comparison concept, retrospective analysis and the willingness-to-pay (WTP) approach-typically generate arbitrary pseudo-optimal thresholds. Conclusion: The shadow-price concept is the most evident method, given a fixed budget, to maximize the medical benefit. In this context, it appears that, in the interest of equitable and efficient resource allocation, a shift from implicit to explicit rationing is necessary.