Dictionary
The Dictionary provides concise definitions of health economics terms, arranged alphabetically for quick reference. Use it to understand unfamiliar terminology or confirm the meaning of a specific term.
A
- Affordability Threshold
- The level of budget impact beyond which a payer considers a new technology's total cost unsustainable, regardless of its individual cost-effectiveness.
- Annuity Payment
- A reimbursement structure paying a treatment's total cost to the manufacturer in a series of instalments over time, rather than as a single upfront sum.
- Average Analysis Method
- An analytic approach comparing an intervention's total cost to its total effect independently, rather than incrementally against a specific comparator.
- Average Cost
- Total cost divided by the quantity of output produced, giving the cost per unit of service.
- Average Cost-Effectiveness
- A measure comparing an intervention's total cost to its total effect, without reference to an alternative comparator.
- Average Cost-Effectiveness RatioACER
- The total cost of an intervention divided by its total health effect, calculated for each option rather than as a comparison.
B
- Bottom-Up Costing
- A costing method that estimates total cost by measuring detailed resource use at the individual patient level and aggregating those measurements.
- Break-Even Point
- The level of output or activity at which total revenue equals total cost, so an organisation neither gains nor loses money.
- Breakeven Analysis
- An analysis identifying the point at which total costs equal total revenues or benefits, so an activity neither gains nor loses value.
C
- Comprehensive Value Measurement
- A value measurement considering outcomes across the full cycle of care for a condition alongside total costs, rather than individual services alone.
- Cost Driver
- A factor that causes the total cost of an activity to change, such as patient volume, case complexity, or length of stay.
- Cost Driver Analysis
- A systematic examination of the factors responsible for changes in total cost, used to break an overall increase into its component causes.
- Cost Function
- A mathematical representation of the relationship between the quantity of output produced and the total cost of producing it.
- Cost Structure
- The composition of an organisation's or intervention's total costs across categories, such as fixed and variable, or direct and indirect.
E
- Economic Burden
- The total cost imposed on a health system, individuals, or society by a specific disease, injury, or risk factor.
I
- Incremental Cost
- Incremental cost is the difference in expected total cost between one healthcare option and its stated comparator, calculated using the same population, perspective, time horizon, currency, price year and costing methods.
- Incremental Cost Estimation
- The process of estimating the difference in cost between two interventions, rather than each option's total cost in isolation.
M
- Marginal Analysis
- An approach to resource allocation examining the additional cost and benefit of small changes in an activity's level, rather than its total cost and benefit.
- Marginal Analysis Method
- A technique for evaluating resource allocation decisions by comparing the additional cost and benefit of small changes in an activity, not its total cost.
O
- Outcome Structure
- The way a decision-analytic model links its outcomes, including how intermediate clinical events translate into measures such as QALYs and total cost.
S
- Societal Cost
- The total cost of an intervention from the broadest perspective, covering direct healthcare, direct non-medical, and indirect costs regardless of who bears them.
T
- Total Cost
- The sum of all costs, fixed and variable, incurred in producing a given level of output.
- Total Cost of Care
- A comprehensive measure of all healthcare spending associated with a defined population over a period, across all settings and providers.
- Treatment Capping
- A contractual limit on the maximum amount a payer will reimburse for an individual patient's treatment, whether by cycles, dose, or total cost.