Lowest Nb

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• decision criteria (3)
• budget constraint (3)
• cost model simulation alternatives (2)
• common types (2)

1.How to Compare and Rank Your Alternatives Based on Different Perspectives and Preferences?[Original Blog]

After you have created and run your cost model simulation, you will have a set of alternatives that represent different scenarios or options for your decision problem. How can you compare and rank these alternatives based on different perspectives and preferences? This is where decision criteria and rules come in. Decision criteria are the factors or attributes that you use to evaluate the alternatives. Decision rules are the methods or procedures that you use to apply the criteria and determine the best alternative. In this section, we will discuss some common types of decision criteria and rules, and how they can help you perform a cost-effectiveness analysis of your alternatives. We will also provide some examples to illustrate how these criteria and rules work in practice.

Some of the common types of decision criteria and rules are:

1. Cost-effectiveness ratio (CER): This is the ratio of the cost of an alternative to its effectiveness. The effectiveness can be measured by any relevant outcome or benefit that you are interested in, such as quality-adjusted life years (QALYs), disability-adjusted life years (DALYs), lives saved, cases averted, etc. The CER can help you compare the efficiency of different alternatives, and rank them from the lowest to the highest CER. The lower the CER, the more cost-effective the alternative is. For example, suppose you have three alternatives for a health intervention: A, B, and C. Their costs and effectiveness are as follows:

| Alternative | Cost | Effectiveness (QALYs) | CER |

| A | $100 | 10 | 10 |

| B | $150 | 15 | 10 |

| C | $200 | 18 | 11.1|

Using the CER as the decision criterion, you can rank the alternatives as A = B < C. Alternatives A and B have the same CER, so they are equally cost-effective. Alternative C has a higher CER, so it is less cost-effective than A and B.

2. Incremental cost-effectiveness ratio (ICER): This is the ratio of the difference in cost between two alternatives to the difference in their effectiveness. The ICER can help you compare the additional cost and benefit of moving from one alternative to another, and determine whether the incremental benefit is worth the incremental cost. The ICER can also help you identify the optimal alternative that maximizes the effectiveness for a given budget constraint, or minimizes the cost for a given effectiveness threshold. For example, using the same data as above, suppose you have a budget of $300 and you want to choose the best alternative. You can calculate the ICERs of moving from A to B, and from B to C, as follows:

| Comparison | Incremental Cost | Incremental Effectiveness | ICER |

| B vs A | $50 | 5 | 10 |

| C vs B | $50 | 3 | 16.7 |

Using the ICER as the decision rule, you can compare the ICERs with your budget constraint. Since the ICER of moving from A to B is equal to the budget constraint, you can choose alternative B as the optimal one. Moving from B to C would require an ICER of 16.7, which is higher than the budget constraint, so it is not worth the additional cost.

3. Net benefit (NB): This is the difference between the benefit and the cost of an alternative, multiplied by a willingness-to-pay (WTP) factor. The WTP factor is the maximum amount of money that you are willing to pay for one unit of effectiveness. The NB can help you compare the value of different alternatives, and rank them from the highest to the lowest NB. The higher the NB, the more valuable the alternative is. For example, suppose you have a WTP of $20 per QALY. You can calculate the NBs of the three alternatives as follows:

| Alternative | Benefit ($20 x QALYs) | Cost | NB |

| A | $200 | $100 | 100|

| B | $300 | $150 | 150|

| C | $360 | $200 | 160|

Using the NB as the decision criterion, you can rank the alternatives as C > B > A. Alternative C has the highest NB, so it is the most valuable one. Alternative B has the second highest NB, and alternative A has the lowest NB.

These are just some examples of the decision criteria and rules that you can use to compare and rank your alternatives based on different perspectives and preferences. There are many other types of criteria and rules that you can explore, such as cost-utility analysis, cost-benefit analysis, multi-criteria decision analysis, etc. The choice of the criteria and rules depends on your decision problem, your objectives, your data, and your assumptions. You should always be transparent and explicit about the criteria and rules that you use, and the limitations and uncertainties that they entail. By doing so, you can perform a robust and rigorous cost-effectiveness analysis of your cost model simulation alternatives.

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