Value

This chapter seeks to answer the question: how much should we pay for a public health program? We often have to decide how to allocate funds to different public health programs or decide whether a new medical test or treatment is worth the cost. How can we make such decisions fairly? The author first works through some examples of commonly used decision trees to make these judgments in a rigorous and fair way. Some decision trees are used to solve value of information problems, which are used to perform cost-benefit analysis to determine whether we want to pay for a new service, test, or treatment if we are focused on lowering the costs of operations. The reader will then understand how to perform cost-effectiveness analysis to identify under what circumstances a more expensive new service, test, or treatment might be worth the cost because it meaningfully improves health outcomes.