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FIGURE 3-4: COST EFFECTIVENESS CHARTSCostEffectivenessFor the remaining two quadrants (yellow and green in Figure 3-4) cost effectiveconsiderations need to be made for assessment. In the green area, alternative scenarios areboth more costly and more effective and the incremental cost effectiveness ratio (ICER) isthe gradient between the two points i.e. the cost of gaining an additional unit of effectiveness(e.g. cost per QALY gained or DALY averted). For scenarios in the yellow area, theterminology is a little different, as these points represent lower effectiveness and lower costs;they are referred to as the compensation for the loss of a unit of effectiveness.The ICER is the defining measure of these economic evaluation techniques. Commonbenchmarks are used to determine whether an intervention is acceptable on a costeffectiveness basis. A number of different thresholds are used to determine the acceptabilityof an intervention. For example, the Department of Health and Ageing has in the pastindicated a threshold ICER value of $60,000 per life year saved as a guide for its decisionprocess (DHA, 2003). The WHO describes ‘cost effective’ interventions as ones that costone to three times GDP per capita (in Australia roughly A$49,000 to A$147,000) per DALYavoided; and ‘very cost effective’ interventions as ones that cost less than GDP per capita($49,000) per DALY avoided in 2008.Results from a CBA are examined in a slightly different manner. As outcomes are measuredin monetary terms these benefits can be compared against the costs (or outlays) from theprogram. A common metric for a CBA is achieving a positive net benefit in NPV terms, overa defined time horizon. Other measures such as the BCR are used, where a value greaterthan one represents a greater proportion of benefits arising from the costs. Alternatively areturn on investment (ROI) is used where a value greater than zero (the breakeven point)represents an excess of benefits resulting from the intervention.100