Economic modelling

Economic modelling in healthcare involves developing a simplified mathematical representation (model) of real-world processes to support decision making, particularly in health technology assessment. It synthesises diverse clinical, epidemiological and economic evidence from appropriate sources into an evaluation framework to generate an estimate for a specific outcome, such as an incremental cost-effectiveness ratio. These models are built upon a defined design/structure, a range of assumptions, and a set of input parameters. Common designs include decision trees, cohort Markov models or micro-simulations. Sensitivity analysis can be used to investigate the uncertainty surrounding a pint estimated of the model’s output, reflecting the uncertainty in input parameters and model structure.