Effectiveness is the key to cost-effectiveness.

H ealth care spending has risen faster than the rest of the United States economy for the past several decades, and is now swamping federal and state government budgets. The rising cost of health care has important consequences: either spending on other programs (eg, education, public safety, and infrastructure) must be reduced, or taxes must rise, or the budget deficit must grow larger. 1 In light of these facts, physicians , whose decisions determine the bulk of health expenditures , need to become better stewards of healthcare resources. Physicians are particularly able to determine which treatments are effective and to identify which patients benefit most from those treatments. With health care dollars scarce, physicians are in the best position to see that they are spent wisely. Cost-effectiveness analysis is one tool physicians can use to assess the value provided by a treatment strategy. Despite its technical complexities, the basic principles of cost-effectiveness analysis are conceptually simple. One key principle is that cost-effectiveness is comparative, not absolute: the therapy of interest should be compared with the next best alternative therapy. One can assess the cost-effectiveness of coronary artery bypass graft (CABG) surgery compared with percutaneous coronary intervention (PCI), or the cost-effectiveness of CABG compared with medical therapy, but not of the cost-effectiveness of CABG in isolation. Another important principle is that treatments that cost more money may still be quite valuable if they are highly effective. Effectiveness is measured by the ultimate goals of treatment: patient centered outcomes, such as reduced mortality, improved symptoms, or better quality of life. Therapies that are highly effective by these measures are likely to be cost-effective, whereas therapies that increase costs but do not improve patient outcomes meaningfully do not provide value. The Future Revascularization Evaluation in Patients with Diabetes Mellitus: Optimal Management of Multivessel Disease (FREEDOM) trial is a pivotal study in which patients with diabetes mellitus and multivessel coronary disease were random-ized either to CABG or PCI. 2 The trial reported a substantial improvement in clinical outcomes among the patients assigned to CABG: significantly fewer patients assigned to CABG had died (10.7%) compared with PCI (16.0%) over 5 years of follow up. 1 Because CABG is generally more costly than PCI, its cost-effectiveness for this indication is clearly of interest. The economic outcomes of the FREEDOM trial 3 underscore the importance of clinical effectiveness as the key determinant of cost-effectiveness. Although CABG is …