(Non-market) Valuation methods – Return on investment

[SOURCE: York Health Economics Consortium (2016) Willingness-to-Pay. York Health Economics Consortium. (The website can be accessed here)]

Return on investment is a performance measure used to evaluate the efficiency of a project or to compare the efficiency of a number of different projects. ROI measures the amount of return on a project relative to its cost. To calculate ROI, the return (net benefit: benefit minus cost) of a project is divided by the cost of the project, with the result expressed as a percentage. The requirement of benefit to be expressed in money terms is the main reason that ROI (or cost-benefit analysis) is not used extensively in health technology assessment, however it is used in other contexts such as planning large capital investments (new hospitals, units or services).

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