What is meant by "sensitivity analysis" in health economics?

Sensitivity analysis in health economics refers to the assessment of how variations in different parameters can impact a given outcome, typically a dependent variable. This method is essential for understanding the robustness of economic models and predictions. For instance, in evaluating the cost-effectiveness of a healthcare intervention, sensitivity analysis allows researchers to examine how changes in factors such as cost inputs, probabilities of outcomes, or utility values might influence the overall results of their economic evaluation.

By performing sensitivity analysis, economists and researchers can identify which variables are the most critical in determining the outcome, gauge the potential range of effects, and understand the degree of uncertainty in their analyses. This enhances decision-making by revealing how sensitive the conclusions are to the assumptions made in the model. In health economics, such insights help policymakers and healthcare administrators in planning and resource allocation to ensure that interventions are both effective and economically viable.