Decision analysis

A systematic approach to decision making under uncertainty.  This involves the modelling of the sequences or pathways of multiple possible strategies (e.g. of diagnosis and treatment for a particular clinical problem) to determine which is optimal

Decision tree

A graphical framework for representing alternatives for use in decision analysis

Deterministic sensitivity analysis (DSA)

A method of capturing the level of uncertainty in the results of decision analysis which varies variables one at a time (one-way sensitivity analysis) or two or more at a time (multi-way sensitivity analysis).

Diagnosis Related Group (DRG)

A patient classification scheme that provides a clinically meaningful way of relating the types of patients treated in a hospital to the resources required by the hospital

Direct costs

The fixed and variable costs of all resources (goods, services, etc.) consumed in the provision of an intervention as well as any consequences of the intervention such as adverse effects or goods or services induced by the intervention – includes direct medical costs and direct nonmedical costs such as transportation or child care

Direct medical costs

A medical cost that varies directly with the provision of a health care intervention (e.g. physician salaries).

Direct non-medical costs

A non-medical cost associated with provision of medical services (e.g. transportation of a patient to a hospital).

Discount rate

The interest rate used to discount or calculate future costs and benefits so as to arrive at their present values, e.g. 4%


the process used in economic analyses to convert future costs or benefits to present values using a discount rate. Discounting costs reflects societal preference for costs to be experienced in the future rather than the present, and for benefits to be realised in the present rather than at a later date


A mathematical function describing the variability of a variable.


a strategy is dominated if it is less effective and has higher costs than an alternative strategy