Being cost effective in healthcare is important due to strict budget guidelines and the importance of providing good healthcare services. Cost-effectiveness is about using resources to the best of your ability and creating a good health outcome. There are many different ways to use cost-effective techniques to make changes in a facility. It is important to know the practice of using cost-effective methods because it has a direct relationship with the evaluation of health services and outcomes. Robinson defines cost-effectiveness analysis as “a form of economic evaluation in which the costs of alternative procedures or programs are compared to outcomes measured in natural units – for example, cost per year of life saved, cost per case treated, cost per symptom-free day” (1993, p. 307). Simply put, “cost-effectiveness analysis and cost-utility analysis provide information about differences in outcomes relative to differences in costs” (Hicks, 2014, p.342). This comparison is important in many healthcare organizations because as new medical technology and procedures occur, it is important to know whether a change needs to be made from current tools and practices to new ones. To be effective in providing good medical care, an organization must know whether or not a new procedure will improve health outcomes. If an organization does not pay attention to the costs of adding new technology, it can create a shortfall in the budget and delay regular activities that the organization would normally have been able to provide; if he had not exhausted the money set aside for such tasks. Detsky and Laupacis state that a cost-effective analysis “requires the allocation of a fixed budget among all competing programs and is specifically aimed at... middle of paper... ....5-D The Quality Index of health-related life can help measure a person's quality of life using various factors called dimensions. These dimensions may include: breathing, speech, mental functioning, hearing, eating, elimination, sleep, mobility, vision, etc. This index helps improve cost-effectiveness because it allows the evaluation of healthcare services. The organization can see the value in adding new technology or procedures and decide whether or not it is effective to use the procedure. In conclusion, it is important to understand cost-effectiveness because of the effect it has on the evaluation of healthcare services. Two tools used to evaluate cost-effectiveness include QALYs and the 15-D Health-Related Quality of Life Index. The organization benefits from being cost effective because it can provide services that produce a good outcome.