Cost-effectiveness analysis can be used to help set priorities for funding health care programs. For each intervention, the costs and clinical outcomes associated with that strategy must be compared with an alternate strategy for treating the same patients. If an intervention results in improved outcomes but also costs more, the incremental cost per incremental unit of clinical outcome should be calculated. The incremental cost-effectiveness ratios for various programs can be ranked to set funding priorities. By using this list, the person responsible for allocating resources can maximize the net health benefit for a target population derived from a fixed budget. Clinicians may not share this objective because, individually, they are appropriately concerned solely with the effectiveness of a specific intervention for their patients and are not concerned with the benefit derived from spending those resources on other patients in the target population. In addition, allocation may be driven by distributional and political objectives. Nevertheless, cost-effectiveness analysis demonstrates the consequences of allocation decisions. Because clinicians should participate in policy making, they must understand d the role of this technique in setting funding priorities.