Cost-effectiveness analysis as a means to evaluate medical innovations has become well accepted in the UK and several other Western countries. An important assumption underlying this method is that costs and effects are constant over time. In reality, however, and especially in the short run, variations in costs and effects are likely to occur. These variations can lead to considerable deviations from the outcome of a conventional economic evaluation, which in turn may lead to serious implementation problems at a local level. Taking time into account explicitly in economic evaluations in health care may enhance their utility for both societal and local decision making, and may ultimately smooth the adoption of new and basically cost-effective health care technologies.