With limited resources available, we all would like to allocate health care dollars to do the most good. Clinical research tells us what outcomes to expect (in many cases) from the introduction of a health care program, a test, or a therapy. Even primitive cost analysis can assess the cost of such programs. The ability to place a value on health states is vital when assessing how patient outcomes influence the relative cost-effectiveness of medical procedures, therapies, and programs. Without a means to measure the value of a particular health state, one is left to compare apples with oranges and oranges with vacuum cleaners. In fact, comparisons of fruit and home appliances is relatively easy, because one can readily apply monetary values to apples, oranges, and vacuum cleaners and compare dollar amounts. How can one do the same for the outcomes of medical procedures and diagnostic tests? This is the challenge for health services and outcomes researchers throughout the world and, more urgently, the focus of policy makers, governments, and health insurers. The purpose of this paper is to describe quality-adjusted life-years (QALYs), a method that has successfully measured the outcomes of disparate health programs. We will introduce the QALY method, summarize the various methods of measuring and classifying health states, describe three methods that have been used to measure patients' preferences (utilities) for health states, and discuss the limitations of utility assessment and some controversies that result from the measurement and use of utilities and concerning health-related quality of life. Readers who are interested in general topics of radiology technology assessment and cost-effectiveness analysis should consult other review articles [1-4].