ORIGINAL RESEARCH ARTICLE A Cost-Effectiveness Model for Frail Older Persons: Development and Application to a Physiotherapy-Based Intervention Jonathan Karnon 1,2 • Hossein Haji Ali Afzali 1,2 • Gregorius Virgianto Arpuji Anggoro Putro 1 • Phyu Win Thant 1 • Ameline Dompok 1 • Ingrid Cox 1 • Owen Henry Chikhwaza 1 • Xian Wang 1 • Mercy Mukui Mwangangi 1 • Matahari Farransahat 1 • Ian Cameron 2,3 Ó Springer International Publishing Switzerland 2017 Abstract Introduction The clinical importance of frailty is increas- ing. Existing economic evaluations of interventions to manage frailty have limited time horizons, but even in older populations there may be important longer-term dif- ferences in costs and outcomes. This paper reports on the development of a cost-effectiveness model to predict publicly funded health and aged care costs and quality- adjusted life years (QALYs) over the remaining lifetime of frail Australians and a model-based cost-utility analysis of a physiotherapy-based intervention for frail individuals. Methods A cohort-based state transition (Markov) model was developed to predict costs and QALYs over the remaining lifetime of a frail population. Frailty is defined using the phenotypic definition of frailty, and the model comprises health states that describe frailty status, resi- dential status, the experience of bone fractures and depression, and death. Model input parameters were esti- mated and calibrated using the Dynamic Analyses to Optimise Ageing dataset, supplemented with data from the published literature. Results The cost-effectiveness model was subject to a range of validation approaches, which did not negate the validity of the model. The evaluated physiotherapy-based frailty intervention has an expected incremental cost per QALY gained of Australian $8129 compared to usual care, but there is a probability of 0.3 that usual care is more effective and less costly than the intervention. Discussion Frailty reduces quality of life, is costly to manage and it’s prevalence is increasing, but new approaches to managing frailty need to demonstrate value for money. The value of the reported cost-effectiveness model is illustrated through the estimation of all important costs and effects of a physiotherapy-based frailty inter- vention, which facilitates comparisons with funding deci- sions for other new technologies in Australia. Key Points for Decision Makers • This paper reports on the development and validation of a cost-effectiveness model to predict all important health and aged care costs and quality- adjusted life years in pre-frail and frail individuals. • The evidence base on the effectiveness of frailty interventions is increasing, but there is limited evidence on cost-effectiveness. The reported model can be used to inform the value of frailty interventions. • The case study evaluation of a multi-faceted physiotherapy-based intervention shows high expected value, but significant areas of uncertainty. The conduct of further research to reduce uncertainty also has a high expected value. Electronic supplementary material The online version of this article (doi:10.1007/s40258-017-0324-z) contains supplementary material, which is available to authorized users. & Jonathan Karnon jonathan.karnon@adelaide.edu.au 1 School of Public Health, University of Adelaide, Adelaide, SA 5005, Australia 2 Centre for Research Excellence in Frailty and Healthy Ageing, University of Adelaide, Adelaide, SA 5005, Australia 3 Sydney Medical School, University of Sydney, Edward Ford Building (A27), Fisher Road, Sydney, NSW 2006, Australia Appl Health Econ Health Policy DOI 10.1007/s40258-017-0324-z