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The use of noninvasive ventilation for patients with acute respiratory failure has become increasingly popular over the last decade. Although the literature provides good evidence for the effectiveness of noninvasive ventilation in addition to standard therapy compared with standard therapy alone in patients with chronic obstructive pulmonary disease (avoiding intubation and improving hospital mortality), the associated costs have not been rigorously measured. Adding noninvasive positive pressure ventilation (NPPV) to standard therapy in the setting of a severe, acute exacerbation of chronic obstructive pulmonary disease (COPD) in patients with respiratory acidosis who are at high risk of requiring endotracheal intubation is both more effective and less expensive.Economic evaluation based on theoretical model.This analysis base case was modeled for a tertiary care, teaching hospital.Carefully selected patients with severe exacerbations of COPD.The two alternative therapies compared were standard therapy (oxygen, bronchodilators, steroids, and antibiotics) and standard therapy plus NPPV.As the hypothesis was dominance, the main outcomes modeled and calculated were costs, mortality rate, and rates of intubation between the two interventions. To determine clinical effectiveness, we used a meta-analysis of randomized trials evaluating the impact of NPPV on hospital survival. A decision tree was constructed and probabilities were applied at each chance node using research evidence and a comprehensive regional database. To provide data for this economic evaluation, MEDLINE literature searches were conducted. Bibliographies of relevant articles were reviewed, as were personal files. To estimate the costs of the alternative therapeutic approaches, eight types of hospitalization days were costed using the London Health Sciences Center costing data. Sensitivity analyses were performed, varying all assumptions made. The meta-analysis yielded an odds ratio for hospital mortality in the NPPV arm, compared with standard therapy, of 0.22 (95% confidence interval, 0.10–0.66). By using baseline case assumptions, we found a cost savings of $3,244 (1996, Canadian), per patient admission, if NPPV were adopted in favor of standard therapy. These findings present a scenario of clear dominance for treatment with NPPV. Sensitivity analyses did not alter the results appreciably.We conclude that from a hospital’s perspective, NPPV and standard therapy for carefully selected patients with acute, severe exacerbations of COPD are more effective and less expensive than standard therapy alone.