PRESSURES FOR GREATER ACCOUNTABILITY ARE REVIEWED, AND PROBLEMS ASSOCIATED WITH THREE APPROACHES TO MEASURING SERVICE EFFORTS AND OUTCOMES--SOCIAL INDICATORS, PROGRAM PLANNING AND BUDGETING SYSTEM, AND COST-BENEFIT ANALYSIS--ARE POINTED OUT. COST-EFFECTIVENESS ANALYSIS, WHICH LINKS MONETARY INPUT AND NONMONETARY OUTPUT MEASUREMENTS, IS RECOMMENDED AS A SOLUTION TO SOME OF THESE PROBLEMS. NONUNIFORMITY IN COST ACCOUNTING AND OTHER OBSTACLES TO IMPLEMENTING COST-EFFECTIVENESS STUDIES ARE NOTED, AND A MODEL BASED ON THE CONCEPT OF COST AGGREGATION BY DELIVERED HOURS OF PROFESSIONAL CARE IS SUGGESTED AS A STRATEGY FOR MAKING HUMAN SERVICE COST ACCOUNTING MORE UNIFORM. FACTORS IN ASSESSING OUTCOMES IN COST-EFFECTIVENESS STUDIES ARE TIME PATTERNS OF OUTCOMES, MULTIPLE OUTCOMES, VARIANCE AMONG SERVICE BENEFICIARIES, CHOICE OF MEASURE, RESEARCH DESIGN, AND RELIABILITY AND VALIDITY. A MENTAL HEALTH SETTING IS USED TO PRESENT AN EXAMPLE OF OUTCOME EVALUATION, TO COMBINE COSTS AND OUTCOMES IN THE DEVELOPMENT OF A COST-OUTCOME MODEL FOR HUMAN SERVICE PROGRAM EVALUATION, AND TO DEFINE A COST-EFFECTIVENESS APPROACH TO PROGRAM DECISIONMAKING. THE FOLLOWING STEPS IN COST-EFFECTIVENESS ANALYSIS ARE DELINEATED: (1) IDENTIFICATION OF SERVICE GOALS TO BE ACHIEVED FOR TARGET GROUPS; (2) COMPARISON OF EQUIVALENT GROUPS OF CLIENTS WHO ARE PROVIDED DIFFERENT SERVICES DESIGNED TO ACHIEVE THE SAME GOALS; (3) USE OF ACCRUAL ACCOUNTING, OPERATING STATISTICS, AND COST FINDING TO DETERMINE THE COST PER EPISODE FOR EACH CLIENT; (4) PREINTERVENTION-POSTINTERVENTION ASSESSMENT TO DETERMINE SERVICE OUTCOMES WITHIN CLIENT GROUPS; (5) STATISTICAL ANALYSIS TO DETERMINE AVERAGE COST PER EPISODE AND AVERAGE OUTCOME FOR EACH SERVICE ALTERNATIVE AND TO DETERMINE WHETHER COST AND OUTCOME DIFFERENCES CAN BE DETECTED WITH CONFIDENCE; AND (6) PRESENTATION OF COST AND OUTCOME SUMMARIES IN COST-OUTCOME AND COST-EFFECTIVENESS MATRICES AS DECISIONMAKING TOOLS. COST-EFFECTIVENESS ANALYSIS IS RECOMMENDED AS A MORE PRACTICAL GENERAL SERVICE PERFORMANCE EVALUATION APPROACH THAN COST-BENEFIT ANALYSIS, WHICH REQUIRES THAT ALL SERVICE OUTCOMES BE CONVERTED TO MONETARY MEASUREMENTS. ILLUSTRATIVE DATA AND A LIST OF REFERENCES ARE PROVIDED. (LKM)