Precise estimation of treatment effects is crucial for evaluating intervention effectiveness. While deep learning models have exhibited promising performance in learning counterfactual representations for treatment effect estimation (TEE), a major limitation in most of these models is that they treat the entire population as a homogeneous group, overlooking the diversity of treatment effects across potential subgroups that have varying treatment effects. This limitation restricts the ability to precisely estimate treatment effects and provide subgroup-specific treatment recommendations. In this paper, we propose a novel treatment effect estimation model, named SubgroupTE, which incorporates subgroup identification in TEE. SubgroupTE identifies heterogeneous subgroups with different treatment responses and more precisely estimates treatment effects by considering subgroup-specific causal effects. In addition, SubgroupTE iteratively optimizes subgrouping and treatment effect estimation networks to enhance both estimation and subgroup identification. Comprehensive experiments on the synthetic and semi-synthetic datasets exhibit the outstanding performance of SubgroupTE compared with the state-of-the-art models on treatment effect estimation. Additionally, a real-world study demonstrates the capabilities of SubgroupTE in enhancing personalized treatment recommendations for patients with opioid use disorder (OUD) by advancing treatment effect estimation with subgroup identification.

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