Transcript Economic Evaluation

Health Interventions:Evaluation
of Cost Effectiveness
Dr Sanjay Dixit M.D. Ph.D
Diploma in Health System Management(U.S.A.)
MGM Medical College Indore
Health care interventions.


Health system with similar level of
Health expenditure per capita
show wide variations in population
health outcomes
Some system devote resources to
expensive interventions with small
effect on population health
Health Care Interventions


Low cost interventions with potentially
greater benefit are not fully
implemented
Information on both costs and
effectiveness are essential for making
evidence-based decisions about
competing health care interventions
Health Care Interventions

20 years ago Health Care intervention
were centered exclusively on
Clinical Effectiveness and
not on Cost Effectiveness.


Intervening years have seen an ever
increasing strain on health resources.
Therefore need of Economic Evaluation
of health Interventions
Health Interventions…
• Clinical
• Behavioral
• Environmental
• Systems
What is problem
?
How much problem can be
prevented?
How much problem intervention
can prevented ?
Benefits compare to costs ?
Key Question
Decision makers
Ask ?
What is cost
of intervention
How benefit to cost can compare
What are Gain compare to present
status?
Why Do Cost Effectiveness?
• Understand trade-offs
between costs and
benefits
• Inform decision
makers
Cost effectiveness Analysis..


It is a Technique for identifying the
most effective use of limited resource
It compares alternative
interventions/procedure/program
using cost and a common
effectiveness out come(Lives
saved/cases prevented/additional
days of activity/extent of sight
restored/ Heart attacks avoided).
Cost effectiveness Analysis


These are combined ( cost per heart
attack avoided) such that the
relative cost effectiveness can be
assessed
Used to assess the comparative
impacts of expenditure on different
health interventions.
Cost Effectiveness Analysis

A study evaluating whether
hypertension screening,Nutrition
Counseling,Medication,or by pass
surgery would provide the most
additional years of life for each
Ruppes spent is a Cost
effectiveness study
Cost Effectiveness Analysis


Cost Effectiveness of interventions
such as DOTS for tuberculosis is
highly cost-effective
Liver transplant for alcoholic
cirrhosis is highly cost-ineffective
Cost Effectiveness
Analysis…

It also helps to choose between
medical and non medical
approaches for protecting health
such as better emergency medical
services versus better highway
design
Cost Effectiveness:
What is it?
What you pay
Cost Effectiveness =
What you get
Burden of illness
Deaths (mortality)
Frequency (incidence, prevalence)
Severity (disability, quality of life)
Hospitalizations
HEALTH
IMPACT
Burden
of Illness
ECONOMIC
IMPACT
Cost of illness
Cost of Illness
• Direct (medical and non-medical)
costs
• Indirect (productivity/Travel
Expenses/Loss of time) costs
• Loss of Quality of Life
• Intangible costs (grief, pain,
suffering)
HEALTH
IMPACT
Burden
of Illness
ECONOMIC
IMPACT
Cost of
Illness
Can an Intervention Work?
• Interventions -- public health
programs, policies, clinical care
• Efficacy
Can an intervention work in ideal
settings?
Effectiveness/Efficiency

Effectiveness
Relate input and output
to out come..Are the outputs produced
actually having desired impact
Efficiency
Indicates how inputs are used to
produced the outputs
ECONOMIC
IMPACT
HEALTH
IMPACT
Burden
of Illness
Cost of
Illness
Intervention
Net Benefit Effectiveness
Cost of Intervention?
Net Cost (or Saving) = Cost of program
+
(Cost of care with a program – Cost of care
without a program)
HEALTH
IMPACT
Burden
of Illness
ECONOMIC
IMPACT
Cost of
Illness
Intervention
Net Benefit Effectiveness
Cost of
Program
Difference
in Cost
of Care
Net Cost
How Do Benefits
Compare to Costs?
• Combine benefits, harms, and
costs
• Cost effectiveness, cost utility,
cost benefit
Does an Intervention Work?
• Effectiveness
Does it work in real-world settings?
• Net Benefit = Benefits - Harms
Measuring
Effectiveness
• Natural health units
– Lives saved, cases prevented, life years
saved
• Conversion to common units
– Quality-adjusted life years (QALY’s)
• Conversion to Rupees
Quality of Life Adjustment Factors
Duration
Health Status
Reference State Perfect Health
3 months
3 months
3 months
8 years
8 years
life
life
Adjustment
1.00
home confinement,TB
0.68
home confinement contagious ds. 0.65
depression
0.44
kidney transplant
0.58
mastectomy for breast cancer 0.48
home dialysis
0.40
hospital confinement contagious ds 0.16
Reference State
Dead
0.00
ECONOMIC
IMPACT
HEALTH
IMPACT
Burden
of Illness
Cost of
Illness
Intervention
Cost of
Program
Net Benefit Effectiveness
Cost
Effectiveness
Difference
in Cost
of Care
Net Cost
Steps in Cost-Effectiveness
Analysis….


Step 1
Define the Program
* Define Precisely problems to be analyzed, Its focus,process,and
limits
* Develop Alternative approaches to the program Treatment v/s
Immunization, Refinement1 Age of Vaccination, Means of delivery
Step 2
Compute net cost (Four Parts)
* Compute gross Program cost Screening 1Cost of Screening, 2Follow up of +ve
cases3,Treatment of person who otherwise might gone untreated
* Compute monetary savings ( Cost of Avoided treatment)
* Discount costs and saving to the present value (5 to 15 %)
* Compute the net cost( Gross costs less savings)
Steps in Cost Effectiveness
Analysis….


Step 3
Compute the net health
effects Live saved, Complications averted,
Cases of illness prevented
 ( in terms of additional years of healthy
life).
- Add Additional years with full health
- Additional years of disease( A year
restricted to home may be valued 80%
of complete health
Steps in Cost Effectiveness
Analysis….
Improvements in health( not extension
of life) like owns symptoms/restrictions
of being home bound may be relieved
-
Negative effects (Inconveniences and
morbidity) restricted activities/person has to
visit the physicians office/Asthma relief
Step 4 Apply a decision rule based on Net Cost
and net health effect
Net Effects
Positive
Net Cost Positive
Net Cost Zero or Negative
Case 1 C.E.= Net Cost-Net Health Effects Case 2 Program economically Valuable
Select most efficient program for
Should generally be implemented
Improving the health
inexpensive and highly effective
( lowest Ratio )
Provision of safe water
Measure of efficiency
Immunization, iodization of salt
Zero Case 3 Program benefit offset by morbidity Case 4 C.E. = Net Cost-Net Health Effects
or
and inconvenience. Program generally
Select most efficient program
Negative
should not be implemented
for containing costs( Highest ratio)
Cost money worsening the life
Steps in Cost
Effectiveness analysis…





Step 5.
Perform Sensitivity Analysis.
It will be necessary to make number of
assumptions and to estimate the value of
various parameters.
Sensitivity Analysis can be used to test how
robust the results are to these imprecise
measurements
It is process used to predict exactly the
future discount rate
DISCOUNTED COST/ BENEFIT
Years------
1-
2
3
4
5
Tot
al
Costs
100
80
75
25
20
300
Discount
ed costs
(5%)
100
76
68
22
16
Benefits
10
50
75
80
85
Discount
ed
Benefits(
5%)
10
48
68
69
70
300
Sensitivity Analysis….




Opinion differ about the value of year with
impaired health relative to perfect health
Medical experts are uncertain about the value
of various preventive measure.
Professional assessment are constantly
updated with research
Its difficult to predict future discount rate
Sensitivity Analysis….




In sensitivity analysis areas of uncertainty are
varied and the effect on result is noted
Uncertain factors are to be examined and their
effect on decision rule are studied
If final decision is not affected by making
different assumptions about uncertain
quantities-by choosing High and Low
estimates, than intervention may be applied
If the decision would drastically altered by
different estimates, than we should be
cautious for making the recommendations
Step I Define the Program


Hypothetical Influenza
Inoculation Program
Vaccinations would be
administered to 100,000persons
aged 65years and older over next
year in existing clinics and health
centers
Step II Compute Net Costs


Inoculations (100,000X$3) =
$300,000
Treatment of Reaction(50X$300)=+$15000(Plus)
_________
Gross Program cost
$315,000
Saving due to People not
$–50,000 (Minus)
getting influenza
____________
(1,000x$50)
Net Program COST = $265,000
Step 3 Compute net Health
Effects
Type of effect
Healthy Years
____________________________________________
1 Additional healthy Life( 10X6.9)
67.9
2 Health Improvement for those Spared +40.0(Plus)
Morbidity of influenza(1000X.04)
___________
Gross Health Effect
107.9
Negative effect of Adverse reaction
-4.5 (Minus)
(50X.09)
_____________
Net Health Effect
103.4
Step IV Apply Decision Rule





Case 1 Situation
definite health gains are achieved but
at net positive cost
Net Cost divided by net health gain
$265000/103.4 health years=$2563 per
healthy years
This ratio helps decision makers to
determine whether to implement the
program or not
Step 5 Perform Sensitivity
analysis



If expert think that only 800 cases
of influenza will be prevented
The cost effectiveness ratio will be
increased
Decision makers will decide
whether its affordable Cost or Not
to save life and provide healthy life
years
Policy Implications of
Economic Evaluations
Type of Analysis
Denominator
Policy Level
Cost Effectiveness
Natural Health Units
(Life years saved, cases
prevented)
Specific Health
Program
Cost Utility
Common Health Units
(Quality-adjusted life
year)
Across health
programs
Cost Benefit
Rupees (all converted to Across Sectors
Rupees)
Preliminary List of Services
Scoring 8 or Higher
SERVICE
Immunize children
Adults tobacco counseling
Adolescent tobacco
counseling
Pneumococcal Immunization
Vision screening 65+
Influenza immunization
Pap smears
Chlamydia Screening
Colorectal cancer screening
Lipid Screening
Hypertension screening
Prevent. Cost Total
Burden Effect.
5
5
10
5
5
10
4
5
9
4
5
4
5
3
5
5
5
5
4
4
3
5
3
3
3
9
9
8
8
8
8
8
8
When to undertake the
C.E.A.




Formal C.E.A. analysis will be most
useful when
1. Large amount of resources(Rs in
Millions/Billions) are involved
2. Responsibilities for decisions are
fragmented
3. The Goals and Objectives of different
groups are at odd or unclear
When to undertake the
C.E.A...



4.Alternate course of actions are
radically different
5.The technology and risks
underlying each alternatives are
well understood
6. A long time frame is involved(eg
Strategy versus management)
Use of Cost Effectiveness
Analysis for Decision/Policy
Makers


Cost-effectiveness analysis as one tool
decision-makers can use to assess and
potentially improve the performance of
their health system.
It indicates which intervention provide
the highest “value of money” and help
them choose the interventions and
programme which maximize health for
available resources.
Challenges of CEA.


Resource allocation decision affecting
the entire health sector must take into
account Priority of sick,reducing social
inequalities in health or well being of
future generation.
Fails to identify existing misallocation of
resources by focusing on evaluation of
new technologies or strategies
Challenges of CEA..



The result of many CEA studies are
context- specific ,they cannot be used
in other population
There are difficulties of generalizing
context specific CEA studies
Overall effectiveness of a given clinical
intervention is often not known
References






Economics for Health Sector Analysis Concept and
causes Mead Over The World Bank Washington D.C.
Health Economics Fundamentals and Flow of funds
Thomas E .Geten John Wiley & Sons (1997)
Health Economics Theories,Insight Rexford E Sanrerre
Revised Edition Dryden press Drden (2000)
Development of WHO Guidelines on Generalized cost
effectiveness analysis Christopher et.al Health
Economics 9:235-251 (2000)
Methods of Economic Evaluation of Health Care
programmeDrummondMF et.a Second Edition Oxford
University Press(1997)
Health interventions assessment WHO –CHOICE website
THANK YOU
Cost Utility Analysis



Life years saved are not
homogenous
Medical intervention is associated
with significant number of life
saved but a reduced quality of life.
Another analysis “ Utility
Analysis”has been frequently used
in recent years.
Cost Utility Analysis


Cost Utility analysis compares
interventions(Procedure, test or
method) using costs and health out
come that is adjusted for quality of life
as rated as assessed by the recipientthe patients
( For example Quality- Adjusted Life
Years or QALYs . The ‘Common
Currency’commonly used is QALYs,
Cost Utility…..

A procedure with a 0.5 Quality of
life outcome(QOL) or Quality
adjusted life year (QALY) costing
Rs 4000 equals in C-U analysis as
Rs 8000 with QOL result of 0.25
Quality of Life adjustment
Factors…
It adjust number of life years gained by
an index between 0.00 (Death) and
1.00 ( Good Health)

Respondents indicated that living for
three months confined to hospital for
tuberculosis treatment was worth only
1.8months ( 0.60 x 3 months)
 Some people consider some illness to be
worse than death , such additional years
lived in such misery may has negative
value
Method to construct index
for measuring utility


First Method:Asks people who have
same condition to assess the
quality of their lives
Second Method:Describes the
condition to a group of people who
do not have the condition and ask
them to gauge the quality of life or
utility
Cost Utility…..


Quality adjusted life years QALYs
for each Health state and
treatment was assessed by ‘Self
Reported description’
Five dimensions are assessed
Mobility,Self Care,Performance of
usual activity, Pain/Discomfort,and
Anxiety/Depression
Cost Utility…


Each having three possible
responses No problem/some
difficulties/moderate
problem/unable /Extreme problem
Each combination has an
associated utility value derived
with a scale indexed between 0 (
dead) and 1 ( Full Health)
Cost utility analysis

The difficulty in using utility
analysis lies in developing
appropriate index for measuring
the Utility
Economic Issues-Time Horizon


Time frame should be long enough to
capture all harms, benefits and costs
regardless of when they occur, usually a
lifetime
Contrast with short term analyses which
often capture many of the costs but fewer
of the benefits
Economic Issues--Perspective
Whose point of view -- patient, medical
care system, employers, society
Examples of cost included in typical Cost
effectiveness analysis based on perspective of
analysis
Cost
Perspective
Societal
Payer Employer
Patient
Direct Medical
Y
Y
Y
Out of pocket
Direct Non-Medical
(e.g., transportation,
day care)
Y
N
N
Y
Indirect (e.g.,
Productivity)
Y (if not in
denominator)
N
Y
Y (if not in
denominator)
Intangible (e.g.,
grief, pain, suffering)
Y (if not in
denominator)
N
N
Y (if not in
denominator)
Cost Benefit Analysis
Cost Benefit Analysis (CBA) measures
both cost and benefits in monetary
values.An intervention is commonly
adopted if the monetary benefits exceed
the cost, resulting in net benefit.
 Important tool is the benefit -to-costs
ratio
Total Monetary cost of benefit or
outcome divided by the total monetary
cost of obtaining them

Cost –minimization
Analysis



The simplest from of economic
evaluation where the procedure or
programmer identified that cost the
least.
If there is no significant difference in
the benefit of two interventions,the
preferred intervention will be the one
that is least costly
If there is no significant difference in
the cost of two interventions,the
preferred intervention will be one that
is most effective