1 Cost-effectiveness of improving medical services in low-resource settings Edward Broughton, PhD,...

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Cost-effectiveness of improving medical services in low-resource

settingsEdward Broughton, PhD, MPH, PT

University Research Co.

May 21 , 2014

[email protected]

USAID Applying Science to Strengthen and Improve Systems

Your decision….

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What would you pay?

• An error while splinting wrist fractures can cause pain in the 5th digit for ~ 10 hours

• An effective improvement intervention can avert error

• What is it worth to you to avoid the error?

• What is your willingness to pay?


What would you pay?

• Your choice: this pain for 10 hours or pay $ to not have pain

• How much are you willing to pay?

10 cents?...... $ 100,000?

$ 1? …….. $ 10,000

$ 10?……. $ 1,000? etc.

Please write down your answer

This is your willingness to pay (WTP)


What is economic analysis?

• Comparative analysis of two or more courses of action in terms of the costs and consequences of an intervention

• Different types of analyses:– Cost-minimization– Cost-effectiveness– Cost-utility– Cost-benefit


What is cost-effectiveness analysis?

• A way to measure efficiency of an intervention in which costs are related to a single common effect

• Cost-effectiveness = costs ÷ effects

• Cost-effectiveness ANALYSIS is the cost-effectiveness of one intervention relative to a baseline / comparison


But we need to know:

• Whose perspective?

• What time-frame?

• What units of effectiveness?

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Our improvement intervention example

• Training / coaching program that prevents errors that lead to adverse event (pain)

• Before intervention, 50% risk of pain. After intervention, 10% risk of pain

• Cost of improvement intervention = $ 100 / patient

• Cost of treating pain = $ 8 / patient (average) but ineffective

Is intervention cost-effective?

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Important details:

• Whose perspective? = Health system

• What time-frame? = 1 year

• What units of effectiveness? = adverse event averted or hour of pain avoided or DALY averted or QALY gained

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Cost of improvement intervention

• What are the costs above what would happen without the improvement intervention?

• Staff time costs should be included even if staff were not paid more

• Any other costs we should consider?

• Assume a cost of $ 100 per patient (divided among all patients who benefit)

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Decision tree

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Calculations

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Incremental cost effectiveness ratio = difference in costsdifference in effects

ICER = [(0.1 x 100) + (0.9 x 100)] – [(0.5 x 8) + ( 0.5 x 0)]. [( 0.1 x 0 ) + ( 0.9 x 10 )] – [( 0.5 x 0 ) + ( 0.5 x 10 )]

ICER = $ 24.00 / hr of pain relief


Table of results

Strategy Cost Incremental cost

Effect Incremental effect

Inc. cost-effectiveness

ratio

Improve-ment

100 96 9 hours of pain

avoided

4 hours of pain

avoided

$ 24 / hour of pain avoided

Business-as-usual

4 5 hours of pain

avoided

All data are per recipient of strategy


Cost effectiveness plane

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Higher cost

Lower cost

More effective

Less effective

Willingness-to-pay threshold

$ 24

1 hr pain relief



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Higher cost

Lower cost

More effective

Less effective


$ 24

Hr of pain relief


If we include the economic consequences of the improvement intervention …..

Taking the societal perspective:

• Can people work with pain caused by error?

• Assuming no work, calculate lost income / productivity

• Assume income / productivity = $ 50 / hour

• Assume no difference in the cost of treatment ( $ 8 )

• Now redo calculations


CEA calculation

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Incremental cost effectiveness ratio = difference in costsdifference in effects

ICER = [(0.1 x 100) + (0.9 x(-500))] – [(0.5 x 8) + ( 0.5 x(-500)]. [( 0.1 x 0 ) + ( 0.9 x 10 )] – [( 0.5 x 0 ) + ( 0.5 x 10 )]

ICER = – $ 48.50 / hr of pain relief


Table of results

Strategy Cost Incremental cost

Effect Incremental effect

Inc. cost-effectiveness

ratio

Improve-ment

– 440 –194 9 hours of pain

avoided

4 hours of pain

avoided

– $ 48.5 / hour of pain

avoided

Business-as-usual

– 246 5 hours of pain

avoided

All data are per recipient of strategy



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Higher cost

Lower cost

More effective

Less effective


$ 24

- $ 48.5



20

Higher cost

Lower cost

More effective

Less effective


$ 24

- $ 48.5


Why CEAs of improvements difficult in LMICs?

• Often “effectiveness” is process indicator, not clinical outcome (eg: compliance with standard of care)

• Difficult to transform into a clinical outcome

• Often improvement has many different effects

• Need modeling to convert to DALYs, QALYs etc.

• Need to guess how long improvement will last

• Data often dubious

• No control groups to determine attributability


Clarifying the question

• What are you comparing your intervention to?– Doing nothing– Another intervention– Several other interventions

• What point of view / perspective are you taking?– Recipient of the intervention– One or several of the funders– Everyone (societal)

• Why are you doing the CEA?– Who is your audience?– What is the information going to be used for?


Calculating DALYs and WTP

• Global burden of disease: 2004 Update• http://www.who.int/healthinfo/global_burden_diseas

e/GBD2004_DisabilityWeights.pdf?ua=1

• DALYs for AE = 10/(365 x 24) x 0.132 = 0.001142• WHO: > 3 x GDPPC / DALY, WB = 1 x GDPPC / DALY• For US, $ 178 (WHO) or $ 59 (WB)

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http://www.who.int/healthinfo/global_burden_disease/GBD2004_DisabilityWeights.pdf?ua=1

http://www.who.int/healthinfo/global_burden_disease/GBD2004_DisabilityWeights.pdf?ua=1


Questions?

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