Economic evaluation lecture 2013.3.21

FM Morning Activities: Introduction to Economic Evaluation in Healthcare Settings

Borwornsom Leerapan, MD PhD SM March, 20th 2013

http://www.slideshare.net/borwornsom

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1.  What exactly is “economic evaluation”?

2.  Why should family physicians be concerned with economic evaluation?

3.  How should we read/do an economic evaluation?

Presentation Outline

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Source :influxentrepreneur.com/wendyelwell/

“Up and Down the Ladder of Abstraction”

นามธรรม (Abstract): •  แนวคิด (concepts)

•  ทฤษฎี (theories) •  หลักการ (principles)

รูปธรรม (Concrete): •  เปาหมาย/วัตถุประสงคของการศึกษา (goals)

•  การวัดตนทุน/ผลลัพธ (measures) •  รูปแบบ/ชนิดของการวิเคราะหความคุมคา

(types of analysis)

•  การแปลผลความคุมคา (interpretation) •  การนำไปใชประโยชน (implications)

“What exactly is “economic evaluation?”


Vocabulary

•  Efficacy = measure of effects under ideal conditions

•  Effectiveness = measure of effects under “real life” conditions

à Efficacy does not imply effectiveness!

•  Efficiency = measure of the relationship between costs and effects/benefits

à Effectiveness does not imply efficiency!

Economic Evaluation

•  A study method that aims to provide an information on the efficiency of interventions.

•  Intended to help decision makers make the best choices

under conditions of uncertainly, conflicting objectives, and resources constraints (Weinstein, 2006).

•  Health technology: “the application of organized knowledge and skills in the form of devices, medicines, vaccines, procedures and

systems developed to solved a health problem and improved quality of lives” (WHO 2007).

•  Therefore, health technology may include:

– Health interventions

– Health policies

– Health technologies

Health Technology

Source: The 60th World Health Assembly agenda 60.29, 2007

policy

Intervention Technology

•  Health technology assessment (HTA): “a structured analysis of health technology, a set of related technologies, or a technology-

related issue that is performed for the purpose of providing input to a policy decision” (Goodman 2004).

•  Economic evaluation is a part of health technology assessment.

Health Technology Assessment

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HTA

Decision making

Scientific Evidence

•  Safety

•  Benefits (e.g. efficacy, effectiveness)

•  Value for money (e.g. cost-effectiveness)

•  Ethical considerations

•  Institutional considerations

•  Social considerations (e.g. equity)

Health Technology Assessment Issues

Source: Adapted from Teerawattananon (2013)

Assessment of New Drugs

Source: Adapted from Teerawattananon (2013)

Quality

Efficacy/Effectiveness

Value for Money

For pre-market authorization (e.g. FDA)

For reimbursement (e.g. NICE, HITAP)

Safety

= “The Fourth Hurdle”

Example of Economic Evaluation

Source: AMERICAN JOURNAL OF RESPIRATORY AND CRITICAL CARE MEDICINE VOL 166 2002


Source:http: www.rcgp.org.uk/Publications/BJGP.aspx


Source: www.ncbi.nlm.nih.gov/pubmed

Key Features

•  Key features of economic evaluation: 1.  An evaluation of the relationship between costs and

consequences: “efficiency”

2.  A comparative evaluation: “relative efficiency” between the one under the study and the natural comparator.

“Why should we be concerned with economic evaluation?”


Decision-makers in Healthcare

Source: Adapted from: Lessard et a. (2009)

Macro

•  Policy level

•  Policymakers

Meso

•  Administrative level

•  Organizational administrators

Micro

•  Clinical practices level

•  Clinicians

“It’s a no-brainer!”

Worse & More

Expensive

Better & More

expensive

Worse & Cheaper

Better & Cheaper

Cost

Heath Benefits

Cost-Effectiveness Plane

Excluded Cost-‐effec/ve

Ques/onable Donimant

Source: Adapted from: www.whatisseries.co.uk

Cost

Heath Benefits

•  FPs prefer evidence-based decision making, that is customized/individualized for each patient (and family).

•  But evidence is usually generated by population-level studies (including economic evaluation).

•  Question: How should FPs use economic evaluation of health interventions to help making clinical clinical decisions for each patient?

Dilemma of Clinical Decisions

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•  Two ways to increase healthcare efficiency:

–  เพิ่มประสิทธิภาพเชิงเทคนิค (technical efficiency)

–  เพิ่มประสิทธิภาพในการจัดสรรทรัพยากร (allocative efficiency)

Technical vs. Allocative Efficiency

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The Five Control Knobs for Health-sector Reform

Source: Marc J. Robert etc. (2004)

Control Knobs

Target popula1on The Health System

Financing

Payment

Organiza/on

Regula/on

Behavior

Efficiency

Quality

Access

Health Status

Customer Sa/sfac/on

Risk Protec/on

WHO Health System Framework

Pix source: WHO (2007)

“How should we read an economic evaluation? ”


•  “Opportunity costs” are the value of benefits forgone by choosing one particular allocation of scarce resources over another (Brouselle and Lessard 2011).

•  Efficiency results when benefits are maximized, and opportunity costs minimized (Donaldson et al. 2002).

Concepts of Costs I

Pix source: en.wikipedia.org/wiki/

Concepts of Costs II

•  Accounting costs vs. Economic costs

– Accountants concerns money or expenses in exchange for goods and services or input.

–  Economists concerns resources sacrifice in order to obtain goods and services or input (“Opportunity costs”).

•  Cost vs. Price/Charge vs. Reimbursement

– Cost usually differs from price, charge, or reimbursement.

Source: Adapted from Brouselle and Lessard (2011)

Concepts of Costs III

•  Fixed vs. Variable •  Medical vs. Non-medical

•  Average vs. Marginal •  Capital vs. Operating/Recurrent

•  Direct vs. Indirect

•  External vs. Internal

•  Tangible vs. Intangible

•  Explicit vs. Implicit

Costs from Providers perspective

Total cost

Direct

Fixed Salaries Deprecia/on cost

Variable

Drugs OT wages

Referral charges Transporta/on Electricity/water

Indirect Fixed

Salaries Deprecia/on cost

Variable OT wages

Office supplies Electricity/water

Figure Source: Courtesy of Chathaya Wongrathanandha, M.D

Costs from Patients perspective

Total cost

Direct Medical

Medica/on Inves/ga/on Hospitaliza/on Rehabilita/on

Non-‐medical Food

Transporta/on Child care

Indirect Tangible

Absence from work Decrease earning

capacity

Intangible Pain

Suffering Figure Source: Courtesy of Chathaya Wongrathanandha, M.D

Three Dimensions of Economic Evaluation

Patient Provider

Payer Societal/Governmental

Perspectives

Costs

Cost Analysis

Cost-Effectiveness Cost-Utility Analysis

Cost-Benefit Analysis

Analyses

Cost-Consequence Analysis


Economic Evaluation of CKD Interventions

Perspectives

Costs

Cost Analysis

Cost-Effectiveness Analysis Cost-Utility Analysis

Cost-Benefit Analysis

Analyses

Cost-Consequence Analysis

CKD interventions 1)  Palliative Treatment 2)  Continuous Ambulatory

Peritoneal Dialysis 3)  Hemodialysis 4)  Renal Transplantation

Patient Provider

Payer Societal/Governmental


Types of Economic Evaluation

•  Cost-Minimization Analysis (CMA)/Cost Identification

•  Budget Impact Analysis (BIA)

•  Cost-Effectiveness Analysis (CEA)

•  Cost-Utility Analysis (CUA)

•  Cost-Benefit Analysis (CBA)

•  Cost-Consequence Analysis (CCA)



•  All costs are in the same monetary unit.

•  Type of outcomes determines type of analyses:

Health Outcomes Type of Analysis Findings

Clinical/Health effects CEA ICER

Utility/Quality of life CUA ICER

Monetary benefits CBA Net benefits, or Benefit-cost ratio

Health effects in non-aggregated format

CCA Lists of health effects gained/lost and resources used


Process of Outcome Asessment

1. Identification:

2. Measurement:

3. Valuation:

•  Morbidity and mortality •  Quality of life

•  Measures in natural units (eg. number of deaths averted).

•  Value benefits (if appropriate)


1)  Measuring health in a natural/clinical unit:

–  Length of life: (e.g. morbidity and mortality rate, life expectancy, life years lost, etc.)

2)  Measuring health in a common unit:

–  Quality of life measures (e.g. SF-36, EQ-5D, etc.)

–  Measures health in monetary unit (e.g. THB, US$, etc.)

Measuring Health

Valuing Health

3)  Valuing health into monetary terms:

– Willingness-to-pay (WTP)

– Human Capital

4)  Utility or preference assessment:

– Quality-Adjusted Life Years (QALYs):

– Variants on QALY: Years of Health Life (YHL), Health-Adjusted Person Years (HAPY), Health-Adjusted Life expectancy (HALE)

•  “Utility” = satisfaction/well-being that reflects a consumers (weighted) preferences

•  “Utility weights” are necessarily subjective: they elicit an individual’s preferences for, or value of, one or more health states.

Methods of Valuing Health

Techniques For Measuring “Utility”

•  Variety of techniques available:

– Time Trade off

– Person Trade Off

– Standard Gamble

– Rating Scale


Results: CEA

Cost of intervention A Cost of intervention B

Outcome A Outcome B

VS.

•  Cost-Effectiveness Ratio: Concerns an average cost of each intervention


•  Incremental/Marginal Analysis concerns the benefits gained or lost from adding or subtracting the next unit of resources for a given program (Mitton & Donaldson, 2004).

•  Incremental Cost-Effectiveness Ratio (ICER):

= Additional costs (cost B – cost A)

Additional outcome (outcome B – outcome A)

Results: CEA with Marginal Analysis

Results: CBA

•  Interpretation: If net benefit > 0, then benefit exceeds costs.

= -‐ Cost of intervention Benefits Net Benefits

Outcomes in monetary terms

Costs of the intervention and its side effects


•  Interpretation:

– Baht saved per baht spent

– Return on each baht spent

Costs of the intervention and its side effects Cost of the

intervention

Benefits Benefit-Cost

Ratio =

Results: CBA

Outcomes in monetary terms


Figure 1. Three-way sensitivity analysis based on rates of the main clinical trial.

Source: Tjan-Heijnen V C G et al. (2003)

FL = Febrile Leukopenia

Results: CEA with Sensitivity Analysis

Results: CEA with Sensitivity Analysis

Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)

“How should we conduct an economic evaluation? ”


The EQ-5D Questionnaire (Thai Version)


Check-list of Economic Evaluation


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“Efficiency is intelligent laziness.” --Anonymous

Economic evaluation lecture 2013.3.21

Health & Medicine

Transcript of Economic evaluation lecture 2013.3.21