PPHC: L12 Health Economic II

Health technology assessment:

• Process to evaluate health technologies (e.g. drugs, devices, diagnostics etc) to decide what to provide/fund:

  • … effectiveness

    • Does the technology improve health outcomes relative to other alternatives

  • … evaluation

    • Does the technology provide good value for money (e.g. comparing costs and outcomes) relative to other alternatives

  • … and … impact

    • How does the technology affect different populations

  • … impact

    • How would adopting the technology impact the healthcare delivery, infrastructure, planning

  • … Impact Analysis

    • Estimating the short-term financial burden on healthcare systems

Clinical, Economic, Social, ethical, Organizational, Budget

The key difference between economic evaluation and budget impact analysis (BIA) is in their …

objectives

… compares the costs and health outcomes of different interventions to determine which provides the best value over the long term

Economic evaluation

… assesses the short-term afforability of introducing a new intervention, looking at the financial impact on a specific budget, usually over 1-5 years, without directly assessing long-term health outcomes

Budget Impact Analysis

Economic evaluation focuses on … and long-term efficiency, while budget impact analysis focuses on … financial …

value, immediate, feasibility

Economic evaluation:

…, comparative analysis of two (or more) courses of action in terms of their costs and consequences

• Systematic → a … framework — what are the relevant components of an analysis, how do they relate to one another, how should the analysis be conducted 

• … → efficiency — two or more alternatives, costs and consequences 

• … → a particular way of using resources, delivery of health care services

Systematic, unified, course of action

What are the 3 building blocks of economic evaluation?

Objective, choice, costs and consequences

… Analysis

• Comparison of cost impact of two different technologies

  • We effectively ignore the …!

• Appropriate only when effectiveness between comparators is …

  • Assumes that there is no difference between interventions

    • You want to be really confident this is the case!

• Does not include … effects

  • Things that might not affect outcomes but might affect experience

Cost-Minimization, benefit, equivalent, qualitative

… Analysis

• Cost-Benefit principle

  • Simple: take an action only if the extra benefits … the extra cost

• What should a rational person do?

  • The benefit of heading to Point Grey is the $15 you save

  • The cost of heading to Point Grey is the value you assign to the inconvenience

• Costs and benefits in monetary terms, so just think about … benefit

  • Net benefit = (BenefitA – BenefitB) - (CostA – CostB)

  • If net benefit is … (Benefit>Cost) – you do it

  • If net benefit is … (Benefit<Cost) – you don’t do it

Cost-Benefit, exceed, net, positive, negative

… Analysis

• Measure effectiveness in natural units

  • One outcome

    • Cancer screening – number of cases detected

    • Hypertension tablets – reduction in blood pressure (average)

    • Heart attack treatment – life-years gained

  • Costs in dollars ($)

• Efficiency – cost per unit of effect achieved

  • Compare incremental effects gained by one alternative over another against the incremental resources used by one alternative over the other

• Incremental cost (ΔC) = CostY – CostX

• Incremental effect (ΔE) = EffectY – EffectX

• Incremental cost-effectiveness ratio = (CostY – CostX)/ (EffectY – EffectX) = ΔC / ΔE

• Are the extra units of effectiveness (if any) worth the extra cost?

• ICER (incremental cost-effectiveness ratio) - the cost per additional unit of effect

• Tells you the price tag per extra/additional/incremental unit of extra effect

  • Life years

  • Square feet

  • Whatever benefit you want to use

• But it can only tell you about one measure of effect

Cost-Effectiveness

… Analysis

• The same structure as cost-effectiveness analysis

  • Same? – some people just call it cost-effectiveness analysis

  • Subset – uses an outcome measure which incorporates subjective valuation of health

• Outcome measure is the quality-adjusted life years (QALY)

  • Length of life (years) * Quality of life adjustment 0 = death; 1 = full health

    • Subjective valuation ((utility), on a 0-1 scale)

• Incremental cost (ΔC) = CostY – CostX

• Incremental effect (ΔE) = Effect_QALYsY – Effect_QALYsX

• Incremental cost-effectiveness ratio = (CostY – CostX)/ (Effect_QALYsY – Effect_QALYsX) = ΔC / ΔE

Cost-Utility

What does economic evaluation tell us?

• Tells you the … of an extra unit of effectiveness (however you decide to measure effectiveness)

  • E.g., it tells you $/liter of gas, $/kg of cornflakes

price

What doesn’t economic evaluation tell us?

• How much you should be … to pay

  • Only decision maker knows that (or we make it up e.g. $50,000 per QALY)

• The … impact

  • E.g.,it does not tell you how many liters of gas you’ll have to buy

willing, budget

… Analysis

• An analysis of the impact to a single budget from the … of a new treatment to a centre, government or individual

  • “How much more is this going to cost?”

    • Bottom line impact/financial impact to the decision maker

    • Relates to costs, incidence, prevalence

• The least explanatory type of economic evaluation

  • Does not take into account benefits or qualitative impact

  • The least informative but most widely used

• Very useful … to other types of economic evaluation

Budget Impact, addition, complement