CEA Part 2

Economic Evaluation

• Economic evaluations assess the costs and consequences of health interventions.

Key Elements of Economic Evaluation

• Evaluating costs:

  • Typically measured in monetary units (e.g., dollars in the U.S.)

  • Essential to determine the expense associated with providing a health intervention.

• Evaluating consequences:

  • Measured in various types of units:

    • Natural units (e.g., number of cancer cases detected, infections avoided)

    • Years of life gained (YLG)

    • Quality Adjusted Life Years (QALY)

    • Dollar outcomes (cost equivalency of outcomes)

Definitions and Context

• Understand the terminology:

  • Benefits, outcomes, consequences, and effectiveness often used interchangeably.

  • Understanding the Terminology in Economic Evaluation

    • Benefits: Refers to the positive outcomes delivered by health interventions. These can include improvements in health status, quality of life, or increased productivity.

    • Outcomes: The measurable results of healthcare interventions, often reflecting the effectiveness in achieving desired health goals.

    • Consequences: The broader impact of health interventions which can include both positive and negative effects on patients and the community.

    • Effectiveness: A measure of how well a given intervention works in the real world, often distinguished from efficacy, which evaluates results under controlled conditions.

    • Importance of Context: Effectiveness should be evaluated in context; consider factors such as life extension, treatment success rates, and societal benefits like returning individuals to the workforce.

• Importance of context:

  • Evaluate effectiveness regarding:

    • Life extension

    • Successful treatment outcomes

    • Societal benefits such as returning individuals to work.

Goals of Economic Evaluation

• Informed Decision Making

  • Aim to make decisions based on systematic analysis of costs and consequences.

• Resource Allocation

  • Address resource scarcity (a fundamental economic principle), notably in public health.

  • Allocate limited resources efficiently for maximum societal benefit.

Methods of Analysis

• Objectivity in Decisions:

  • Economic evaluations encourage objective assessment of different healthcare options.

• Evaluating Value of New Interventions:

  • Assess if the costs of new technologies provide sufficient benefits.

  • Consider incremental costs versus incremental benefits:

    • Incremental: Change in total costs/benefits by producing one more unit of a service.

  • Example in daily life:

    • Reflect on personal value (e.g., paying extra for craft beer for better satisfaction).

  • Utility Framework: People consume until marginal utility = marginal cost. This principle suggests that consumers will continue to purchase goods or services as long as the satisfaction gained from the last unit consumed is equal to or greater than the cost incurred, ensuring optimal resource allocation.

Additional Considerations

• Value vs. Affordability

  • Value does not necessarily equate to affordability, putting pressure on healthcare budgets.

  • Example of evaluating new medications (e.g., Alzheimer’s drugs) in terms of cost-effectiveness.

Key Elements of Economic Evaluation

1. Perspective of Analysis

   • Identify who incurs costs and who benefits (e.g., providers, insurers, society).

2. Time Horizon

   • Classify studies as short-term (<1 year) or long-term (>1 year).

3. Discounting

   • Consider the time preference of costs and benefits:

     • Present benefits valued higher than future benefits.

4. Sensitivity Analysis

   • Assess how uncertainty in data affects decisions;

     • Explore different outcomes based on variable inputs.

5. Evaluation Methods

   • Determine whether methods involve simply adding costs/benefits or utilizing decision trees/Markov models.