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4.1 economic evaluation (t)
 

4.1 economic evaluation (t)

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4.1 economic evaluation (t) 4.1 economic evaluation (t) Presentation Transcript

  • Economic evaluation in healthcare Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 1
  • Economic evaluation and priority settingHow does economic evaluation fit with apriority setting process such as PBMA?Can economic evaluation guide resourceallocation decisions? 2 Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 2
  • This leads to these questions1. What is economic evaluation?2. How is it done?3. What are the results?4. What are the limitations of economic evaluation, specifically with respect to resource allocation decisions? Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 3
  • What is Economic Evaluation?Economic evaluation is a set of scientific methods toassist decision-makers in making choices betweenalternative interventionsConcerned with efficiency not just effectivenessBased on principles of welfare economics maximise the well-being of the community ‘Fair’ choices require a systematic comparison of costs (resources) and consequences (outcomes or benefits) of alternative health programs Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 4
  • Basic premiseEconomic evaluation is about comparing thecosts and benefits of an intervention with thecost and benefits of an alternative intervention Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 5
  • Efficiency ConceptsTechnical efficiency How to do something using as few resources as possible (e.g. LEAN process)Allocative efficiency About what to do About whether to do something rather than how to do it Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 6
  • Economic PrinciplesOpportunity cost The benefits associated with the best alternative use of a bundle of resources is the opportunity costThe Margin Marginal Cost = cost of one more unit of output/consumption Marginal Benefit = benefit from one more unit of output/consumption Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 7
  • Types of Economic EvaluationCost-Effectiveness Analysis (CEA)Difficult to compare across programs as outcome measure is intervention-specific, therefore better suitedto addressing technical efficiencyCost-Utility Analysis (CUA)Can be used to address technical efficiency or allocative efficiency because it allows for comparison acrossprograms as outcome measure is genericCost-Benefit Analysis (CBA)Easiest to compare across programs but requires putting a dollar value on health conditionsCost-Minimization Analysis (CMA)When benefits are constant under all alternatives being considered (special case, only costs are compared) Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 8
  • Nature of Economic evaluation Impact on health status  Survival Program A  Quality of life  Intervention costs Impact on health care costs  Hospitalisations  Drugs, procedures etc.Targetpatientgroup Impact on health status  Survival  Quality of life  Intervention costs Program B Impact on health care costs  Hospitalisations  Drugs, procedures etc. Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 9
  • How is it done: Generic steps in economic evaluation(1) Define study question and perspective Describe alternatives(2) Identify, measure and value costs and benefits Measure costs and benefits in physical units relevant to the analysis(3) Analysis of costs and benefits Discounting, incremental (additional) costs and benefits of alternatives, sensitivity analysis on key parameters(4) Decision rule Incremental Cost-Effectiveness Ratios (ICERs) Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 10
  • Study PerspectiveStudy question determines perspectivePerspective determines costs/ consequences considered e.g. societal, government, third party payer, providerSocietal - widest possible range of costs/ consequencesProvider – narrowest perspective Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 11
  • CostsIdentify, measure and value all resource useimpactsDirect health care costs (e.g. costs of intervention)Direct personal costs (e.g. transportation)Indirect costs (e.g. productivity losses)AND, all savingsValuation using opportunity costs Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 12
  • BenefitsCost-Effectiveness Analysis Measure benefits in natural units e.g. Blood pressure, weightCost-Utility Analysis Measure benefits in terms of QALYs (Quality-Adjusted-Life- Years) or equivalentCost-Benefit Analysis Measure benefits in terms of dollar valuations Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 13
  • Quality Adjusted Life Years (QALYs) Full 1.0 Health Final 0.8 Initial 0.6 0.4 0.2 0.0 Dead Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 14
  • Quality Adjusted Life Years (QALYs) Intervention 0.8 0.6Quality of Life QALYs Gained = (20)*.8 – (14)*.6 = 7.6 Base case 0 14 20 Life Years Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 15
  • Results: Incremental Cost-Effectiveness Ratio (Costnew – Costold) = ICER (Effectivenessnew – Effectivenessold) ICER = C / E Incremental Incremental health resources required effects gained by using by the intervention the intervention Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 16
  • A simple decision ruleICER for new program ≤ $20,000/QALY Decision: adopt new programICER for new program> $20,000/QALY Decision: do not adopt new program Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 17
  • Grades of recommendation $100,000/QALY More Costly D E C $20,000/QALY BDecrease in QALYs Increase in QALYs F A Less Costly The Cost-Effectiveness Acceptability Plane Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 18
  • A. Compelling evidence for adoption $100,000/QALY More Costly D E C $20,000/QALY B Decrease in QALYs Increase in QALYs F A Less Costly New technology is equally or more effective & less costly Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 19
  • B. Strong evidence for adoption $100,000/QALY More Costly D E C $20,000/QALY BDecrease in QALYs Increase in QALYs F A Less Costly New technology more effective, incremental cost/QALY ≤$20,000 Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 20
  • C. Moderate evidence for adoption $100,000/QALY More Costly D E C $20,000/QALY B Decrease in QALYs Increase in QALYs F A Less CostlyNew technology more effective, incremental cost/QALY more than $20,000 and less than $100,000 Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 21
  • D. Weak evidence for adoption $100,000/QALY More Costly D E C $20,000/QALY B Decrease in QALYs Increase in QALYs F A Less Costly Craig incremental | Priority Setting & > 22New technology more effective,Mitton & Francois Dionnecost/QALY Resource Allocation | 22 $100,000
  • E. Compelling evidence for rejection $100,000/QALY More Costly D E C $20,000/QALY B Decrease in QALYs Increase in QALYs F A Less CostlyNew technology is less effective, MittonequallyDionne | Priority Setting & Resource Allocation | 23 Craig or & Francois effective, and more costly 23
  • F. Less costly and less effective $100,000/QALY More Costly D E C $20,000/QALY B Decrease in QALYs Increase in QALYs$20,000/QALY F A Less CostlyNew technology is less effective, or equallyFrancois Dionne | Priority Setting & Resource same |or less Craig Mitton & effective, and costs the Allocation 24 24
  • Limitations of Economic evaluationPotential challenges to validityBut more importantly, with respect to resource allocationdecisions:• Does a low ICER mean that the new drug/ technology is ‘cost-effective’?• What does an ICER actually mean in terms of budget impact?• What about other factors affecting the decision, objectives other than maximizing health impact Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 25
  • ConclusionEconomic evaluation or CEA methods are well developed;many studies now include an economic componentIn some cases, CEA is an ideal tool, but in most cases it playsa role within a broader framework Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 26
  • The many factors in funding decisions Public expectations Safety Politics and public image Efficacy Productivity, satisfaction and QOL Physician support Effectiveness DECISION Cost-effectiveness Budget Impact Moral and ethical Regulatory Issues concerns Societal values Craig Mitton & Francois Dionne | Priority Setting & Resource Allocation | 27