Introductory lecture of Economic Evaluation for family medicine residents

1. FM Morning Activities:
Introduction to Economic Evaluation in Healthcare Settings
Borwornsom Leerapan, MD PhD SM
March, 20th 2013
http://www.slideshare.net/borwornsom
Pix source: www.wsed.at/en/

2. Presentation Outline
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?
Pix source: online.wsj.com

3. “Up and Down the Ladder of Abstraction”
นามธรรม (Abstract):
• แนวคิด (concepts)
• ทฤษฎี (theories)
• หลักการ (principles)
รูปธรรม (Concrete):
• เปาหมาย/วัตถุประสงคของการศึกษา (goals)
• การวัดตนทุน/ผลลัพธ (measures)
• รูปแบบ/ชนิดของการวิเคราะหความคุมคา
(types of analysis)
• การแปลผลความคุมคา (interpretation)
• การนำไปใชประโยชน (implications)
Source :influxentrepreneur.com/wendyelwell/

4. “What exactly is “economic evaluation?”
Pix source: online.wsj.com

5. 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!

6. 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).

7. Health Technology
• 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 policy
– Health policies
Technology Intervention
– Health technologies
Source: The 60th World Health Assembly agenda 60.29, 2007

8. Health Technology Assessment
• 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.
HTA
Scientific Decision
Evidence making
Pix source: http://ecsphysics.webs.com/

9. Health Technology Assessment Issues
• Safety
• Benefits (e.g. efficacy, effectiveness)
• Value for money (e.g. cost-effectiveness)
• Ethical considerations
• Institutional considerations
• Social considerations (e.g. equity)
Source: Adapted from Teerawattananon (2013)

10. Assessment of New Drugs
Quality
Safety
For pre-market
authorization Efficacy/Effectiveness
(e.g. FDA)
Value for Money
For reimbursement
= “The Fourth Hurdle”
(e.g. NICE, HITAP)
Source: Adapted from Teerawattananon (2013)

11. Example of Economic Evaluation
Source: AMERICAN JOURNAL OF RESPIRATORY AND CRITICAL CARE MEDICINE VOL 166 2002

12. Example of Economic Evaluation
Source:http: www.rcgp.org.uk/Publications/BJGP.aspx

13. Example of Economic Evaluation
Source: www.ncbi.nlm.nih.gov/pubmed

14. 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.

15. “Why should we be concerned
with economic evaluation?”
Pix source: online.wsj.com

16. Decision-makers in Healthcare
• Policy level
Macro • Policymakers
• Administrative level
Meso • Organizational administrators
• Clinical practices level
Micro • Clinicians
Source: Adapted from: Lessard et a. (2009)

17. “It’s a no-brainer!”
Cost
Worse & Better &
More More
Expensive expensive
Heath
Benefits
Worse & Better &
Cheaper Cheaper

18. Cost-Effectiveness Plane
Cost
Cost-­‐
Excluded
effec/ve
Heath
Benefits
Ques/onable
Donimant
Source: Adapted from: www.whatisseries.co.uk

19. Dilemma of Clinical Decisions
• 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?
Pix source: meritmattersusa.blogspot.com/2010_11_01_archive

20. Technical vs. Allocative Efficiency
• Two ways to increase healthcare efficiency:
– เพิ่มประสิทธิภาพเชิงเทคนิค (technical efficiency)
– เพิ่มประสิทธิภาพในการจัดสรรทรัพยากร (allocative efficiency)
Pix source: en.wikipedia.org/wiki/

21. The Five Control Knobs for Health-sector Reform
Control
Knobs
Financing
Health
Status
Payment
Efficiency
Organiza/on
Quality
Customer
Sa/sfac/on
Regula/on
Access
Behavior
Risk
Protec/on
The
Health
System
Target
popula1on
Source: Marc J. Robert etc. (2004)

22. WHO Health System Framework
Pix source: WHO (2007)

23. “How should we read
an economic evaluation? ”
Pix source: online.wsj.com

24. Concepts of Costs I
• “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).
Pix source: en.wikipedia.org/wiki/

25. 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)

26. 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

27. Costs from Providers perspective
Salaries
Fixed
Deprecia/on
cost
Direct
Drugs
OT
wages
Variable
Referral
charges
Total
Transporta/on
Electricity/water
cost
Salaries
Fixed
Deprecia/on
cost
Indirect
OT
wages
Variable
Office
supplies
Electricity/water
Figure Source: Courtesy of Chathaya Wongrathanandha, M.D

28. Costs from Patients perspective
Medica/on
Inves/ga/on
Medical
Hospitaliza/on
Rehabilita/on
Direct
Food
Non-­‐medical
Transporta/on
Total
Child
care
cost
Absence
from
work
Tangible
Decrease
earning
capacity
Indirect
Pain
Intangible
Suffering
Figure Source: Courtesy of Chathaya Wongrathanandha, M.D

29. Three Dimensions of Economic Evaluation
Perspectives Analyses
Patient Cost-Benefit Analysis
Provider Cost-Utility Analysis
Payer Cost-Effectiveness
Societal/Governmental Cost-Consequence Analysis
Cost Analysis
Figure Source: Courtesy of Chathaya Wongrathanandha, M.D
Costs

30. Economic Evaluation of CKD Interventions
CKD interventions
1) Palliative Treatment
2) Continuous Ambulatory
Peritoneal Dialysis
3) Hemodialysis
4) Renal Transplantation Analyses
Cost-Benefit Analysis
Perspectives
Patient Cost-Utility Analysis
Provider Cost-Effectiveness Analysis
Payer Cost-Consequence Analysis
Societal/Governmental Cost Analysis
Figure Source: Courtesy of Chathaya Wongrathanandha, M.D
Costs

31. 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)
Source: Adapted from Brouselle and Lessard (2011)

32. Types of Economic Evaluation
• 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- CCA Lists of health
aggregated format effects gained/lost
and resources used
Source: Adapted from Brouselle and Lessard (2011)

33. Process of Outcome Asessment
1. Identification: • Morbidity and mortality
• Quality of life
2. Measurement: • Measures in natural units
(eg. number of deaths averted).
3. Valuation: • Value benefits (if appropriate)
Figure Source: Courtesy of Chathaya Wongrathanandha, M.D

34. Measuring Health
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.)

35. 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)

36. Methods of Valuing Health
• “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.

37. Techniques For Measuring “Utility”
• Variety of techniques available:
– Time Trade off
– Person Trade Off
– Standard Gamble
– Rating Scale
Figure Source: Courtesy of Chathaya Wongrathanandha, M.D

38. Results: CEA
• Cost-Effectiveness Ratio:
Concerns an average cost of each intervention
Cost of intervention A Cost of intervention B
VS.
Outcome A Outcome B
Figure Source: Courtesy of Chathaya Wongrathanandha, M.D

39. Results: CEA with Marginal Analysis
• 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)

40. Results: CBA
Net Benefits =
Benefits -­‐
Cost of
intervention
Outcomes in Costs of the intervention
monetary terms and its side effects
• Interpretation: If net benefit > 0, then benefit exceeds costs.
Figure Source: Courtesy of Chathaya Wongrathanandha, M.D

41. Results: CBA
Outcomes in
Benefits monetary terms
Benefit-Cost =
Ratio Costs of the intervention
Cost of the and its side effects
intervention
• Interpretation:
– Baht saved per baht spent
– Return on each baht spent
Figure Source: Courtesy of Chathaya Wongrathanandha, M.D

42. Results: CEA with Sensitivity Analysis
FL = Febrile Leukopenia
Figure 1. Three-way sensitivity analysis based on rates of the main clinical trial.
Source: Tjan-Heijnen V C G et al. (2003)

43. Results: CEA with Sensitivity Analysis
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)

44. Results: CEA with Sensitivity Analysis
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)

45. “How should we conduct
an economic evaluation? ”
Pix source: online.wsj.com

46. Types of Economic Evaluation
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)

47. Types of Economic Evaluation
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)

48. Types of Economic Evaluation
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)

49. The EQ-5D
Questionnaire
(Thai Version)
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย,
เนติ สุขสมบูรณ, บรรณาธิการ (2552)

50. Check-list of Economic Evaluation
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)

51. Check-list of Economic Evaluation
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)

52. Check-list of Economic Evaluation
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)

53. Check-list of Economic Evaluation
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)

54. Check-list of Economic Evaluation
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)

55. Check-list of Economic Evaluation
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)

56. “Efficiency is intelligent laziness.”
--Anonymous
Pix source: www.wsed.at/en/