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Introductory lecture of Economic Evaluation for family medicine residents
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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/
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
Pix source: online.wsj.com
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?”
Pix source: online.wsj.com
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
Pix source: http://ecsphysics.webs.com/
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
Example of Economic Evaluation
Source:http: www.rcgp.org.uk/Publications/BJGP.aspx
Example of Economic Evaluation
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?”
Pix source: online.wsj.com
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
Pix source: meritmattersusa.blogspot.com/2010_11_01_archive
• Two ways to increase healthcare efficiency:
– เพิ่มประสิทธิภาพเชิงเทคนิค (technical efficiency)
– เพิ่มประสิทธิภาพในการจัดสรรทรัพยากร (allocative efficiency)
Technical vs. Allocative Efficiency
Pix source: en.wikipedia.org/wiki/
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? ”
Pix source: online.wsj.com
• “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
Figure Source: Courtesy of Chathaya Wongrathanandha, M.D
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
Figure Source: Courtesy of Chathaya Wongrathanandha, M.D
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)
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-aggregated format
CCA Lists of health effects gained/lost and resources used
Source: Adapted from Brouselle and Lessard (2011)
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)
Figure Source: Courtesy of Chathaya Wongrathanandha, M.D
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
Figure Source: Courtesy of Chathaya Wongrathanandha, M.D
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
Figure Source: Courtesy of Chathaya Wongrathanandha, M.D
• 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
Figure Source: Courtesy of Chathaya Wongrathanandha, M.D
• 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 Source: Courtesy of Chathaya Wongrathanandha, M.D
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)
Results: CEA with Sensitivity Analysis
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)
“How should we conduct an economic evaluation? ”
Pix source: online.wsj.com
Types of Economic Evaluation
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)
Types of Economic Evaluation
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)
Types of Economic Evaluation
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)
The EQ-5D Questionnaire (Thai Version)
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)
Check-list of Economic Evaluation
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)
Check-list of Economic Evaluation
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)
Check-list of Economic Evaluation
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)
Check-list of Economic Evaluation
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)
Check-list of Economic Evaluation
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)
Check-list of Economic Evaluation
Source: อุษา ฉายเกล็ดแกว, ยศ ตีระวัฒนานนท, สิริพร คงพิยาชัย, เนติ สุขสมบูรณ, บรรณาธิการ (2552)
Pix source: www.wsed.at/en/
“Efficiency is intelligent laziness.” --Anonymous
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