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Health Interventions:Evaluation of Cost Effectiveness
Dr Sanjay Dixit M.D. Ph.D Diploma in Health System
Management(U.S.A.)MGM Medical College Indore
Health care interventions. Health system with similar
level of Health expenditure per capita show wide variations in population health outcomes
Some system devote resources to expensive interventions with small effect on population health
Health Care Interventions Low cost interventions with
potentially greater benefit are not fully implemented
Information on both costs and effectiveness are essential for making evidence-based decisions about competing health care interventions
Health Care Interventions 20 years ago Health Care intervention
were centered exclusively on
Clinical Effectiveness and
not on Cost Effectiveness. Intervening years have seen an ever
increasing strain on health resources. Therefore need of Economic
Evaluation of health Interventions
Health Interventions…
•Clinical
•Behavioral
•Environmental
•Systems
What is problem ? How much problem can be
prevented?
How much problem intervention
can prevented ?
Benefits compare to costs ?
What is cost of intervention
How benefit to cost can compare
What are Gain compare to present status?
Key QuestionDecision makers
Ask ?
Why Do Cost Effectiveness?
• Understand trade-offs between costs and benefits
• Inform decision makers
Cost effectiveness Analysis..
It is a Technique for identifying the most effective use of limited resource
It compares alternative interventions/procedure/program using cost and a common effectiveness out come(Lives saved/cases prevented/additional days of activity/extent of sight restored/ Heart attacks avoided).
Cost effectiveness Analysis
These are combined ( cost per heart attack avoided) such that the relative cost effectiveness can be assessed
Used to assess the comparative impacts of expenditure on different health interventions.
Cost Effectiveness Analysis A study evaluating whether
hypertension screening,Nutrition Counseling,Medication,or by pass surgery would provide the most additional years of life for each Ruppes spent is a Cost effectiveness study
Cost Effectiveness Analysis Cost Effectiveness of
interventions such as DOTS for tuberculosis is highly cost-effective
Liver transplant for alcoholic cirrhosis is highly cost-ineffective
Cost Effectiveness Analysis… It also helps to choose
between medical and non medical approaches for protecting health such as better emergency medical services versus better highway design
Cost Effectiveness: What is it?
Cost Effectiveness =What you payWhat you get
Burden of illness
Deaths (mortality)
Frequency (incidence, prevalence)
Severity (disability, quality of life)
Hospitalizations
Burden of Illness
HEALTH IMPACT
ECONOMIC IMPACT
Cost of illness
Cost of Illness• Direct (medical and non-medical)
costs
• Indirect (productivity/Travel Expenses/Loss of time) costs
• Loss of Quality of Life
• Intangible costs (grief, pain, suffering)
Burden of Illness
Cost of Illness
HEALTH IMPACT
ECONOMICIMPACT
Can an Intervention Work?
• Interventions -- public health programs, policies, clinical care
• Efficacy
Can an intervention work in ideal settings?
Effectiveness/Efficiency Effectiveness Relate input and output to out come..Are the outputs produced
actually having desired impact
Efficiency Indicates how inputs are used to
produced the outputs
Burden of Illness
Cost of Illness
Net Benefit
Intervention
Effectiveness
HEALTH IMPACT
ECONOMICIMPACT
Cost of Intervention?
Net Cost (or Saving) = Cost of program
+ (Cost of care with a program – Cost of care
without a program)
Burden of Illness
Cost of Illness
Net Benefit
Cost ofProgram
Difference in Cost of Care
Net Cost
Intervention
Effectiveness
HEALTH IMPACT
ECONOMICIMPACT
How Do BenefitsCompare to Costs?
• Combine benefits, harms, and costs
• Cost effectiveness, cost utility, cost benefit
Does an Intervention Work?
• Effectiveness Does it work in real-world settings?
• Net Benefit = Benefits - Harms
Measuring Effectiveness
• Natural health units– Lives saved, cases prevented, life years
saved
• Conversion to common units– Quality-adjusted life years (QALY’s)
• Conversion to Rupees
Quality of Life Adjustment Factors
Duration Health Status Adjustment
Reference State Perfect Health 1.00 3 months home confinement,TB 0.68 3 months home confinement contagious ds. 0.65 3 months depression 0.44 8 years kidney transplant 0.58 8 years mastectomy for breast cancer 0.48 life home dialysis 0.40 life hospital confinement contagious ds 0.16 Reference State Dead 0.00
Burden of Illness
Cost of Illness
Net Benefit
Cost ofProgram
Difference in Cost of Care
Net Cost
Intervention
Effectiveness
CostEffectiveness
HEALTH IMPACT
ECONOMICIMPACT
Steps in Cost-Effectiveness Analysis….
Step 1
Define the Program * Define Precisely problems to be analyzed, Its
focus,process,and limits * Develop Alternative approaches to the program Treatment
v/s Immunization, Refinement1 Age of Vaccination, Means of delivery
Step 2 Compute net cost (Four Parts) * Compute gross Program cost Screening 1Cost of Screening, 2Follow
up of +ve cases3,Treatment of person who otherwise might gone untreated
* Compute monetary savings ( Cost of Avoided treatment) * Discount costs and saving to the present value (5 to 15 %) * Compute the net cost( Gross costs less savings)
Steps in Cost Effectiveness Analysis…. Step 3 Compute the net health effects
Live saved, Complications averted, Cases of illness prevented
( in terms of additional years of healthy life).
- Add Additional years with full health - Additional years of disease( A year
restricted to home may be valued 80% of complete health
-
Steps in Cost Effectiveness Analysis….
Improvements in health( not extension of life) like owns symptoms/restrictions of being home bound may be relieved
- Negative effects (Inconveniences and morbidity) restricted activities/person has to visit the physicians office/Asthma relief
Step 4 Apply a decision rule based on Net Cost and net health effect
Net Effects Net Cost Positive Net Cost Zero or Negative
Positive Case 1 C.E.= Net Cost-Net Health Effects Case 2 Program economically Valuable Select most efficient program for Should generally be implemented Improving the health inexpensive and highly effective ( lowest Ratio ) Provision of safe water Measure of efficiency Immunization, iodization of salt Zero Case 3 Program benefit offset by morbidity Case 4 C.E. = Net Cost-Net Health Effects or and inconvenience. Program generally Select most efficient programNegative should not be implemented for containing costs( Highest ratio) Cost money worsening the life
Steps in Cost Effectiveness analysis… Step 5. Perform Sensitivity Analysis. It will be necessary to make number of
assumptions and to estimate the value of various parameters.
Sensitivity Analysis can be used to test how robust the results are to these imprecise measurements
It is process used to predict exactly the future discount rate
Years------ 1- 2
3 4 5 Total
Costs 100 80 75 25 20 300
Discounted costs (5%)
100 76 68 22 16
Benefits 10 50 75 80 85 300
Discounted Benefits(5%)
10 48 68 69 70
DISCOUNTED COST/ BENEFIT
Sensitivity Analysis…. Opinion differ about the value of year
with impaired health relative to perfect health
Medical experts are uncertain about the value of various preventive measure.
Professional assessment are constantly updated with research
Its difficult to predict future discount rate
Sensitivity Analysis…. In sensitivity analysis areas of uncertainty are
varied and the effect on result is noted Uncertain factors are to be examined and their
effect on decision rule are studied
If final decision is not affected by making different assumptions about uncertain quantities-by choosing High and Low estimates, than intervention may be applied
If the decision would drastically altered by different estimates, than we should be cautious for making the recommendations
Step I Define the Program Hypothetical Influenza
Inoculation Program Vaccinations would be
administered to 100,000persons aged 65years and older over next year in existing clinics and health centers
Step II Compute Net Costs
Inoculations (100,000X$3) = $300,000Treatment of Reaction(50X$300)=+$15000(Plus) _________ Gross Program cost $315,000 Saving due to People not $–50,000 (Minus)
getting influenza ____________ (1,000x$50)
Net Program COST = $265,000
Step 3 Compute net Health Effects Type of effect Healthy Years____________________________________________
1 Additional healthy Life( 10X6.9) 67.92 Health Improvement for those Spared +40.0(Plus)Morbidity of influenza(1000X.04) ___________ Gross Health Effect 107.9
Negative effect of Adverse reaction -4.5 (Minus) (50X.09) _____________ Net Health Effect 103.4
Step IV Apply Decision Rule
Case 1 Situation definite health gains are achieved
but at net positive cost Net Cost divided by net health gain $265000/103.4 health years=$2563
per healthy years This ratio helps decision makers to
determine whether to implement the program or not
Step 5 Perform Sensitivity analysis If expert think that only 800
cases of influenza will be prevented
The cost effectiveness ratio will be increased
Decision makers will decide whether its affordable Cost or Not to save life and provide healthy life years
Policy Implications of Economic Evaluations
Type of Analysis Denominator Policy Level
Cost Effectiveness Natural Health Units (Life years saved, cases prevented)
Specific Health Program
Cost Utility Common Health Units (Quality-adjusted life year)
Across health programs
Cost Benefit Rupees (all converted to Rupees)
Across Sectors
SERVICE Prevent.Burden
CostEffect.
Total
Immunize children 5 5 10Adults tobacco counseling 5 5 10Adolescent tobaccocounseling
4 5 9
Pneumococcal Immunization 4 5 9Vision screening 65+ 5 4 9Influenza immunization 4 4 8Pap smears 5 3 8Chlamydia Screening 3 5 8Colorectal cancer screening 5 3 8Lipid Screening 5 3 8Hypertension screening 5 3 8
Preliminary List of Services Scoring 8 or Higher
When to undertake the C.E.A. Formal C.E.A. analysis will be most
useful when 1. Large amount of resources(Rs in
Millions/Billions) are involved 2. Responsibilities for decisions are
fragmented 3. The Goals and Objectives of
different groups are at odd or unclear
When to undertake the C.E.A... 4.Alternate course of actions
are radically different 5.The technology and risks
underlying each alternatives are well understood
6. A long time frame is involved(eg Strategy versus management)
Use of Cost Effectiveness Analysis for Decision/Policy Makers Cost-effectiveness analysis as one
tool decision-makers can use to assess and potentially improve the performance of their health system.
It indicates which intervention provide the highest “value of money” and help them choose the interventions and programme which maximize health for available resources.
Challenges of CEA. Resource allocation decision affecting
the entire health sector must take into account Priority of sick,reducing social inequalities in health or well being of future generation.
Fails to identify existing misallocation of resources by focusing on evaluation of new technologies or strategies
Challenges of CEA.. The result of many CEA studies are
context- specific ,they cannot be used in other population
There are difficulties of generalizing context specific CEA studies
Overall effectiveness of a given clinical intervention is often not known
References Economics for Health Sector Analysis Concept and
causes Mead Over The World Bank Washington D.C. Health Economics Fundamentals and Flow of funds
Thomas E .Geten John Wiley & Sons (1997) Health Economics Theories,Insight Rexford E
Sanrerre Revised Edition Dryden press Drden (2000) Development of WHO Guidelines on Generalized cost
effectiveness analysis Christopher et.al Health Economics 9:235-251 (2000)
Methods of Economic Evaluation of Health Care programmeDrummondMF et.a Second Edition Oxford University Press(1997)
Health interventions assessment WHO –CHOICE website
THANK YOU
Cost Utility Analysis Life years saved are not
homogenous Medical intervention is
associated with significant number of life saved but a reduced quality of life.
Another analysis “ Utility Analysis”has been frequently used in recent years.
Cost Utility Analysis Cost Utility analysis compares
interventions(Procedure, test or method) using costs and health out come that is adjusted for quality of life as rated as assessed by the recipient-the patients
( For example Quality- Adjusted Life Years or QALYs . The ‘Common Currency’commonly used is QALYs,
Cost Utility….. A procedure with a 0.5 Quality
of life outcome(QOL) or Quality adjusted life year (QALY) costing Rs 4000 equals in C-U analysis as Rs 8000 with QOL result of 0.25
Quality of Life adjustment Factors… It adjust number of life years gained by
an index between 0.00 (Death) and 1.00 ( Good Health)
Respondents indicated that living for three months confined to hospital for tuberculosis treatment was worth only 1.8months ( 0.60 x 3 months)
Some people consider some illness to be worse than death , such additional years lived in such misery may has negative value
Method to construct index for measuring utility First Method:Asks people who
have same condition to assess the quality of their lives
Second Method:Describes the condition to a group of people who do not have the condition and ask them to gauge the quality of life or utility
Cost Utility….. Quality adjusted life years QALYs
for each Health state and treatment was assessed by ‘Self Reported description’
Five dimensions are assessed Mobility,Self Care,Performance of usual activity, Pain/Discomfort,and Anxiety/Depression
Cost Utility… Each having three possible
responses No problem/some difficulties/moderate problem/unable /Extreme problem
Each combination has an associated utility value derived with a scale indexed between 0 ( dead) and 1 ( Full Health)
Cost utility analysis The difficulty in using utility
analysis lies in developing appropriate index for measuring the Utility
Economic Issues-- Time Horizon
Time frame should be long enough to capture all harms, benefits and costs regardless of when they occur, usually a lifetime
Contrast with short term analyses which often capture many of the costs but fewer of the benefits
Economic Issues--Perspective
Whose point of view -- patient, medical care system, employers, society
Cost Perspective
Societal Payer Employer Patient
Direct Medical Y Y Y Out of pocket
Direct Non-Medical(e.g., transportation,day care)
Y N N Y
Indirect (e.g.,Productivity)
Y (if not in denominator)
N Y Y (if not indenominator)
Intangible (e.g.,grief, pain, suffering)
Y (if not in denominator)
N N Y (if not indenominator)
Examples of cost included in typical Cost effectiveness analysis based on perspective of analysis
Cost Benefit Analysis Cost Benefit Analysis (CBA) measures
both cost and benefits in monetary values.An intervention is commonly adopted if the monetary benefits exceed the cost, resulting in net benefit.
Important tool is the benefit -to-costs ratio
Total Monetary cost of benefit or outcome divided by the total monetary cost of obtaining them
Cost –minimization Analysis The simplest from of economic evaluation
where the procedure or programmer identified that cost the least.
If there is no significant difference in the benefit of two interventions,the preferred intervention will be the one that is least costly
If there is no significant difference in the cost of two interventions,the preferred intervention will be one that is most effective