06 Sood Lecture 1

Question 1

For economic consequences of health care interventions, what are Interventions?

Answer 1

Changes in costs (numerator of ICER). Changes in health status (denominator of ICER)

Question 2

For economic consequences of health care interventions, what are Changes in Costs?

Answer 2

Health care resources (i.e. cost of flu vaccine production). Non-health care resources (i.e. spending money to go get a flu vaccine). Use of informal care giver time (i.e. family taking care of you). Use of patient time for treatment

Question 3

For economic consequences of health care interventions, what are Changes in Health Status?

Answer 3

Intrinsic value. Economic value (changes in productivity or labor supply)

Question 4

When costs are being measured, what is Societal Perspective?

Answer 4

Everyone in society matters. Includes patients or consumers. Includes firms, providers, hospitals, etc. Government and public programs

Question 5

When costs are being measured, what is Insurer or Payer Perspective?

Answer 5

What matters is expenditures made by the payer

Question 6

When costs are being measured, what is Patient Perspective?

Answer 6

What matters is expenditures made by the patient. Non-monetary costs such as time and inconvenience

Question 7

What are Societal Perspectives like when considering something like Surgery?

Answer 7

Cost of surgeon time. Cost of patient time. Cost of medical supplies

Question 8

What are Insurer or Payer Perspectives like when considering something like Surgery?

Answer 8

How much did the payer pay for the surgery. Might be different than costs

Question 9

What are Patient Perspectives like like when considering something like Surgery?

Answer 9

How much did the patient pay for surgery. Patient time costs

Question 10

What perspective should we use?

Answer 10

Always start with societal perspective as the reference case when doing a CEA. Include other perspectives depending on the problem and decision maker

Question 11

What are Societal Perspectives like when considering something like “Should LA County provide free flu shots”?

Answer 11

How will it impact health care and non-health care costs for everyone in society

Question 12

What are Government Perspectives like when considering something like “Should LA County provide free flu shots”?

Answer 12

How will it impact LA County budget

Question 13

What are Payer Perspectives like when considering something like “Should LA County provide free flu shots”?

Answer 13

Will it increase or decrease covered health care costs

Question 14

What are Patient Perspectives like when considering something like “Should LA County provide free flu shots”?

Answer 14

Will it reduce the burden of health care and non-health care costs for patients

Question 15

What are Direct Costs?

Answer 15

Changes in resource use directly attributable to the implementation of the intervention

Question 16

What are Indirect Costs?

Answer 16

Change in productivity and labor force participation due to health changes caused by the intervention

Question 17

Why do most CEAs exclude indirect costs?

Answer 17

Indirect costs are captured in denominator as change in health. Can be reported separately

Question 18

Do direct costs have to involve a monetary transaction?

Answer 18

No! What matters is change in resource use not whether someone was paid for it. Example about free lunch (free to me, but not from societal perspective. We have 5 fewer cows even though I didn’t pay for it)

Question 19

Are all monetary transactions direct costs?

Answer 19

No! What matters is change in resource use not money changing hands

Question 20

Should we report transfer costs separately?

Answer 20

Important for equity concerns: society does care about who wins and who loses (teacher gives me $5, thats fine. I give the teacher $5, thats a problem). These costs are important if you are not conducting analysis from societal perspective

Question 21

Do transfers cause a change in behavior?

Answer 21

Increase in taxes for national health care means people will work less. Costs associated with such change in behavior is called “deadweight costs”. Deadweight costs should be included in numerator

Question 22

Should we consider only short term costs directly attributable to the intervention?

Answer 22

No! Both short term and long term costs of the intervention need to be considered. For example, costs of mammography screening include costs of screening itself such as those of mammogram and physician time. And costs of follow up tests to confirm positive results and changes in treatment costs d/t identification of additional breast cancer cases

Question 23

When looking at types of Direct Costs, what are some examples of Health Care Costs?

Answer 23

Costs of tests, drugs, supplies. Costs of health personnel. Cost of facilities

Question 24

When looking at types of Direct Costs, what are some examples of Non-Health Care Costs?

Answer 24

Time costs of receiving intervention including travel and wait time. Time family members or others spend providing care. Travel costs, child care costs or other costs incurred because of the intervention

Question 25

When accounting for time costs, what needs to be included?

Answer 25

Time costs of receiving intervention should be included in costs (numerator). Time costs of changes in morbidity d/t intervention should be included in denominator (changes in morbidity will affect QALY)

Question 26

What is an example for accounting for time costs?

Answer 26

Time costs of initial surgery should be included in numerator. Downstream time costs d/t change in morbidity should NOT be included in the numerator (they are included in QALY in the denominator). Time costs of mortality should NOT be included in the numerator (affect QALY, already in denominator)

Question 27

What is Micro Costing?

Answer 27

Detailed inventory and measurement of resources. Use principals of industrial engineering to break up intervention into discrete work steps and accounting for resources used in each step. Specific to particular implementation of intervention

Question 28

Example of Micro Costing:

Answer 28

Cost of hospitalization would be broken down into costs of specific types of procedures used, cost of different types of health personnel time, costs of drugs, tests, supplies, etc.

Question 29

What is Gross Costing?

Answer 29

Uses more aggregate data. For example, the cost of a hospitalization for heart attack is the average cost of such hospitalization in a national database

Question 30

What are the advantages of Gross Costing?

Answer 30

More robust to geographic, institutional and other sources of variation. Less costly and more practical. Not appropriate for novel interventions

Question 31

What are some key questions in deciding between Micro and Gross Costing?

Answer 31

What is the value of more precise cost information. Will more precise information alter the key results from the CEA analysis. First conduct some sensitivity analysis before embarking on a costly micro costing exercise. Several CEA studies combine both approaches (Micro costing for intervention, Gross costing for downstream costs)

Question 32

In what cases can market prices provide a good approximation of the opportunity costs of a resource?

Answer 32

Markets are competitive. Prices can adjust freely. If above two conditions hold: price equals the marginal cost to society of providing a good or service

Question 33

What are the costs to be included in a CEA?

Answer 33

The value of all goods and services that may change because of the intervention (these are called variable costs). CEA analysis should exclude costs that are held constant independent of the level of production or time frame of the analysis (Fixed Costs)

Question 34

Should we include costs for developing a new intervention or costs for introducing a new drug?

Answer 34

Depends on the question. Include if the question is whether or not to develop intervention. Exclude if the question is how to use intervention or drug. Might want to include R&D costs as reflected in prices if using a payer perspective rather than societal perspective

Question 35

What is excess capacity and costs?

Answer 35

Ex. Extra bed in vacant hospital has a zero cost for occupying it. If there is a big accident and all are occupied, then from a societal perspective marginal cost is not zero

Question 36

What happens in a Non-Competitive market?

Answer 36

In monopoly prices are high, sometimes prices are determined like with Medicare and don’t match marginal costs. In both cases, the ideal analysis should adjust prices before using them in a CEA

Question 37

How do we compute the costs of patient time related to intervention?

Answer 37

Use wage rate the person would have earned during that time. In practice, use age-gender specific wages or wages based on occupation. Note that using wages means that the CEA will reflect imperfections in labor market

Question 38

What are the three key issues in accounting for timing of costs?

Answer 38

Return on investment. Increase in prices of resources used for the intervention (how much more will the resource cost in the future). Increase in overall prices or inflation (what will be the value of money in the future)

Question 39

What should be done if resource costs are in “real dollars” in regards to interest rate to discount?

Answer 39

Use “real” interest rate to discount. Real interest rate is nominal interest rate less inflation rate. Most studies use 3-5%. If resource costs are in nominal dollars use the nominal interest rate