06 Sood Lecture 1 Flashcards
For economic consequences of health care interventions, what are Interventions?
Changes in costs (numerator of ICER). Changes in health status (denominator of ICER)
For economic consequences of health care interventions, what are Changes in Costs?
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
For economic consequences of health care interventions, what are Changes in Health Status?
Intrinsic value. Economic value (changes in productivity or labor supply)
When costs are being measured, what is Societal Perspective?
Everyone in society matters. Includes patients or consumers. Includes firms, providers, hospitals, etc. Government and public programs
When costs are being measured, what is Insurer or Payer Perspective?
What matters is expenditures made by the payer
When costs are being measured, what is Patient Perspective?
What matters is expenditures made by the patient. Non-monetary costs such as time and inconvenience
What are Societal Perspectives like when considering something like Surgery?
Cost of surgeon time. Cost of patient time. Cost of medical supplies
What are Insurer or Payer Perspectives like when considering something like Surgery?
How much did the payer pay for the surgery. Might be different than costs
What are Patient Perspectives like like when considering something like Surgery?
How much did the patient pay for surgery. Patient time costs
What perspective should we use?
Always start with societal perspective as the reference case when doing a CEA. Include other perspectives depending on the problem and decision maker
What are Societal Perspectives like when considering something like “Should LA County provide free flu shots”?
How will it impact health care and non-health care costs for everyone in society
What are Government Perspectives like when considering something like “Should LA County provide free flu shots”?
How will it impact LA County budget
What are Payer Perspectives like when considering something like “Should LA County provide free flu shots”?
Will it increase or decrease covered health care costs
What are Patient Perspectives like when considering something like “Should LA County provide free flu shots”?
Will it reduce the burden of health care and non-health care costs for patients
What are Direct Costs?
Changes in resource use directly attributable to the implementation of the intervention
What are Indirect Costs?
Change in productivity and labor force participation due to health changes caused by the intervention
Why do most CEAs exclude indirect costs?
Indirect costs are captured in denominator as change in health. Can be reported separately
Do direct costs have to involve a monetary transaction?
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)
Are all monetary transactions direct costs?
No! What matters is change in resource use not money changing hands
Should we report transfer costs separately?
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
Do transfers cause a change in behavior?
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
Should we consider only short term costs directly attributable to the intervention?
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
When looking at types of Direct Costs, what are some examples of Health Care Costs?
Costs of tests, drugs, supplies. Costs of health personnel. Cost of facilities
When looking at types of Direct Costs, what are some examples of Non-Health Care Costs?
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
When accounting for time costs, what needs to be included?
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)
What is an example for accounting for time costs?
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)
What is Micro Costing?
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
Example of Micro Costing:
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.
What is Gross Costing?
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
What are the advantages of Gross Costing?
More robust to geographic, institutional and other sources of variation. Less costly and more practical. Not appropriate for novel interventions
What are some key questions in deciding between Micro and Gross Costing?
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)
In what cases can market prices provide a good approximation of the opportunity costs of a resource?
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
What are the costs to be included in a CEA?
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)
Should we include costs for developing a new intervention or costs for introducing a new drug?
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
What is excess capacity and costs?
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
What happens in a Non-Competitive market?
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
How do we compute the costs of patient time related to intervention?
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
What are the three key issues in accounting for timing of costs?
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)
What should be done if resource costs are in “real dollars” in regards to interest rate to discount?
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
