9) Health Economics

Question 1

What is priority setting?

Answer 1

Decisions about the allocation of resources between the competing claims of different services, different patient groups or different elements of care.

Question 2

Why do we need priority setting?

Answer 2

• because of scarcity of resources= demand outstrips supply
• need to be clear and explicit about what we are trying to achieve and who benefits from public expenditure

Question 3

What are the two forms of rationing?

Answer 3

Explicit and implicit

Question 4

What is explicit rationing?

Answer 4

Decisions are based on defined rules of entitlement (conditions of which treatment is funded or not)

Question 5

What is implicit rationing?

Answer 5

Care is limited, but neither the decisions not the justification/evidence for those decisions are clearly expressed.

Question 6

Evaluate the use of implicit rationing

Answer 6

• can lead to inequities and discrimination (clinicians making subjective decisions)
• open to abuse
• decisions based on perceptions of ‘social deservingness’ (creates a ‘postcode lottery’ where access to resources depends on social demographic)
• doctors appear increasingly unwilling to complete implicit rationing (pressure to make decisions, feel judgemental)

Question 7

Outline advantages to the use of explicit rationing

Answer 7

Advantages:

• transparent, accountable
• opportunity for debate (different stakeholders ie commissioners, clinicians, patients)
• more clearly evidence based
• more opportunities for equity in decision making

Question 8

Outline limitations to the use of explicit rationing

Answer 8

• very complex (difficult to apply to individual cases)
• heterogeneity of patients and illnesses (problematic as lose individuality)
• patient and professional hostility
• impact on clinical freedom (cannot make ‘individual’ based decisions)
• evidence of patient distress (now treatments available that could help with their condition, but not funded by NHS)

Question 9

Which organisation is responsible for making the recommendations for resource allocation/treatment funding?

Answer 9

NICE- National Institute for Health and Care Excellence

Question 10

What is the role of NICE?

Answer 10

Provides guidance on whether treatments (new or existing) can be recommended for use on the NHS in England.
-appraise significant new drugs and devices/review existing programmes.
Promotes equal access for patients across the country

Question 11

What is meant by scarcity?

Answer 11

Needs outstrip resources. Prioritisation is inevitable.

Question 12

What is meant by efficiency?

Answer 12

Getting the most out of limited resources

Goal of priority setting is to increase efficiency

Question 13

What is equity?

Answer 13

The extent to which distribution of resources is fair, also access to different groups of patients.

Question 14

What is effectiveness?

Answer 14

The extent to which an intervention produces desired outcomes

Question 15

What is utility?

Answer 15

How does patient value the outcomes of resource allocation- the value an individual places on a health state.

Question 16

What is opportunity cost?

Answer 16

Once you have allocated a resource in one way, you no longer have it to use in a different way.

Question 17

Describe the use of opportunity cost

Answer 17

• when deciding to spend resources on a new treatment, those resources cannot now be used on other treatments
• the opportunity cost of the new treatment is the value of the next best alternative use of resources
• cost is viewed as sacrifice rather than financial expenditure
• opportunity cost is measured in BENEFITS FOREGONE

Question 18

What are the two types of efficiency?

Answer 18

Technical efficiency- the most efficient way of providing care (eg should antenatal care be community or hospital based?)

Allocative efficiency- choosing between needs of different people across the community (eg fund hip replacements or neonatal care?)

Question 19

What is economic evaluation?

Answer 19

Comparison of resource implications and benefits of alternative ways of delivering healthcare.
Input ———> option 1———>outputs
Input———->option 2———->outputs
(Resources required) (Benefits/outcomes)

Question 20

How do you measure costs?

Answer 20

• cost of healthcare service
• cost of patient’s time
• costs associated with care-giving
• other costs associated with illness
• economic costs (employers, employees and rest of society)

Question 21

How do you measure benefits?

Answer 21

• impact on health status (extent to which improves survival rate/QoL/symptoms)
• savings in other healthcare resources (reduction drugs needed/hospitalisations/ 2ndary procedures/Side effects)
• improved productivity (benefits to society/back to work quicker- benefits patients and employers)

Question 22

How do you compare costs and benefits?

Answer 22

1. Cost minimisation analysis
2. Cost effectiveness analysis
3. Cost benefit analysis
4. Cost utility analysis

Question 23

Cost minimisation is?

Answer 23

All outcomes assumed to be equivalent
Focus on costs (inputs)
Not often relevant as outcomes are rarely equivalent
Ie all treatments provide same outcome- choose the cheapest one

Question 24

What is cost effectiveness?

Answer 24

Compares treatments with a common health outcome
Compared in terms of cost per unit outcome
If costs are higher for one treatment, but benefits are too, need to calculate how much extra benefit is obtained for the extra cost.
Is it worth it?

Question 25

Cost benefit is?

Answer 25

All inputs and outputs valued in monetary terms
Allows comparison with interventions outside healthcare
Methodological difficulties -putting monetary value on things such as lives saved
‘Willingness to pay’ often used, also problematic

Question 26

What is cost utility analysis?

Answer 26

Particular type of cost effectiveness analysis
Focuses on quality of health outcomes produced or forgone
Most frequently used measure is quality adjusted life year (QALY)
Interventions can be compared in terms of cost per QALY gained

Question 27

What is a QALY?

Answer 27

Incorporates quantity AND quality of life

1 year of perfect health= 1 QALY

Question 28

How can QALYs be used?

Answer 28

Can be used to compare treatment methods;

Calculate QALYs without treatment
Calculate QALYs with treatment
Value with- value without= QALYs gained

Cost per QALY= QALYs gained/cost per year received treatment

Different values for each treatment compared

Question 29

Identify criticisms of QALYs

Answer 29

-controversial about values they embody
-do not distribute resources according to need, but according to benefits gained per unit of cost
-may disadvantage common conditions
-technical problems with their calculations
-may not embrace all dimensions of benefit (may not be representative)
!!!! Do not assess impact on carers or family