Economic studies Flashcards
5 types of economic study
- cost minimisation
- cost effectiveness
- cost utility
- cost benefit
- cost consequences
Direct costs
-costs of hospital space, cost of drugs, cost of equipment etc
Indirect costs
-costs due to loss of productivity for the patient, the cost of having a caretaker for one’s dog or nanny for a child when hospitalised
Intangible (not measurable costs)
-cost of pain and suffering, social stigma, physical discomfort
Opportunity cost
-cost of wasted opportunities
Economic benefits
-amount saved as a result of the prevention of illness and treatment, avoidance of admission, economic benefits of work, cost saved from quicker recovery
Clinical benefits
-improvement in rating scale scores, life years gained and deaths prevented
The quality of life benefits
-improved general well being, improved perceived life quality, regain of functions
Health state preference values
- the value that a person will place in a health state in a hypothetical situation
- 4 main methods
1. rating scales
2. time trade-off measures
3. standard gamble measures
4. willingness to pay
Rating scales for health state preference values
- the respondent is asked to indicate along a line where would he place a particular health state
- 0 refers to death, maximum point refers to perfect health
Time trade-off measures
-how many of the remaining life years would a respondent spend in trying to get cured of a particular condition
Standard gamble measures
-how much risk would an individual accept to get cured for a health problem where the intervention could cure or kill them
Willingness to pay
-how much people would be prepared to spend to prevent or cure a particular health state
Cost minimisation study
-used when both interventions produce the same outcome and so just the costs are compared
Cost effectiveness study
-used when both interventions result in an outcome that can be measured using the same clinical scale
Cost utility study
- used when apart from the clinical effect, one has also to consider holistically the disease burden, side effects and social impact
- output is QOL, QALY
Cost benefit study
- used when two different interventions with different clinical outcomes are compared
- in this case all the outcomes are translated into money terms and then compared
- used by managers to decide how to spend allocated money effectively
Cost consequences study
- used when two different interventions with different clinical outcomes are compared but instead of combining costs into a common unit (like money or QALYS), natural units are used such as days saved, number of deaths prevented
- also known as a disaggregated approach as outcomes on a balance sheet have different dimensions rather than a single net value
Quality indicators of economic analyses
- viewpoints
- clinical effectiveness
- incremental values
- sensitivity analysis
Viewpoints
- conclusions of an economic analysis could vary based on who is estimating the costs vs benefits
- the conclusion of an economic study must be interpreted in the context of the viewpoint employed in the analysis
Clinical effectiveness
-compared interventions may be cheap but they have to work
Incremental values
-incremental calculation must be done if two interventions are compared in an economic analysis and compares value for money
Sensitivity analysis
- in economic analysis it assumes the standard rate of inflation and discounts changes in foreign exchange
- a conventional 6% discount rate is assumed year-on-year calculations
- it is therefore important to check the effect of the outcome of a reported economic analysis by systematically examining what will happen if the assumptions are changed in one way
1. one way analysis
2. extreme scenario analysis
3. two way analysis
4. Monte-Carlo simulations
5. Bootstrapping technique
One-way analysis
- change one variable in a manner plausible at a particular economic circumstance to observe the effect on the outcome
- may underestimate the uncertainty
Extreme scenario analysis
- set one variable to either maximal or minimal values and examine the changes in the outcome
- this overestimates the uncertainty
Two-way analysis
- two variables are changed simultaneously to observe the effects
- might be cumbersome
Monte-Carlo simulation
-the uncertainty in each utility is assumed to possess a probability distribution when estimating the predicted effects
Bootstrapping technique
- the effect of resampling the data set is investigated
- the RCT on which an economic analysis is based gets repeated a large number of times
- any variability in outcome depends on the precision of the originally reported results
Cost Effectiveness Analysis
- most popular in health care
- average cost-effectiveness ratio ACER) is equal in cost/effect
- Incremental cost-effectiveness ratio (ICER)- measure of the additional cost per unit of health gained
ICER (incremental cost-effectiveness ratio
(the cost of the proposed intervention-cost of control intervention) /(the effect of proposed intervention-the effect of the control intervention)
Incremental cost-effectiveness plane
- shows the incremental cost and incremental effect visually
- the horizontal axis divides the plane according to incremental cost and teh vertical axis divides the plane according to the incremental effect
- each quadrant has a different implication for the decision
ICER falls in NORTHWEST
- positive costs and negative effects
- no use of the intervention
ICER falls in SOUTHEAST
- negative costs and positive effects
- intervention preferred
ICER falls in NORTHEAST
- positive effects and positive costs
- needs further consideration before acceptance
ICER falls in SOUTHWEST
- negative costs and negative effects
- not clinically effective
- needs further study
Deciding ‘value for money’
- ICER must be compared to the maximum amount that the decision maker is willing to pay for health effects ( maximum acceptable ceiling ratio)
- probabilities of investment can be identified from the incremental cost-effectiveness plane with reference to the decision maker’s defined maximum acceptable ceiling ratio- uses a Cost-effectiveness acceptability curve= CEAC
Cost-effectiveness acceptability curve
- gives a probability that an intervention is cost-effective compared to the alternative, given the observed data for a range of willingness to pay values(lambda)
- CEAC is a method of summarising the uncertainty in estimates of cost-effectiveness
Nixon
-used a permutation matrix rather than a cost-effectiveness plane, but similar concept
