Health Economics

Question 1

Why do resources need to be prioritised?

Answer 1

Because of the scarcity of resources, demand outstrips supply. So, this means difficult decision have to be made.

Question 2

Why is the cost of running the NHS increasing?

Answer 2

Because we have an ageing population and 60% of those over 65 have a long term condition.
Increase incidence and prevalence of cancer and new cancer therapies are often very expensive to produce. They don’t often cure but can increase survival.

Question 3

What are the two forms of rationing?

Answer 3

Explicit rationing - Based in defined rules of entitlement
Implicit rationing - Care is limited, but neither the decisions, nor the bases for those decisions are clearly expressed.

Question 4

What is implicit rationing?

Answer 4

Implicit rationing is the allocation of resources through individuals clinical decisions without the criteria for those decisions being explicit.

Question 5

What are the problems with implicit rationing?

Answer 5

Can lead to discrimination and inequalities
Open to abuse
Decisions are based on perceptions of “social deservingness”
Doctors appear increasingly unwilling to do it.

Question 6

What is explicit rationing?

Answer 6

Explicit healthcare rationing or priorities-setting is the use of institutional procedures for the systematic allocation of resources within healthcare system.

Question 7

Why is explicit rationing more common than implicit rationing?

Answer 7

• Care is limited and the decisions are explicit, as is the reasons behind those decisions.
• Technical processes eg assessments of efficiency and equity
• Political processes eg lay participation

Question 8

What are the pros and cons of explicit rationing?

Answer 8

Pros:

1. Transparent, accountable
2. Opportunity for debate
3. More clearly evidence based
4. More opportunities for making equity in decision-making

Cons:

1. Very complex
2. Heterogeneity of patients and illnesses (system assumes all patients will illness are the same)
3. Patient and professional hostility
4. Impact on clinical freedom
5. Some evidence of patient distress.

Question 9

What is NICE?

Answer 9

NICE is the National Institute for Health and Care Excellence.
it was set up to provide guidance on whether treatments (new or existing) can be recommended for use in the NHS in England.
NICEis asked to appraise every significant new drug and devices to ensure the effectiveness, cost effectiveness and quick delivery to patients. It also works to minimise variation.
Once national guidelines have been issued by NICE, it replaces the local recommendations and promotes equal access for patients across the country.

Question 10

What are the drawbacks of NICE?

Answer 10

• It has a particularly controversial role in relation to expensive treatments (media backlash…)
• If not approved, patients are effectively denied access to them (except for individual requests)
• If approved, local NHS organisations much fund then (if clinically appropriate) sometimes with adverse consequences for other priorities.

Question 11

What are the 6 basic concepts in health economics?

Answer 11

SCARCITY - Needs outstrip resources so prioritisation is inevitable.
EFFICIENCY - Getting the most out of limited resources
EQUITY - The extent to which distribution of resources is fair
EFFECTIVENESS - The extent to which an intervention produces desired outcomes
UTILITY - The value an individual places on health state
OPPORTUNITY COST - Once you have used a resource in one way, you no longer have it to use in another way.

Question 12

What is opportunity cost?

Answer 12

The opportunity cost of a treatment is the value of the next best alternative use of those resources. This is because, once you have used the resources, they cannot be used on another treatment. In this model, cost is viewed as a sacrifice rather than as financial expenditure.
Opportunity cost is measured in BENEFITS FOREGONE.

Question 13

What happens in an economic analysis?

Answer 13

An economic analysis compares inputs (resources) and outputs (benefits and values attached to them) of alternative interventions. This allows better decision to be made about which interventions represent the best value for investment.

Question 14

What different things do you need to take into consideration when measuring costs?

Answer 14

You need to identify, quantify and value the resources needed. eg costs of….
Healthcare services
Patient’s time
associated with care giving
Other costs associated with illness
Economic costs borne by the employers, other employees and the rest if society.

Question 15

How do you measure benefits?

Answer 15

Benefits are harder to measure because improved or maintained health are hard to value. Although, you can measure…
Impact on health status (survival and QoL)
Savings in other healthcare resources (drugs, hospitalisations…)
Improved productivity if patient or family members return to work.

Question 16

How can you compare costs and benefits?

Answer 16

-Cost minimisation analysis
Cost effective analysis
Cost benefit analysis
Cost utility analysis

All these methods consider the costs but they differ int he extent to which they attempt to measure and value consequences / benefits.

Question 17

What is cost minimisation analysis?

Answer 17

This is when outcomes are assumed to be equivalent.
The focus here is on costs (inputs).
It is not often relevant as outcomes are rarely equivalent.
eg it would say that all prostheses for hip replacement improve mobility equally so it would choose the cheapest one.

Question 18

What is cost effectiveness analysis?

Answer 18

This is used to compare drugs or interventions which have a common health outcome eg reduce BP
It is compared in terms of cost per unit outcome eg cost per reduction of 5mm/Hg
If costs are higher for one treatment, but benefits are too, you will need to calculate how much extra benefit is obtained for the extra cost.
They key question is “is the extra benefit worth the extra cost?”

Question 19

What is cost benefit analysis?

Answer 19

All inputs and outputs are valued in monetary terms.
This method can allow comparison with interventions outside healthcare.
Methodological difficulties eg putting monetary value on non-monetary benefits such as lives saved.
“Willingness to pay” is often used but this is also problematic.

Question 20

What us cost utility analysis?

Answer 20

Particular type of cost effectiveness.
Cost utility analysis focuses on quality of health outcomes produced or foregone.
Moat frequently used measure is “quality adjusted life year (QALY)”
Interventions can be compared in cost per QALY terms.

Question 21

What are QALYs?

Answer 21

These are “quality adjusted life year (QALY)”. They adjust life expectancy for quality of life. So, 1 QALY = I year of perfect health. QALY= life expectancy (in years) x quality of life (on scale of 1(perfect health) - 0 (dead))

Question 22

What are the three alternatives you may see to QALYs?

Answer 22

Health Year Equivalents (HYEs)
Saved-young-life equivalents (SAVEs)
Disability Adjusted Life Years (DALYs)

There are advantages and disadvantages to all of them but NICE uses QALYs.

Question 23

How does NICE use QALYs?

Answer 23

To assess cost-effectiveness, the QALY score is integrated with the price of treatment.
The result is ‘cost per QALY’ figure which allows NICE to determine the cost effectiveness of the treatment.
(less the 20K per QALY approved and above 30K needs strong case)

Question 24

What are some criticisms of QALYs?

Answer 24

Controversy about the values they embody
They do not distribute resources according to need, but according to benefits gained per unit cost
May disadvantage common conditions
Technical problems with their calculations
QALYs may not embrace all dimensions of benefit; values expressed by experimental subjects so it not be representative.
QALYs do not assess impact on carers or family.
The randomised control trial evidence is not perfect…
Statistical modelling can address some problems and areas of uncertainty.