health economics intro Flashcards
what is opportunity cost?
the value of the consequences when you choose to deploy resources in one way rather than their best alternative use - i.e. the value of the things you missed out on by using resources one way rather than the alternative
give an example of opportunity cost in health care services.
- deciding to spend more money on health services leads to less funding in other services such as education, social welfare etc. (=opportunity cost)
- deciding to give someone a heart bypass which could have funded 150 MMR vaccinations or 11 cataract removals (=opportunity cost)
what is technical efficiency as opposed to allocative efficiency?
technical efficiency looks at producing output in the best way possible, WITHOUT WASTING SCARCE RESOURCES.
Therefore with technical efficiency, you look to treat someone in the cheapest but best way possible (balancing money and result).
Allocative efficiency on the other hand looks at producing output that is best tailored to consumer’s wants/needs.
You look to treat someone with what they will be most satisfied with.
Define economic evaluation.
a COMPARATIVE analysis of alternative courses of action in terms of both COSTS and CONSEQUENCES.
What is the difference between cost effectiveness analysis (CEA) and cost utility analysis (CUA)?
cost effectiveness analysis analyses spending through ONE single outcome e.g. lives saved or increased survival. the results are usually quantitive (physical units) and easy to measure e.g. cost per lives saved. the end decision comes down to dominance (costs of intervention are less but benefits are greater - easy decision) or a CE ratio.
in comparison, cost utility analysis analyses spending in terms of quality of life. It measures outcomes in Quality Adjusted Life Years - QALYs. therefore the results are in cost per additional QALY gained. the end decision comes down to dominance or a CU ratio.
what are the main types of economic evaluation?
- cost effectiveness analysis
- cost utility analysis
- cost consequence analysis
- cost minimisation analysis
- cost benefit analysis
what are cost benefit analysis (CBA), cost consequence analysis (CCA) and cost minimisation analysis (CMA)?
CBA - looks at benefits of spending money on something. if benefits outweigh costs then proceed.
CCA - looks at cost and consequence of two outcomes separately and compares. if for one outcome the cost is low and the benefit is high, there is no need to do further analysis.
CMA - comparing cost between two outcomes that are equivalent in benefit.
what is incremental economic evaluation?
evaluating the difference in cost and the difference in benefit of choosing option A over option B. e.g. how do new proposed interventions compare to services offered currently?
define the terms marginal cost and marginal benefit.
marginal cost - the increase in cost by increasing production by one additional unit. (marginal cost can become really high in some cases such as detection test where when you do the test on more people, you are less likely to detect someone with the condition and it becomes more expensive to do test more people).
marginal benefit - the increase in benefit by increasing production by one additional unit
*both used in the incremental approach to economic evaluation.
what is the UK threshold for cost per QALY for an intervention to be considered effective in CUA?
£20,000 - £30,000 per QALY.
below £20,000 deemed effective. between this range will be considered. higher then £30,000 deemed ineffective. - set by NICE.
define the Incremental cost-effective ratio (ICER).
ICER = difference in costs/difference in consequences.
