Lectures 1-4 Flashcards
Economic evaluation is a broad term and captures
Cost-effectiveness analysis (CEA) ►Cost utility analysis ►Cost minimization analysis ►Cost benefit analysis ►Net monetary benefit analysis
Providers
Role: improve patient health
►Value: ensure the intervention offers best clinical value to patient
►Relates to comparative effectiveness research
Hospitals
Role: improve patient health
►Value: provide best clinical value to patient and make a strong value proposition
►Consider example of robotic-assisted surgery
Insurers
Role: improve patient health within budgetary limits
►Value: ensure patients receive best value
Government
Role: Improve patient health and use policies to incentivize value
►Value: Maximize health within budgetary limits
Patients
Role: Improve their health
►Value: Best clinical value that they can afford
Nongovernmental organizations
Role: How to measure value and incentivize optimal allocation
►Value: Defines, assesses, and constructs policies to promote value
Manufacturers
Product pricing (“value for money”) ►Marketing strategy
Third party payers (health insurers)
Coverage decisions (new therapies, drugs, devices...) ►Payment decisions (provider reimbursement, patient cost-sharing)
Medical professional organizations
Practice guidelines
Health systems (hospitals)
Management tools (control cost while maintaining quality)
intervention
An intervention is a ”choice” we will evaluate in economic evaluation It represents a change in health care practice that aims to either improve health or reduce costs ►Drugs ►Surgery techniques ►New technology ►Screening strategy ►Public health campaign ►New process or structure of care
Resources
Resources can represent a variety of inputs ►Resources can be ►Time ►Labor ►Capital ►Technology ►We can think of these resources in terms of money such that we have a common unit ►Remember, time = money
Opportunity cost
Opportunity cost = value of what we are giving up to acquire a resource
Market Prices
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Market prices is the result of demand meeting supply
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Buyers have varying willingness to pay for a specific good
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Sellers have varying willingness to sell a specific good (function of quantity)
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Where these meet determines market clearing price
Imperfect Market of Health Care
The health care market is imperfect for many reasons including:
1.Buyers often rely on agents for purchasing health care
●Doctor prescribing drugs or treatments
2.Information about prices is not widely available
●What insures pay is often hidden
3.Price is rarely negotiated
4.Price and demand is often subsidized by insurance
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Medical costs
Direct cost for medical goods and services
►For example, cost of drugs or surgical procedures
Morbidity costs
Any nonmedical costs associated with the morbidity of a condition
►Often opportunity costs
►For example, lost wages due to illness
Mortality costs
►Any nonmedical costs associated with the mortality of a condition
►Often opportunity costs
►For example, lost wages due to illness
Other nonmedical costs
Nonmedical costs associated with an illness that are not captured by the above
►Often direct costs such as transportation cost
Payment transfers
Costs associated with the payment or receipt of money due to an illness
Micro-Costing Approach
►Micro costing is used to estimate the cost of a health intervention
►As the name suggests, it estimates each individual components cost
►Three stages of micro-costing:
►Identification of all resources involved in the provision of care (e.g., human-resources, time, and supplies)
►Measurement of each resource (for example using time-and-motion studies)
►Valuation of the resources used
Burden of Disease Studies
Takes into account:
►Morbidity of disease (time disabled or sick)
►Mortality of disease (time lost due to premature death)
►Often source of information for economic evaluation modeling and decision analysis
Cost-Effectiveness/Utility Analysis (CEA/CUA)
Examines two or more alternative activities (interventions)
►Single, common outcome that differs only in magnitude between the alternative activities
►Results are expressed as a ratio of differences in cost and differences in effects
Cost-Effectiveness Analysis (CEA)
CEA outcome (effects) measured in “natural units”
►Life-years, gain in life expectancy
►Clinically relevant outcomes (e.g., Hg for blood pressure; HbA1c for diabetes, etc.)
►Infections averted; number of diseased patients, or symptom-free days
Cost-Utility Analysis (CUA)
CUA outcome (effect) based on individual or societal preferences (utilities)
►Outcome measured in quality‐adjusted life years (QALYs), disability‐adjusted life years (DALYs), or Healthy years equivalent (HYE)
►Outcomes capture both quality and quantity of health
Disadvantages to CEA and CUA
Cannot be used to compare interventions beyond the health sector (i.e., costs can be directly compared, but outcomes cannot)
►May not capture inter-health sector comparisons completely
►Some health interventions have other outcomes which must be explicitly listed as inputs to the decision-making process
►Requires studies to estimate utility (for QALY measurement) or disability weights (for DALY measurement)
►Theoretical controversies and measurement issues in the field
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Theory behind Economic Evaluation
The principle aim of economic evaluation is to maximize societal health for a given budget
►Maximization requires optimal allocation
►Utilize the intervention with the best value first before utilizing the next intervention
►Microeconomics underpins much of economic evaluation
►Multiple theories within microeconomics
Decision analysis:
a quantitative method for choosing from a set of alternatives under conditions of uncertainty
Model
a representation of some real-world phenomena, object, or behavior
Cohort study
A cohortis a group of people related in some way (e.g., socio-economic and demographic characteristics): e.g., a birth cohort is a cohort of people born within a given time period
►Researchers can compare outcomes between members of the cohort exposed to the intervention and those not exposed
Case-control study
►Compares subjects who have an outcome of interest (cases) with subjects who do not have the outcome (controls)
►Looks back retrospectively to compare how frequently the exposure to a risk factor is present in each group to determine the relationship between the risk factor and the outcome
Markov Models
State-transition models
►Assume finite numbers of health states (Markov states)
►Patients assigned to one and only one state at a given time
►Patients can transition between states based on some state transition probabilities
►Transition probabilities can be time-dependent (e.g., chance of death increases with age, independent of health)
►The probabilities of moving from one state to all other possible states must always add up to 1
►Highly flexible and allow for an infinite variety of diseases or interventions to be simulated and understood
►Most popular tools for public health and health care research
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