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Summary Economic Evaluation of Health Care
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Samenvatting Economic evaluation of health careLecture 1 introduction
Health Economics: evaluation of health technology in terms of costs and health outcomes.
Goal of health economics balance of demand and care provision & support decisions on
investment, designing, research, pricing, market access and introduction into the benefit package
(services covered by health insurance)
Objective evaluation of health technology:
- Prevention, diagnostics, therapy, recovery, palliative care
- Safety and accuracy
- Future impact on clinical outcomes
- Future impact on non-clinical patient outcomes
- Future costs (cost savings)
Why do we need economic evaluation in health care?
- Constrained budgets in health care (mostly funded by government; insurers; out of packet
payments of patients).
- Every euro can be spent once → How to we get the biggest health bang for our buck?
- Health care spending is increasing over time (from 1970 until 2015)
It is not just about how much we spend, it is also how we spend it! Efficiency, ‘doelmatigheid’,
cost-effectiveness. Optimal use of scare health care resources. Health care budgets are limited – Care
demands and expectations of patients are unlimited.
Health economic evaluation used to inform choices:
- Development of new health care technologies, balancing health care demands and health
care provision
Budgets are limited
Care demand and expectations are unlimited
- Optimal use of scarce health care resources
Economic evaluation assumes efficient and fair allocation of constrained resources to
maximize (societal) health benefits
Assume individual people and society are utility maximisers and aim to achieve the
greatest benefit for the greatest number (of people)
2 principles underlying health economic evaluation:
1. Pareto efficiency: any change in resource allocation leads to losses and gains. It is impossible
to make one party better off without making someone worse off.
1
, Many health economist assume the pareto efficiency a criterion. Only from a societal
perspective the loss of some people is compensated with gains of others (not from
an individual perspective).
To measure the net benefit we need one measure of utility across disease and
interventions
2. Principle of opportunity costs: in microeconomic theory, the opportunity cost of a choice is
the value of the best alternative forgone
The opportunity cost is the cost of not enjoying the benefit from the second-best
choice available
A suboptimal use of healthcare budget means a loss of money, so a loss of health.
Fundamentals and types of economic evaluation
Health economic evaluation = systematic evaluation of costs and effects
Economic evaluation
- Comparative analysis (2 or more alternatives of interventions/strategies/policies)
- Incremental (cost-effectiveness) analysis extra cost per extra unit of benefit
- Goal: systematically identify, measure, value and compare costs and effects of different
alternatives
- Within a health problem or over different health problems
Concept of an economic evaluation:
Timing of an economic evaluation:
- Ideally after proof of efficacy in research setting
- Ideally before large scale implementation of technology
- Impact on decision making optimal
Comparator and perspective of an economic evaluation
- Comparators: systematic identification of all relevant alternative interventions
Including: do-nothing/watchful waiting/active surveillance
For example, stop smoking program counselling program as alternative to chemo in
lung cancer patients
- Perspective: determines the outcome of the economic evaluation
Perspective of patient, hospital, insurer, society
For example, telemonitoring health failure compared to regular hospital check-ups:
cost-effective from societal perspective, not cost-effective from hospital perspective
2
,Cost of illness (COI) study & Budget impact analysis (BIA)
- COI: identify and measure all the costs of a particular disease
Outcome: total costs burden of a particular disease (to society)
Also called burden of illness (BOI)
- BIA: Analysis of the financial consequences of the use of an alternative intervention
compared to the current situation for a certain budget holder (for example: hospital, health
insurer, the Ministry of Health)
What extra money is required?
Two approaches:
- Trial based analysis (empirical study)
Costs and effects are measured simultaneously in a randomized clinical trail
- Model-based analysis
Synthesis of evidence on costs and effects from a variety of sources in a decision-
analytic model
Types of economic evaluation
- Cost Minimisations Analysis (CMA)
- Cost Effectiveness Analysis (CEA)
- Cost Benefit Analysis (CBA)
- Cost Utility Analysis (CUA)
Main difference between methods: measurement and valuation of (health) effects &
Measurement of effects determines to what other interventions one can compare the
intervention under study
Types of (full) economic evaluation:
- Cost Effectiveness Analysis (CEA)
Can express effects in any measure of interest for intervention under study.
Not comparable across conditions, only within a condition or within on type of
intervention (with exception for life years gained)
For example: Stop smoking campaign, the effect is the number of quitters
- Cost Benefit Analysis (CBA)
All effects of interest have to be translated into monetary units (cost effects + health
effects).
Advantage: net cost can easily be compared, allows for comparison across conditions,
even across different sectors of the economy, as traffic/environment
Monetary value on health using a willingness-to-pay threshold (WTP), for example we
are willing to pay 20,000 euro to gain one life year in good
- Cost Utility Analysis (CUA)
Costs alternatives expressed in monetary units
3
, Effects expressed as Quality-Adjusted Life Years (QALYs)
Outcome: Incremental cost per QALY gained
Allows comparison of interventions extending life with strategies (also) improving quality
of life
Particularly relevant when an intervention/strategy has positive as well as negative
impact on health (side effects, complications)
- Cost Minimization Analysis (CMA)
Compare the costs of interventions to determine the cheapest intervention.
Only applicable if there are no differences in effectiveness, effects are considered to be
exactly the same for all patients (no heterogeneity). Hardly ever valid assumption, so
CMA is not the analytical technique of choice!
Outcomes of economic evaluation
- ICER = Incremental cost-effectiveness ratio
∆Costs
ICER =
∆ Effects
- ICUR = Incremental cost-utility ratio (special case of ICER)
∆ Costs
ICUR =
∆ QALY ' s
Displaying results economic evaluations Incremental cost-effectiveness plane
The WTP-threshold of 20,000 euro per QALY is given by the dotted line
Intervention 1 is below the WTP threshold, so this intervention is considered a good option.
Intervention 2 is above the WTP threshold, so this intervention is too expensive for the
benefits it brings.
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