Download to read offline
More Related Content
Similar to economic evaluation.pptxllllllllllllllllllllllllllll
More from yewollolijfikre
economic evaluation.pptxllllllllllllllllllllllllllll
- 1. 02:07 PM 1 Costingof health care program/illness and Economic Evaluation
- 2. 02:07 PM 2 Learningobjective • To analyze the conceptual basis of economic evaluations • Recognize the importance of discounting and calculate values • Critically compare CBA, CEA and CUA as approaches to evaluation of projects
- 3. 02:07 PM 3 •What is cost?
- 4. 02:07 PM 4 Costof illness • Cost of Illness (COI) is defined as the value of the resources that are expended or foregone as a result of a health problem • The COI includes: – Health sector costs, – Value of lost productivity by the patient (indirect cost), and – Cost of pain and suffering
- 5. 02:07 PM 5 Typesof Cost of Illness Direct Incidental Indirect Psychic Direct costs of a disease accurately correlated with an illness Preventing, diagnosing, treating the disease (hospital stay, professional fee, drugs, laboratory exams, home care)
- 6. 02:07 PM 6 Typesof Cost of Illness… Incidental costs / direct non medical costs Non-medical costs like travel costs, food and lodging, costs of attendants Indirect costs production losses, economic losses Loss of wages due to illness, disability, premature death Intangible costs or Psychic costs Unquantifiable Pain, suffering, disruption of normal lifestyle
- 7. 02:07 PM 7 Typesof Cost of Illness…
- 8. 02:07 PM 8 WhyShould We Calculate the COI? • The objective of health policy decision makers is to improve the health status of society. • To make informed choices, we need to know the economic burden imposed by the various health problems. • COI provides a monetary estimate for the economic burden of diseases
- 9. 02:07 PM 9 Why…… –COI studies allow us to determine the amount of money that we spend on an illness and – to compare it with what we spend on the interventions that decrease or eliminate the problems. – We can estimate how much the intervention costs, – How much the illness costs before (or without) the intervention, and – How much the illness costs after (or with) the intervention
- 10. 02:07 PM 10 Assessmentof costs Measure Measure in natural physical units (e.g. LY saved). Fixed, variable and total costs. Average versus marginal costs. Direct health care costs (e.g. costs of treatment) Direct personal costs (e.g. Wage, transportation) Indirect costs (e.g. productivity losses)
- 11. 02:07 PM 11 FixedProgram Costs • Cost of the program that, in short run, do not vary with the level of activity Example: Facility (rent and utilities) Costs for support staff • These costs are often incurred at the beginning of program implementation and are frequently referred to as start-up costs.
- 12. 02:07 PM 12 VariableProgram Costs The variable costs of a program are those that change as the level of activity changes Examples include: – Providers’ time, – Medications, – Tests, material, and supply costs The typical approach to measuring variable costs is to identify the quantity of the relevant resource and multiplying it with unit price
- 13. 02:07 PM 13 Totalcost Total cost (TC) of a program is derived by adding all the costs incurred in producing a given level of output So it includes the cost of all the personnel, the supplies, and the equipment that were identified in the cost inventory. Total costs are expressed as: TC=(Q1 x P1)+(Q2 x P2)+...+(Qn x Pn)
- 14. 02:07 PM 14 Totalcost.. Total costs can be used to – Rank diseases by economic burden – Measure the cost of treating a disease – Measure the cost of a program
- 15. Average cost • Theaverage cost (AC) is the cost per unit of output (e.g., cost per patient treated or cost per child immunized). • AC is computed by dividing the total cost by the number of participants 15 The formula is AC=TC/Q Where, AC=Average cost TC=Total cost Q=Units of output
- 16. Marginal Cost • Themarginal cost (MC) is the cost associated with producing one additional unit within the same intervention/program • It is useful in making program expansion decisions. 16
- 17. 02:07 PM 17 MarginalCost…….. • The formula for calculating MC is: • MC=Change in total costs/Change in quantity produced Or MC=(TC' – TC)/(Q' – Q) Where, Q=Lower level of output Q'=Higher level of output TC=Total costs at lower output level TC'=Total costs at higher output level
- 18. 02:07 PM 18 MarginalCost…….. Example • A nurse can screen 25 patients per day. Her salary is $160 per day. Screening and lab costs are $25 per patient. If >25 patients are scheduled, the nurse must call and ask that a nurse's aide help her. The nurse's aide salary is $100 per day
- 19. 02:07 PM 19 Economicevaluation Defined as the comparative analysis of alternative courses of action in terms of both their costs and consequences or benefits Economic evaluation is therefore an effort to analyze inputs (resources) and outputs (changes in health outcomes) simultaneously
- 20. 02:07 PM 20 Economicevaluation…. • Since resources (monetary and non-monetary) are scarce it is essential to do evaluations for the continuous improvement in the quality and efficiency of healthcare • Economic evaluation helps policy makers and practitioners to prioritize and to decide how and where to allocate the scarce resources.
- 21. 02:07 PM 21 Economicevaluation…. Always compares any health care programme with an alternative, for example, no treatment or routine care. Always measure the benefits produced by all alternatives compared. Always measures the cost of any programme.
- 22. 02:07 PM 22 WhyShould Economic Evaluations Be Conducted?
- 23. 02:07 PM 23 Typesof Economic Evaluations Cost Minimization Analysis(CMA) Cost Effectiveness Analysis(CEA) Cost Utility Analysis(CUA) Cost Benefit Analysis(CBA
- 24. 02:07 PM 24 1.Cost minimization analysis • Consequences of competing interventions are the same and in which only inputs, that is, costs are considered • Used when the effect of both interventions is assumed to be identical. • Thus, there is no outcome measure - only costs are accounted for. • Aim is to decide the least costly way of achieving the same outcome • Choose least costly outcome among options with similar outcomes Similar out come but d/t programs Cost? A B
- 25. 02:07 PM 25 2.Cost-Benefit Analysis • Cost benefit analysis is the most comprehensive and theoretically sound form of economic evaluation • It has been used as an aid to decision making in many different areas of economic, social policy in the public sector for more than fifty years. • Estimates and totals up the equivalent money value of the benefits
- 26. 02:07 PM 26 Cost-BenefitAnalysis • The main difference between cost-benefit analysis and other methods of economic evaluation: – that it seeks to place monetary values on both the inputs (costs) and outcomes (benefits) of health care • If the value of benefits exceeds the costs of any intervention then it is potentially worthwhile to carry that intervention
- 27. 02:07 PM 27 Stepsfor a CBA in the field of health: WHO 2006 • An intervention is worthwhile if the ‘average cost- benefit ratio’ (ACBR) is below one, i.e., if
- 28. 02:07 PM 28 ABenefits Versus Costs Example • Consider a vaccination program implemented by an employer to vaccinate employees — healthy working adults — against influenza. An economic study documents that the total cost of vaccinating one person is $16.69, and • benefits gained by each person vaccinated total $30.35. • If the employer has sufficient health-care funds to fund the program, should the employer do it? • Because the benefits outweigh the costs, the employer might consider investing in the program if it compares favorably to other programs
- 29. 02:07 PM 29 3.Cost Effectiveness Analysis (CEA) • Concerned with technical efficiency issues • Technical efficiency issues such as: what is the best way of achieving a given goal or what is the best way of spending a given budget • Comparison can be made between different programs in terms of their cost effectiveness ratio. • Aim is to decide the best effective among programs with the same initial cost • Cost per unit of effect
- 30. 02:07 PM 30 3.Cost Effectiveness Analysis . . . • Inputs are, as in CBA, measured (expressed) in monetary terms, but benefits, or outcomes, are not monetized. • Some benefits of a project or policy are very difficult to measure in monetary terms, • We may simply take the physical quantities, measured in natural units, such as lives saved, life years gained . . . • Select the maximum benefit obtained with a given level of resources
- 31. 02:07 PM 31 3.Cost Effectiveness Analysis . . . Examples of measures of effectiveness Cases treated appropriately Lives saved Life years gained Pain or symptom free days Cases successfully diagnosed Complications avoided Speed of healing of a wound
- 32. 02:07 PM 32 3.Cost effectiveness analysis (CEA)…. • The average cost effectiveness ratio (ACER) is an index used to make comparison of the costs and consequences • For example, if effectiveness is measured by length of life, ACER it is defined as: • ACER = costs in units of money ⁄ benefit in life years gained
- 33. 02:07 PM 33 A30000/3o = 1,ooo costs/ LYG B 50000/40 = 1250 costs/ LYG C 60000/50 = 1200 costs/ LYG program A is cost effective
- 34. 02:07 PM 34 4.Cost-Utility Analysis • A close relative of cost–benefit and cost–effectiveness analysis, • But where benefit is measured in neither monetary terms nor natural units like ‘deaths prevented’ • CUA tends to be used when quality of life is an important factor involved in the health programs being evaluated • This is because CUA combines life years (quantity of life) gained as a result of a health program with some judgment on the quality of those life years • It is this judgment element that is labeled utility
- 35. 02:07 PM 35 Cost-UtilityAnalysis • Utility is simply a measure of preference /choice • The best known utility index is the 'quality adjusted life year' or QALY. Other Disability adjusted life years (DALY) lost • It is used to reduce or summarize all heath related consequences/outcomes of healthcare intervention into a single index. • To derive QALYs, all conceivable health states are evaluated and weighted on a scale running from 0 to 1.
- 36. 02:07 PM 36 Cost-UtilityAnalysis…. • The worst health state (could be death) is assigned the value 0 and the perfect health state is assigned the value 1. • The intermediate states are scaled in the range between the two extremes. • Each weighted health state is multiplied by the expected duration – the number of years a particular health state will last.
- 37. 02:07 PM 37 Cost-utilityanalysis (CUA)….. • In this way, all health effects of an intervention are measured and weighted. • They are then aggregated into a single number to obtain ‘gain in QALYs’. • Measures the effects on morbidity (quality of life) and mortality (quantity of life ) • Combines life years saved with the quality of life during those years
- 38. 02:07 PM 38 Cost-utilityanalysis (CUA) • It is possible to compare surgical, medical, pharmaceutical and health promotion interventions with each other. • Comparability then is the key advantage of this type (CUA) of economic evaluation over that of CEA. • For a decision maker faced with allocating scarce resources between competing claims, CUA is potentially informative.
- 39. 02:07 PM 39 Typesof Economic Evaluation Type of Analysis Result Consequences Costs Cost Minimisation Cost Benefit Cost Utility Cost Effectiveness Dollars Single or multiple effects not necessarily common. Valued as “utility” eg. QALY Different magnitude of a common measure eg., LY’s gained, blood pressure reduction. Least cost alternative. Identical in all respects. Dollars Dollars Dollars Cost per unit of consequence eg. cost per LY gained. Cost per unit of consequence eg. cost per QALY. As for CUA but valued in money. eg willingness-to- pay Net $ cost: benefit ratio.
- 40. 02:07 PM 40 Useof Economic Evaluation in Setting Health Policy CBA CUA CEA Who makes decisions: Country Head, Legislators Minister of Health Program Director