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Cost-effectiveness of health programs In health services and other sectors HS 422f

Cost-effectiveness of health programs In health services and other sectors HS 422f.  Donald S. Shepard, Ph.D. Schneider Institute for Health Policy Heller School, MS 035 Brandeis University Waltham, MA 02454-9110 USA Tel: 781-736-3975 • Fax: 781-736-3965

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Cost-effectiveness of health programs In health services and other sectors HS 422f

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  1. Cost-effectiveness of health programsIn health services and other sectorsHS 422f  Donald S. Shepard, Ph.D. Schneider Institute for Health Policy Heller School, MS 035 Brandeis University Waltham, MA 02454-9110 USA Tel: 781-736-3975 • Fax: 781-736-3965 Web: http://www.sihp.brandeis.edu/shepard E-mail: Shepard@Brandeis.edu Module I September 5, 2001 – October 22, 2001 1

  2. Practical information • Teaching assistant: Jsuaya@Brandeis.edu • Administrative assistant: Linda Purrini, Next to library in Heller 781-736-3930 Purrini@Brandeis.edu • Cost of packet (including diskette): $6.00 2

  3. Web page 3

  4. Overview of topics • Principles • Measuring effectiveness • Applications • Policy uses 4

  5. Comparison: depreciation and amortization 5

  6. Calculations: future value andpresent value 6

  7. Calculations: expected cost 7

  8. Wednesday, Sept. 5 andMonday, Sept 10:Principles of Cost-Effectiveness Analysis by  Donald S. Shepard, Ph.D. Schneider Institute for Health Policy Heller School, MS 035 Brandeis University Waltham, MA 02454-9110 USA Tel: 781-736-3975 • Fax: 781-736-3965 Web: http://www.sihp.brandeis.edu/shepard E-mail: Shepard@Brandeis.edu 8

  9. Monday, Sept. 17Measuring effectiveness and other CEA considerations by  Donald S. Shepard, Ph.D. Schneider Institute for Health Policy Heller School, MS 035 Brandeis University Waltham, MA 02454-9110 USA Tel: 781-736-3975 • Fax: 781-736-3965 Web: http://www.sihp.brandeis.edu/shepard E-mail: Shepard@Brandeis.edu 9

  10. Monday, Sept. 24Applications of Cost-Effectiveness Analysis by  Donald S. Shepard, Ph.D. Schneider Institute for Health Policy Heller School, MS 035 Brandeis University Waltham, MA 02454-9110 USA Tel: 781-736-3975 • Fax: 781-736-3965 Web: http://www.sihp.brandeis.edu/shepard E-mail: Shepard@Brandeis.edu 10

  11. Monday, Oct. 1:Policy Uses of Cost-Effectiveness Analysis by  Donald S. Shepard, Ph.D. Schneider Institute for Health Policy Heller School, MS 035 Brandeis University Waltham, MA 02454-9110 USA Tel: 781-736-3975 • Fax: 781-736-3965 Web: http://www.sihp.brandeis.edu/shepard E-mail: Shepard@Brandeis.edu 11

  12. Monday, Oct. 15:Modeling in Cost-Effectiveness Analysis by  Donald S. Shepard, Ph.D. Schneider Institute for Health Policy Heller School, MS 035 Brandeis University Waltham, MA 02454-9110 USA Tel: 781-736-3975 • Fax: 781-736-3965 Web: http://www.sihp.brandeis.edu/shepard E-mail: Shepard@Brandeis.edu 12

  13. Monday, Oct. 22:Applications of cost-effectiveness analysis to other sectors by  Donald S. Shepard, Ph.D. Schneider Institute for Health Policy Heller School, MS 035 Brandeis University Waltham, MA 02454-9110 USA Tel: 781-736-3975 • Fax: 781-736-3965 Web: http://www.sihp.brandeis.edu/shepard E-mail: Shepard@Brandeis.edu 13

  14. Wednesday, Sept. 5 andMonday, Sept 10:Principles of Cost-Effectiveness Analysis by  Donald S. Shepard, Ph.D. Schneider Institute for Health Policy Heller School, MS 035 Brandeis University Waltham, MA 02454-9110 USA Tel: 781-736-3975 • Fax: 781-736-3965 Web: http://www.sihp.brandeis.edu/shepard E-mail: Shepard@Brandeis.edu 14

  15. Key book • ·Gold, Marthe R. et al. Chapter 6 “Estimating Cost in Cost-Effectiveness Analysis”, Cost-Effectiveness in Health and Medicine. Oxford University Press, New York, 1996, pp.176-209. • (Reports the findings of the 1993 U.S. Panel on Cost-Effectiveness Analysis.) 15

  16. Key article - 1 • Weinstein, M.C., Siegel J.E., Gold, M.R., Kamlet, M.S., and Russell L.B. “The Recommendations of the Panel of Cost-Effectiveness Analysis in Health and Medicine.” JAMA 1996; 276:1253-1258. (This article presents the background, issues, considerations, and final recommendations of the 1993 U.S. Panel on Cost-Effectiveness Analysis for the reference case analysis.) 16

  17. 17

  18. Cost-effectiveness ratio • Numerator: net use of health resources • Denominator: net improvement in QALYs 18

  19. Standard reference case • Standard set of assumptions for consistent analyses • Comparator is the status quo • Uses a discount rate of 3% 19

  20. First Principles of Cost‑Effectiveness Analysis in Health by DONALD S. SHEPARD, PhD MARK S. THOMPSON, PhD Public Health Reports 94:535-544, 1979 Web: http://www.sihp.brandeis.edu/shepard/downloads 20

  21. Steps inCost‑Effectiveness Analysis • DEFINE THE PROGRAM • COMPUTE NET COSTS • COMPUTE NET HEALTH EFFECTS • APPLY DECISION RULES • PERFORM SENSITIVITY ANALYSIS 21

  22. Develop alternative approaches to the problem Define precisely programs to be analyzed (who, what, where, when, and how) 1. DEFINE THE PROGRAM 22

  23. 2. COMPUTE NET COSTS • Compute gross program costs • Compute monetary savings • Discount costs and savings to present value • Compute net costs (gross costs less savings) 23

  24. 3. COMPUTE NET HEALTH EFFECTS(IN TERMS OF ADITIONAL YEARS OF HEALTHY LIFE) • Add • Additional years with full health • Additional years of disease • Improvement in health (no extension of life) • Negative effects (inconveniences and morbidity) 24

  25. 4. APPLY DECISION RULES • Identify case based on signs of net costs and net effects • Apply rule for appropriate case 25

  26. 5. PERFORM SENSITIVITY ANALYSIS • Vary uncertain parameters and recompute costs and health effects • Examine effects on decision 26

  27. Compute cost‑effectiveness (CE) ratio 27

  28. Example of a cost‑effectiveness (CE) ratio (Routine vaccinations in Ecuador, National, 1985 ) 28

  29. Decision rules in cost‑effectiveness analysis 29

  30. Conceptual uses of cost-effectiveness analysis • Objective: Develop more cost-effective programs • Start with an existing or proposed program • Identify potential modifications that improve effectiveness (e.g., more powerful intervention, improved patient adherence) • Identify potential modifications that reduce costs (e.g., offer intervention only to selected clients, deliver faster, use lower cost personnel) 30

  31. Conclusions • Cost-effectiveness analysis can be a useful tool in allocating resources • Quantitative application requires data about program effectiveness compared to the absence of program • Conceptual uses are very powerful tools to plan alternative design 31

  32. Cost analysis • Introduce cost exercise 32

  33. A health center needs to have an operating refrigerator to maintain the potency of vaccines . The table below shows the resource requirements for four type of refrigerators based on subjective estimates and an study for 100 centers in Uganda. The capital costs include the initial inventory of spares and repair requirement. Solar refrigerators and equipment have a 10-year useful life. Other types have a 5-year useful life. Quantities for operation are annual. Use a real interest rate of 3 percent per year. Complete the table (all the yellow cells) with data and computations. “Refrigerator Costing” Exercise 33

  34. “Refrigerator Costing” Exercise 34

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