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Knowing what you get for what you pay

Knowing what you get for what you pay . An introduction to cost effectiveness FETP India. Objective this lecture. Understand how cost effectiveness studies are conducted. Key areas. Types of analysis Conducting a cost effectiveness analysis Generalized cost effectiveness .

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Knowing what you get for what you pay

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  1. Knowing what you get for what you pay An introduction to cost effectiveness FETP India

  2. Objective this lecture Understand how cost effectiveness studies are conducted

  3. Key areas • Types of analysis • Conducting a cost effectiveness analysis • Generalized cost effectiveness

  4. Cost benefit analysis • Concept • Use of dollars as the common metric • No use of health outcome • Results expressed in benefit-cost ratio • Advantages • Allows comparisons with non health programmes • Useful when intervention generates non health outcomes • Disadvantages • Controversial • Assigns a value to human life

  5. Planning Relevance Programming Implementation Adequacy Inputs Process Output Programmed resources----------- Allocatedresources Norms and procedures---------- Applications of norms / procedures Agreed objectives / targets----------------- Achieved objectives / targets Outcome Effectiveness Progress Efficiency Public health managerial processes Impact

  6. Efficiency and effectiveness • Efficiency • Relationship between the output obtained and the efforts (input) invested • Effectiveness • Degree of attainment of pre-determined objectives of a programme (e.g., in terms of reducing death / disability)

  7. Definition of cost effectiveness analysis • Method used to evaluate public health interventions in terms of cost per health outcome • No attempt made to assign a monetary value to disease averted • Outcome used: • Cases • Deaths • Years of life • DALYs

  8. Cost effectiveness analysis: Relevance • Estimates cost per health outcome • Provide additional information to decision makers • Is not the only criteria to take into account to make decisions

  9. Effectiveness • Obtain documented data on effectiveness • Measure effectiveness precisely • Meta analysis • Confidence intervals • Document assumptions The cheapest way to go to the moon is to jump. However, we don’t do it because it does not work

  10. Cost utility analysis • Subset of cost effectiveness analysis • Take YLLs or DALYs as outcome

  11. Discounting • Reflect time preference • Applies to costs • Applies to effects • Subject to discussion

  12. Conducting a cost effectiveness study • Frame the problem • Identify interventions • Define outcome measures • Estimate net costs • Estimate effects • Compile costs and effects • Perform sensitivity analysis

  13. 1. Frame the problem • Write study question • Define economic perspective • Ministry of health • Health system • Societal • Chose time frame for intervention • Absorb start up costs • Chose analytic horizon for consequences

  14. 2. Identify interventions • Take the baseline • “Do nothing” scenario • Define potential interventions • Describe components • Relate to measurable effectiveness

  15. 3. Define outcome measures • Intermediate outcomes • Cases identified, treated • Final outcomes • Cases prevented • Life saved • YLLs • DALYs Cost utility

  16. 4. Estimate costs • Cost of the intervention • ? Cost of the disease averted • Medical costs • Non medical costs • ? Productivity losses Net costs = Cost intervention - Cost disease averted

  17. 5. Estimate effects • Burden of disease • Incidence of disease • Incidence of complications (natural history) • Utility calculations • Effectiveness of intervention • Documented effectiveness estimates • Compliance • Coverage

  18. 6. Compile costs and effects • Calculation of cost effectiveness ratio • Average • Incremental • Can address various options • Coverage • Discounting

  19. 7. Perform sensitivity analysis • Parameters to examine • Costs • ps and qs • Discounting • Effectiveness • Burden of disease • Combinations • Advanced analysis

  20. Key elements of the report of a cost effectiveness study • Study perspective, time frame and horizon • Study question • Assumptions • Description of interventions • Identification of relevant costs • Cost effectiveness ratios • Sensitivity analysis • Discussion

  21. Cost effective and cost saving • Some interventions have negative net costs • Cost saving interventions are: • Uncommon • Subject to distributional effects • Cost effective does not mean cost saving • Human life is not “cost effective” • Investment is needed to sustain it

  22. Cost effectiveness criteria • Not cost effective • Cost per DALY above 3 GDP / capita • Cost effective • Cost per DALY under 3 GDP / capita • Highly cost effective • Cost per DALY under 1 GDP / capita WHO commission on macroeconomics and health

  23. Cost effectiveness versus burden of disease • Cost effective intervention can prevent only a small burden of disease • Some large sources of burden of disease may be preventable through non cost effective interventions

  24. Cost effectiveness of various health interventions

  25. Limitations of traditional cost-effectiveness studies • Different horizons • Different types of costs included • Different costing methods • Different discounting rates • Different outcome measures • Incremental approach • Existing interventions not reconsidered • One dimension • May not address variations by regions • Conflicts of interests

  26. The WHO CHOICE project: Generalized cost-effectiveness • Identical horizons • Standardized approach to including costs • Unique costing methods • Standardized discounting policy • DALY as outcome measures • Null case base • Existing interventions reconsidered • Multiple dimension • Region specific • Science dissociated from advocacy

  27. Generalized cost effectiveness: Challenges • Recent concept • Difficulties in adapting theoretical concepts • Resource intensive • Single study team (at the moment)

  28. Generalized cost effectiveness: Example of results for the SEAR D region

  29. Other criteria to chose an intervention • Feasibility • Ethics • Equity • Sustainability • Acceptability

  30. Take home messages • Chose cost effectiveness analysis • Frame the question right • Follow up progress on the generalized cost effectiveness concept

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