HSPM 818: Economic Evaluation and Policy Analysis of Health Services. Fall Semester 2011, Week 1: Introduction Assistant Professor Brian Chen

Transcription

1 HSPM 818: Economic Evaluation and Policy Analysis of Health Services Fall Semester 2011, Week 1: Introduction Assistant Professor Brian Chen

2 Introductions Course description Course objective Assignments Grading standards What is Economic Evaluation? Characteristics/Types Use Pitfalls and caveats Layout of course/explanation of syllabus Agenda

3 Class times meets weekly on Thursday, 5:00 7:00 p.m. HESC 103 Office hours to be discussed address: Office number: (803) Assignments: reading and leading classroom discussions; final project Grading: Synthesis of classroom discussions (due on date of your discussion) (25%) Quality of your discussion/presentation (25%) Final project that employs concepts learned in the class to evaluate a hypothetical or real health care program (50%) Note: Students should be familiar with basic concepts of microeconomics Preliminary information

4 Exploring how tools of economics and similar quantitative methods might be applied to health care decisions Acquainting students with the state of the art and the difficulties in applying cost-effectiveness and costbenefit analysis in health care Providing graduate students in public health an opportunity to learn how other professional groups, particularly in management, think about such problems and how to communicate with colleagues from other fields by classroom discussion of and inter-disciplinary projects investigating these issues Course objectives

5 You should be able to appraise the quality of the existing literature You should be equipped with the tools to undertake an evaluation, perhaps as part of a multidisciplinary team including economists, epidemiologists and clinicians At the end of the course:

6 Palin, Aug. 7, 2009: The America I know and love is not one in which my parents or my baby with Down Syndrome will have to stand in front of Obama s death panel so his bureaucrats can decide, based on a subjective judgment of their level of productivity in society, whether they are worthy of health care. Motivation

7 U.S. spends considerably more on health care than other industrialized nations

8 Not only does the US spend more, the growth in health spending is also greater

9 U.S. does not appear to obtain better health outcomes despite greater health expenditures

10 Heterogeneity in behavioral, genetic, and other factors not related to health care systems Failure to include nonobservable values Failure to account for different intensities of inputs Unless one nation uses the same inputs for greater outputs or fewer inputs for the same outputs, it is hard to infer the productive efficiency of its health care system Caveats

11 The U.S. already spends more on health care with arguably less desirable health results are limited Wants are unlimited Is rationing the solution? Rationing = death panels? Does the US really not ration health care? IF RATIONING IS NECESSARY, ON WHAT BASIS DO WE RATION CARE? Dilemmas and solution(s)?

12 Palin objects to subjective criteria used to decide who lives and who dies Can we find objective criteria to ration care? ECONOMIC EVALUATION OF HEALTH CARE PROGRAMS? A way to ration health care?

13 Pre-1990s - medical research focused on biomedical efficacy of medical technology Beginning in the 1990s - greater emphasis on cost, quality (of life), and patient satisfaction Pitfalls of economic evaluation? Complexity of evaluation (compare: automobile fuel efficiency) Moral hazard Public good Other limitations: difficulty in valuing changed health states How to address these pitfalls? Refereed process (not fool-proof, however) Clear documentation of data, assumptions, methodology Sensitivity analysis Enters Economic Evaluation of Health Care Programs

14 Instead of just asking, does Drug X lower cholesterol levels, economic evaluation can help us frame the discussion for: Should all women be screened for cervical cancer? Every year? Every two years? Every three years? Every four years? Should all patients be prescribed lovastatin? Or only those with high cholesterol values? Only those who have previously suffered a heart attack? Or for those with elevated cholesterol values who previously suffered a heart attack? Should clinicians check the blood pressure of each adult who walks into their offices? Should planners launch a scoliosis screening program in secondary schools? Should individuals be encouraged to request annual checkups? Should a new, expensive drug be on the formulary? Types of questions economic evaluation can help decision-makers make difficult choices

15 Identify the relevant alternatives Clarifies the viewpoint in the analysis Establishes a boundary around magnitudes Other contributions economic evaluation makes

16 All economic evaluation compares the inputs (costs) and outputs (consequences) of two or more types of treatments. Remember, the status quo (do nothing new) is always an option What is economic evaluation

17 Distinguishing Characteristics of Health Care Evaluation Is there comparison of two or more alternatives? Are both costs (inputs) and consequences (outputs) of the alternatives examined? No Yes Examines only consequences Examines only costs 1A (Partial evaluation) 1B (Partial evaluation) 2 Partial evaluation No Outcome description Cost description Cost-outcome description Medical literature Burden of illness Reynell & Reynell (1972) 3A (Partial evaluation) 3B (Partial evaluation) 4 Full evaluation Yes Cost-effectiveness analysis Efficacy or effectiveness Cost analysis Cost-utility analysis evaluation Cost-benefit analysis Randomized clinical trials Lowson et al (1981) Focus Partial vs. full evaluation

18 Least broad to the most broad types of evaluation: Cost-Effectiveness Analysis Cost-Utility Analysis Cost-Benefit Analysis Types of economic evaluation

19 Consider the alternatives: renal transplant or dialysis Transplant Dialysis Cost $30,000 $10,000 +Life years 5 5 CEA $6,000/life year $2,000/life year When to use CEA? most effective when a decision-maker is confronted with a limited range of options and a limited budget Problems with CEA? Assumes a year of life is equal regardless of circumstances Cost-Effectiveness Analysis

20 Instead of comparing crude numbers (as does CEA), CUA adjusts these numbers for the "utility" that individuals or society attaches to them Most common adjustments: QALY, DALY, HYE, SYLE Consider renal transplant vs. dialysis again: Transplant Dialysis Cost $30,000 $10,000 QALY 5*1 = 5 5*0.2 = 1 CUA $6,000/QALY $10,000/QALY Problems with CUA? No universal standard for conversion (e.g., broken arm to a sign painter vs. a translator) When to use CUA? Cost-Utility Analysis

21 CEA/CUA are constrained maximization problems Relative effectiveness compared Does not ask whether it makes sense to expand budget CBA takes the value of the program minus the cost So that CBA is the only method that may justify expansion of a program (rather than choosing between two or more programs) Transplant Dialysis Cost $30,000 $10,000 Consequence $50,000 $20,000 Consequencecost $20,000 $10,000 Problems with CBA? Need to translate life years, QALYs, etc, into monetary values Cost-Benefit Analysis

22 Depends on Data availability Particular context (whether it makes sense to combine any of the methods) Objectives of the decision maker Perspectives Welfarist Extrawelfarist Pragmatist Which method (CEA/CUA/CBA) should we use?

23 Costs Consequences Identification Measurement Valuation (C1) preferences (U) consumed (C2) (C3) Health care program changed created Effects (E) (S1) Willingness to pay (W) created (V) Global willingness to pay losses (C4) (S2) (S3) Value of resources gains (S4) Flow chart of economic evaluation

24 Costs Consequences Identification Measurement Valuation (C1) preferences (U) consumed (C2) (C3) Health care program changed created Week 2 Effects (E) (S1) Willingness to pay (W) created (V) Global willingness to pay losses (C4) (S2) (S3) Value of resources Week 2: Overview gains (S4) Course syllabus in relation to this flow chart

25 Costs Consequences Identification Measurement Valuation consumed (C1) (C2) (C3) Health care program changed created Week 2 Effects (E) (S1) preferences (U) Willingness to pay (W) created (V) Global willingness to pay losses (C4) (S2) (S3) Value of resources Weeks 3, 4, 5, 7, 8 (Measuring health effects under uncertainty) gains (S4) Course syllabus in relation to this flow chart

26 Costs Consequences Identification Measurement Valuation consumed (C1) (C2) (C3) Health care program changed created Effects (E) (S1) preferences (U) Week 2 Willingness to pay (W) created (V) Global willingness to pay losses (C4) (S2) (S3) Value of resources Weeks 6, 9 (Valuing health state changes) gains (S4) Course syllabus in relation to this flow chart

27 Costs Consequences Identification Measurement Valuation (C1) preferences (U) consumed (C2) Week 2 (C3) Health care program changed created Effects (E) (S1) Willingness to pay (W) created (V) Global willingness to pay losses (C4) (S2) (S3) Value of resources Week 7 (Cost analysis) gains (S4) Course syllabus in relation to this flow chart

28 Costs Consequences Identification Measurement Valuation (C1) preferences (U) consumed (C2) (C3) Week Health care program 2 changed created Effects (E) (S1) Willingness to pay (W) created (V) Global willingness to pay losses (C4) (S2) (S3) Value of resources Week 10 (Positivity criterion) gains (S4) Course syllabus in relation to this flow chart

29 Costs Consequences Identification Measurement Valuation consumed Week 2 (C1) (C2) (C3) Health care program changed created Week Effects (E) 2 Week 2 (S1) preferences (U) Willingness to pay (W) created (V) Global willingness to pay losses (C4) (S2) (S3) Value of resources (C1 S1)/E gains (S4) CEA 1: Flow chart demonstrates how the building blocks can be arranged to perform economic evaluation

30 Costs Consequences Identification Measurement Valuation consumed (C1) (C2) Week 2 (C3) Health care program changed created Week Effects (E) 2 (S1) preferences (U) Willingness to pay (W) created (V) Global willingness to pay losses (C4) (S2) Week 2 (S3) Value of resources [(C1+C2+C3+C4) (S1+S2+S3+S4)]/E gains (S4) CEA2: Flow chart demonstrates how the building blocks can be arranged to perform economic evaluation

31 Costs Consequences Identification Measurement Valuation Week 2 (C1) Week preferences (U) 2 consumed (C2) (C3) Health care program changed created Effects (E) Week 2 (S1) Willingness to pay (W) created (V) Global willingness to pay losses (C4) (S2) (S3) Value of resources (C1 S1)/U gains (S4) CUA 1: Flow chart demonstrates how the building blocks can be arranged to perform economic evaluation

32 Costs Consequences Identification Measurement Valuation (C1) Week preferences (U) 2 consumed (C2) Week 2 (C3) Health care program changed created Effects (E) (S1) Willingness to pay (W) created (V) Global willingness to pay losses (C4) (S2) Week 2 (S3) Value of resources [(C1+C2+C3+C4) (S1+S2+S3+S4)]/U gains (S4) CUA 2: Flow chart demonstrates how the building blocks can be arranged to perform economic evaluation

33 Costs Consequences Identification Measurement Valuation (C1) preferences (U) (C2) changed Effects (E) Willingness to pay (W) consumed Week 2 (C3) Health care program created (S1) created (V) Global willingness Week 2 to pay (W ) losses (C4) (S2) (S3) Value of resources W (C1+C2+C3+C4) gains (S4) CBA 1: Flow chart demonstrates how the building blocks can be arranged to perform economic evaluation

34 Costs Consequences Identification Measurement Valuation (C1) preferences (U) consumed (C2) Week 2 (C3) Health care program changed created Effects (E) (S1) Willingness to pay (W) Week 2 created (V) Global willingness to pay losses (C4) (S2) Week 2 (S3) Value of resources (W+V+S1+S2+S3+S4) (C1+C2+C3+C4) gains (S4) CBA 2: Flow chart demonstrates how the building blocks can be arranged to perform economic evaluation

35 Week 11: Economic evaluation of efficacy Week 12: Economic evaluation of quality Week 13: Economic evaluation of insurance coverage Week 14: Some notes on methodology: sensitivity analysis Remainder of the course focuses on application of the materials learned

36 All of these building blocks (costs, savings, effects, utility, value, willingness to pay) can be combined depending on the perspective of the analyst/decision-maker, and which combination is most appropriate depends on the specific program being evaluated, the institutional context, and even data limitations. THERE IS NO ONE STANDARD FORM OF ECONOMIC EVALUAION. COMPLEXITY OF EVALUATION SHOULD MATCH THE BREADTH OF THE QUESTION POSED Conclusion

37 What is economic evaluation? What types of economic evaluation are there? What are the pros/cons of each type of evaluation? When should one (or more) of the evaluation methods be preferentially used over the others? Learning objectives for week 1