ECONOMIC
EVALUATIONS
CHAPTER 14
PRESENTED BY : DR MUHAMMAD AHMED
INSTRUCTOR : DR SAJID NAZIR
CONTENT
01 WHAT IS AN ECONOMIC EVALUATION
02 PURPOSE OF ECONOMIC EVALUATION
03 COMPONENTS OF ECONOMIC ANALYSIS
04 TYPES OF ECONOMIC ANALYSIS
05 ASSESSMENT OF ECONOMIC EVALUATION
WHAT IS AN ECONOMIC EVALUATION
Economic Evaluation is the assessment of various
healthcare intervention programs and their impact
on patient outcome.
PURPOSE
To help decision-makers determine the most effective
and efficient use of resources to improve healthcare
outcomes.
ANALYSIS
Three Factors are considered
1) Cost
2) Program / Intervention
3) Outcome / Benefit
WHAT IS A COST?
The amount of resources needed for a healthcare
program.
Type of costs
1) Direct costs
2) Indirect costs
3) Oppurtunity costs
DIRECT COST ?
The expenses directly attributable to the provision of
healthcare services
Direct costs include
1) Medical Procedures and treatment
2) Medications and Pharmaceuticals
3) Diagnostic tests and laboratory services
4) Equipment and medical
5) Personnel salaries and wages
INDIRECT COST ?
Extra costs that happen because of medical treatment but
aren't directly related to giving medical care.
Indirect costs include
1) Transportation and travel expenses related to accessing healthcare
services
2) Costs associated with complications arising from the intervention.
OPPORTUNITY COST ?
The worth of other healthcare options that are missed out on
when resources are used for a specific healthcare treatment.
Example :
The oppurtunity cost of expanding the emergency department is
the establishment of a new outpatient clinic.
ANALYSIS
Three Factors are considered
1) Cost
2) Intervention and
3) Outcome / Benefit
TYPES OF ECONOMIC ANALYSIS
01 02 03 04
COST-MINIMIZATION COST-EFFECTIVENESS COST-UTILITY COST-BENEFIT
ANALYSIS ANALYSIS ANALYSIS ANALYSIS
COST-MINIMIZATION ANALYSIS
Indication
Used when the benefit/outcome is
IN
identical but the costs are different.
COST-MINIMIZATION ANALYSIS
The intervention and the benefit are identical but the cost is different.
The intervention with the least cost is selected
COST-MINIMIZATION ANALYSIS
Example
The number of successful surgical procedures at a hospital versus performing
the procedures at a private clinic.
Total Procedures Total Cost
Hospital 10 1000000/-
Private Clinic. 10 1500000/-
COST-MINIMIZATION ANALYSIS
The program with the least cost is selected
In the previous example , the hospital would be the preferred choice.
COST-EFFECTIVENESS ANALYSIS
Indication
Used to compare differnet interventions /
IN
programs with common health outcomes.
COST-EFFECTIVENESS ANALYSIS
Example
Analyzing different weight loss programs
........................................................ .Natural Unit/kg
Benefit/Output Intervention Total cost Kilos Lost Cost per unit
Weight Loss 1) Diet Program. 24000/- 6kg 4000/-
2) Exercise Program 30000/- 5kg 6000/-
M 3) Medication 25000/- 4kg 6250/-
COST-EFFECTIVENESS ANALYSIS
The decision rule is based on the cost per unit of output or output
per unit of costs.
COST-EFFECTIVENESS ANALYSIS
Since the diet program is the most cost effective per unit, it will be
selected as the preferred choice.
COST UTILITY ANALYSIS
Indication
Used to compare interventions/programs
IN
with different health outcomes/benefits.
Example : Comparing a patient being
treated for lung cancer
IN with a patient
undergoing dialysis treatment.
COST UTILITY ANALYSIS
In order to compare differnet outcomes, it is important to establish
a common outcome measure
The most commonly used common outcome measure is the Quality
Adjusted Life Year (QALY)
COST UTILITY ANALYSIS
Quality Adjusted Life Year (QALY)
QALY = Number of years gained from an intervention ×. Quality
IN
of life
Range of Quality of life : (0 - 1)
0 = Worst possible health state
1 = Best possible health state
Patient with Kidney disease has started undergoing dialysis for his treatment
Number of years gained from the treatment : 5 years
Perceived quality of life of the patient : 0.4
QALY : 5 × 0.4 = 2
COST UTILITY ANALYSIS
Cost per QALY is compared across
IN different interventions
The intervention with the least cost is chosen.
COST UTILITY ANALYSIS
Calculation of Quality Adjusted Life Year (QALY)
Example 1
Patient with Kidney disease has started undergoing dialysis for his
IN
treatment
Number of years gained from the treatment : 5 years
Perceived quality of life of the patient : 0.4
QALY : 5 × 0.4 = 2
Total Cost : 2000000/-
Cost per QALY : 2000000 / 2 = 1000000/-
COST UTILITY ANALYSIS
Calculation of Quality Adjusted Life Year (QALY)
Example 2
Patient with has started undergoingINtreatment for lung cancer
Number of years gained from the treatment : 5 years
Perceived quality of life of the patient : 0.4
Total Cost : 3000000/-
QALY : 3 × 0.4 = 1.2
Cost per QALY : 3000000 / 1.2 = 2500000 /-
COST BENEFIT ANALYSIS
Indication
Used to compare all the benefits and all the costs of
different interventions inINmonetary terms.
Example : Comparing a health promotion programs for
youths with a chronic care intervention for the elderly
IN
on a variety of output dimensions
COST BENEFIT ANALYSIS
Indication
Example : Comparing a health promotion programs for youths
with a chronic care intervention for the elderly on a variety
IN
of output dimensions
All the benefit and costs are converted into dollar amounts
and are then compared with INeach other. The intervention with
the greatest net benefit is chosen.
HOW TO ASSESS AN ECONOMIC EVALUATION ?
Was a well-defined and operational question formed?
IN
Comparison of alternatives, describes the viewpoint of the
analysis, and considers both INcosts and outcomes of the
alternatives.
HOW TO ASSESS AN ECONOMIC EVALUATION ?
Was a complete description of the alternative courses of
IN
action provided?
Comprehensive information about the different options being
compared, including who is involved,
IN
what actions are taken,
where they occur, and how frequently they occur
HOW TO ASSESS AN ECONOMIC EVALUATION ?
Was there evidence of program effectiveness?
IN
Examines how the effectiveness of the programs being
compared is established. It assesses
IN
whether effectiveness is
based on reliable evidence from literature or other sources.
HOW TO ASSESS AN ECONOMIC EVALUATION ?
Were all important costs and outputs for each course of
IN
action identified?
All relevant costs and outcomes associated with each
IN
alternative being compared
HOW TO ASSESS AN ECONOMIC EVALUATION ?
Were costs and outputs measured accurately?
IN
It examines whether costs and outcomes are measured using
appropriate units and methods,
IN
considering both direct and
indirect costs.
HOW TO ASSESS AN ECONOMIC EVALUATION ?
Were costs and outputs valued credibly?
IN
It ensures that costs are measured in a consistent manner
IN
and are adjusted for inflation or deflation as necessary
HOW TO ASSESS AN ECONOMIC EVALUATION ?
Were costs and outputs adjusted for differential timing?
IN
It considers whether discounting is applied to future costs
and outcomes to facilitateIN meaningful comparisons.
HOW TO ASSESS AN ECONOMIC EVALUATION ?
Was an incremental analysis of costs and outputs
IN
performed?
It assesses whether the analysis identifies the incremental
costs and benefits associated
IN with each alternative.
HOW TO ASSESS AN ECONOMIC EVALUATION ?
Was a sensitivity analysis performed?
IN
It assesses whether variations in key assumptions or
parameters are explored toIN
understand their impact on the
results
HOW TO ASSESS AN ECONOMIC EVALUATION ?
Did the presentation of the findings include all issues of
IN
concern to the users of the analysis?
It assesses whether the presentation of findings provides
relevant information for decision-making
IN and considers the
context in which the analysis will be used.
?
Ahmed
