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
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
Public health managerial processes
Planning
Relevance
Programming Implementation
Adequacy
Process
Norms and procedures
Inputs
Programmed resources ----------Allocated resources
Output
Agreed objectives / targets ----------------Achieved objectives / targets
---------Applications of norms / procedures
Outcome
Impact
Effectiveness
Progress Efficiency
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)
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
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
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 dont do it because it does not work
Cost utility analysis
Subset of cost effectiveness analysis Take YLLs or DALYs as outcome
Discounting
Reflect time preference Applies to costs Applies to effects Subject to discussion
Conducting a cost effectiveness study
1. 2. 3. 4. 5. 6. 7. Frame the problem Identify interventions Define outcome measures Estimate net costs Estimate effects Compile costs and effects Perform sensitivity analysis
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
2. Identify interventions
Take the baseline
Do nothing scenario
Define potential interventions
Describe components Relate to measurable effectiveness
3. Define outcome measures
Intermediate outcomes
Cases identified, treated
Final outcomes
Cases prevented Life saved YLLs DALYs
Cost utility
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
5. Estimate effects
Burden of disease
Incidence of disease Incidence of complications (natural history) Utility calculations Documented effectiveness estimates Compliance Coverage
Effectiveness of intervention
6. Compile costs and effects
Calculation of cost effectiveness ratio
Average Incremental Coverage Discounting
Can address various options
7. Perform sensitivity analysis
Parameters to examine
Costs
ps and qs
Discounting Effectiveness Burden of disease
Combinations Advanced analysis
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
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
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
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
Cost effectiveness of various health interventions
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
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
Generalized cost effectiveness: Challenges
Recent concept Difficulties in adapting theoretical concepts Resource intensive Single study team (at the moment)
Generalized cost effectiveness: Example of results for the SEAR D region
Intervention Disinfection at point of use with education Halving the population without improved water supply Halving the population without improved water supply and sanitation Improved water supply and sanitation (98%) Improved water supply and sanitation with disinfection (98%) Piped water supply and sewage with treatment (98%) Intervention costs 523,019,455 585,826,305 5,907,522,335 11,578,743,777 14,184,319,328 39,689,844,066 DALY averted 3,248,440 951,318 4,908,162 9,627,739 25,443,560 38,442,566 Average CE ratio 161 616 1,204 1,203 557 1,032
Other criteria to chose an intervention
Feasibility Ethics Equity Sustainability Acceptability
Take home messages
Chose cost effectiveness analysis Frame the question right Follow up progress on the generalized cost effectiveness concept
