Economic Evaluation of Health Programs

Economic Evaluation of Health Programs

Economic Evaluation of Health Programs

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Econ Eval Basics - Why Count Costs?

  • Economic Evaluation (EE): Systematic comparison of costs & consequences of ≥2 health interventions.
  • Why EE? Health resources are finite. EE informs choices to maximize health gains from limited budgets, ensuring efficiency & equity.
  • Importance of Counting Costs:
    • Enables comparison of alternative programs.
    • Ensures "value for money" (efficiency).
    • Guides optimal resource allocation.
    • Promotes accountability in health spending.

⭐ Scarcity of resources is the fundamental economic problem that necessitates economic evaluation in healthcare, aiming for allocative efficiency (doing the right things) and technical efficiency (doing things right).

Evaluation Types - Alphabet Soup CMA to CBA

📌 Mnemonic: Costs Minimized (CMA), Effectiveness compared (CEA), Utility valued (CUA), Benefits monetized (CBA).

TypeAcronymCost UnitOutcome UnitWhen to Use
Cost-Minimization AnalysisCMAMonetaryAssumed equivalentOutcomes identical.
Cost-Effectiveness AnalysisCEAMonetaryNatural units (e.g., lives saved, cases cured)Common health outcome.
Cost-Utility AnalysisCUAMonetaryQALYs (Quality-Adjusted Life Years), DALYsQuality of life key; diverse outcomes.
Cost-Benefit AnalysisCBAMonetaryMonetary unitsDiverse programs; benefits vs. costs.
  • QALY: $QALY = \text{Years of Life} \times \text{Utility Score}$ (Utility: 0=death, 1=perfect health).
  • ICER: Used in CEA/CUA. $ICER = (\text{Cost}_A - \text{Cost}_B) / (\text{Effect}_A - \text{Effect}_B)$.

Key Metrics & Terms - QALYs, DALYs, ICERs Oh My!

  • QALY (Quality-Adjusted Life Year): Measures health gain; 1 QALY = 1 year in perfect health.
    • $QALY = (Years \ of \ Life) \times (Utility \ Value)$ (0=death, 1=perfect).
  • DALY (Disability-Adjusted Life Year): Measures disease burden; 1 DALY = 1 lost year of healthy life.
    • $DALY = YLL (Years \ of \ Life \ Lost) + YLD (Years \ Lived \ with \ Disability)$.
  • ICER (Incremental Cost-Effectiveness Ratio): Compares interventions.
    • $ICER = (Cost_{New} - Cost_{Old}) / (Effect_{New} - Effect_{Old})$. Effect in QALYs/DALYs.
  • Discounting: Adjusts future costs/benefits to present value. Common rate: 3-5%.
  • Perspective: Whose costs are included (e.g., patient, societal)? Societal is broadest. 📌 QALYs = GAIN-LY (gained life), DALYs = DRAIN-LY (lost health).

⭐ A lower ICER indicates better value for money. WHO suggests interventions with an ICER < 1x GDP per capita per DALY averted are very cost-effective, and < 3x GDP per capita are cost-effective.

Evaluation Steps - The Grand Plan

  • Structured approach comparing economic aspects of health interventions.
  • Sequential steps ensure robust, transparent, comparable findings.

⭐ The perspective of analysis (e.g., societal, healthcare system, patient) is a fundamental early decision, as it dictates which costs and consequences are relevant and how they are measured.

High‑Yield Points - ⚡ Biggest Takeaways

  • Economic evaluation compares costs & consequences of ≥2 health interventions.
  • CMA (Cost-Minimization Analysis): Assumes identical outcomes, selects the least costly option.
  • CEA (Cost-Effectiveness Analysis): Outcomes in natural units (e.g., lives saved, cases prevented); uses ICER (Incremental Cost-Effectiveness Ratio).
  • CUA (Cost-Utility Analysis): A type of CEA; outcomes in QALYs (Quality-Adjusted Life Years) or DALYs (Disability-Adjusted Life Years).
  • CBA (Cost-Benefit Analysis): Costs & benefits in monetary units; uses Benefit-Cost Ratio (BCR) or Net Benefit.
  • Perspective of analysis (e.g., societal, healthcare system, patient) is crucial as it determines which costs and benefits are included.
  • Discounting adjusts future costs & benefits to their present value due to time preference for money and resources.

Practice Questions: Economic Evaluation of Health Programs

Test your understanding with these related questions

Based on healthcare utility values and life expectancy, which of the following measures can be calculated? Consider a scenario where the average life expectancy for a woman in Japan is 87 years, and there is an increase in life expectancy due to healthcare advancements.

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Flashcards: Economic Evaluation of Health Programs

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The _____ analysis provides information on how much input is needed to produce a unit amount of output.

TAP TO REVEAL ANSWER

The _____ analysis provides information on how much input is needed to produce a unit amount of output.

input-output

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