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
Adequacy
Implementation
Inputs
Programmed
resources
----------Allocated
resources
Process
Output
Norms and
procedures
Agreed
objectives /
targets
----------------Achieved
objectives /
targets
---------Applications
of norms /
procedures
Progress
Efficiency
Outcome
Impact
Effectiveness
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
Chose time frame for intervention
Ministry of health
Health system
Societal
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
Effectiveness of intervention
Documented effectiveness estimates
Compliance
Coverage
6. Compile costs and effects
Calculation of cost effectiveness ratio
Average
Incremental
Can address various options
Coverage
Discounting
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 costs
DALY averted
Average CE
ratio
Disinfection at point of use with education
523,019,455
3,248,440
161
Halving the population without improved
water supply
585,826,305
951,318
616
Halving the population without improved
water supply and sanitation
5,907,522,335
4,908,162
1,204
Improved water supply and sanitation (98%)
11,578,743,777
9,627,739
1,203
Improved water supply and sanitation with
disinfection (98%)
14,184,319,328
25,443,560
557
Piped water supply and sewage with
treatment (98%)
39,689,844,066
38,442,566
1,032
Intervention
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
