In Health Care Cost Effective Approach Means What Peer Reviewed With Bibliography
BMJ. 2002 Oct 19; 325(7369): 891–894.
Price effectiveness analysis in health care: contraindications
Cam Donaldson
a School of Population and Health Sciences and Business Schoolhouse, University of Newcastle upon Tyne, Newcastle upon Tyne NE1 7RU, b Departments of Community Health Sciences and Economics, University of Calgary, Calgary, AB, Canada 52N 4N1, c Centre for Health and Policy Studies, University of Calgary
Gillian Currie
a Schoolhouse of Population and Health Sciences and Business School, University of Newcastle upon Tyne, Newcastle upon Tyne NE1 7RU, b Departments of Community Health Sciences and Economics, University of Calgary, Calgary, AB, Canada 52N 4N1, c Centre for Health and Policy Studies, University of Calgary
Craig Mitton
a School of Population and Health Sciences and Business concern School, University of Newcastle upon Tyne, Newcastle upon Tyne NE1 7RU, b Departments of Community Health Sciences and Economics, University of Calgary, Calgary, AB, Canada 52N 4N1, c Centre for Health and Policy Studies, University of Calgary
In economic evaluation of healthcare interventions, the ascendant practise is to summate an incremental cost effectiveness ratio, ordinarily based on the comparison of a new intervention against electric current practice. Canadian and UK health economists question the economical foundations of such an arroyo
Who could resist implementing the results of a study showing that using alteplase (tPA; tissue plasminogen activator) rather than streptokinase in handling of astute myocardial infarction costs $32 678 (£21 340; €33 330) per life twelvemonth gained, which the authors declare to be "toll constructive by customary criteria"?i Despite similar claims from several such studies, the impact of economic evaluation on setting of priorities remains unclear.2 – 4 Amid the reasons given for this are that opportunities for reducing costs while maintaining quality still ascend, and that cost effectiveness analyses do not have all factors into business relationship.iii
Achieving the same result more than cheaply—a success for economics—represents a archetype cost effectiveness approach. The possibility that not all factors have been considered suggests that other approaches may make economic evaluation more relevant. We contend that, beyond the classic approach, many studies labelled as toll effectiveness analyses of wellness care are not really that at all. At best, this mislabelling is confusing: at worst, conclusions drawn by the studies' authors could exist harmful to patients' health. Thus, there are contraindications to the use of cost effectiveness analysis in health care, and an alternative economic arroyo is required.
In this newspaper we revisit the basic economic principles. And then we make the case that lack of adherence to such principles, through current practice of reducing everything to incremental toll effectiveness ratios, leads to contraindications.
Economic evaluation
Basic principles
The basic principle of economical evaluations is opportunity cost: apply of resources to encounter a need incurs an opportunity cost, that beingness the benefit which could exist obtained past next all-time use of those resource. Efficiency arises when benefits are maximised and opportunity costs minimised. To achieve efficiency, information on both resource use (costs) and benefits (often health gains) that would result from alternative approaches is needed. By deriving estimates of the costs and the effectiveness of a new procedure, and relating them to the status quo, it should exist possible to decide whether the procedure is less costly and at least equally constructive equally the status quo, in which case it would be judged to be better (more technically efficient); or more costly and more constructive, in which case a judgment has to be made nearly whether the extra cost is worth the gains achieved (a question of allocative efficiency—if the number of patients treated remains the same, more than resources would have to exist allocated to this area of care at the expense of another group of patients).
Our main point is that cost effectiveness assay alone cannot handle questions of allocative efficiency, although it is currently beingness asked to practice and so, but in that location are economical evaluation approaches that tin. Data on effectiveness and toll can be brought together in a matrix, combining potential impacts on effectiveness and cost resulting from a modify in care (effigy). The optimum position is prison cell A1; costs are saved and greater effectiveness achieved relative to existing intendance. Interventions in cells A2 and B1 are similarly technically efficient and assigned a green light ("worthwhile"). Correspondingly, interventions in cells B3, C2, and C3 receive a red calorie-free ("not worthwhile"). In C1, a judgment is required every bit to whether the more costly new process is worthwhile in terms of additional effectiveness (the allocative efficiency question). Cell A3 also requires judgment, but that combination is unlikely to arise in exercise. Cell C1 is where alteplase falls, along with the results of many other "cost effectiveness analyses."
An old instance: colon cancer screening
To illustrate these principles, economists often refer to the case of the "6th stool guaiac."5 In the mid-1970s, the American Cancer Order recommended that, when cancer of the colon is suspected, each stool sample exist tested six times. The commencement part of a sample would be tested, and, if results were positive, the patient would have further confirmatory tests and, if necessary, treatment. If the first test was negative, the 2d part would be tested. If this was positive, the patient would accept farther confirmatory testing; if it was negative, the third part would be tested, and so on. A screened person would be declared negative simply after all half dozen parts had been tested. Neuhauser and Lewicki's analysis of this policy showed that almost 66 of the expected 72 cases are detected after the starting time round of testing, at a cost of $1175 per instance detected (tabular array one).5 The second circular of testing ensures that almost all cases are detected, at an average price of $1507 per case. Half dozen rounds capture all cases, at a price per example of $2451.
Table one
Cases of cancer detected in a 10 000 population by guaiac testing and costs ($) of screening with half-dozen sequential tests
| No of tests | Total cases detected | Full costs | Average costs |
|---|---|---|---|
| 1 | 65.0465 | 77 511 | 1175 |
| 2 | 71.4424 | 107 690 | 1507 |
| 3 | 71.9003 | 130 199 | 1811 |
| 4 | 71.9385 | 148116 | 2059 |
| 5 | 71.9417 | 163 141 | 2268 |
| 6 | 71.9420 | 176 331 | 2451 |
A more revealing manner to await at the data, however, is in terms of the actress costs and cases detected from each successive round of testing (tabular array two). Ii rounds detects an extra 5.5 cases compared with ane, the extra cost being $thirty 179, or $5492 per case. Six rounds over five provides little gain—at an extra cost per extra case detected of over $47 one thousand thousand. This intervention is definitely in cell C1 of the matrix in the figure.
Table 2
Incremental cases detected and incremental (and marginal) costs ($) of screening with six sequential tests
| No of tests | Total cases detected | Total costs | Average costs |
|---|---|---|---|
| 1 | 65.0465 | 77 511 | one 175 |
| 2 | 5.4956 | 30 179 | v 492 |
| 3 | 0.4580 | 22 509 | 49 150 |
| 4 | 0.0382 | 17 917 | 469 534 |
| 5 | 0.0032 | xv 024 | 4 724 695 |
| 6 | 0.0003 | 13 190 | 47 107 214 |
Referring dorsum to our theoretical concepts, the $47m indicates that the opportunity cost of the $13 190 spent on having half-dozen rounds rather than 5 is too bang-up. These resources could produce more benefit if used for another need elsewhere. In a cash limited healthcare organisation, nosotros would contract this service at the margin (by having fewer rounds of screening, just not eliminating the service) and reinvest the resources elsewhere, producing more benefits overall.
Contraindications to cost effectiveness analysis
The term cost effectiveness has a specific meaning in economic science. It has to do with organising inputs to production in the virtually technically efficient way, choosing the combination which minimises costs. Thus, cost effectiveness analysis is often introduced as a method for determining:
-
The least cost fashion of achieving a given output (or goal),6 often referred to in the health literature as cost minimisation assay
-
Whether the same level of output be achieved with less of one input
-
The best way of spending a given budget for a group of patients.7
All these are consequent with beingness in cells A1, A2, or B1 (or their opposites) in the figure. (Of course, in establishing cost effectiveness or improved technical efficiency, resources may be saved, raising a further allocative question of how to best spend these savings. Thus, technical and allocative efficiency are intimately linked.)
At this stage, note 2 points. Firstly, in the in a higher place contexts, price effectiveness assay does not involve comparisons of groups of patients with unlike diseases. If a cheaper way of achieving a given health comeback is found, this can merely be substituted for the previous class of care. The same group of patients is treated by whichever intervention is more toll effective. Secondly, cost effectiveness analysis volition not involve consideration of whether a upkeep allocated to handling of a given group of patients (or population sub-group) should be expanded. If the budget were expanded, we would exist in cell C1 of the figure, not A1, A2, or B1. The actress resources would take to come up from some other action which (contradicting the first betoken in this paragraph) would involve comparisons of groups in terms of whether the gains to be had by expanding the upkeep in one expanse are greater than potential gains elsewhere. Amongst other things, opportunity costs will depend on resources bachelor to the healthcare funder. Given this, it is inappropriate for report authors to make claims that an intervention should or should not be implemented or to say whether it is toll constructive when results fall in C1. Such recommendations could lead to inappropriate adoption or rejection of a new intervention. We must now consider what happens in cell C1.
Whither the incremental cost effectiveness ratio?
The most mutual output from an economical evaluation is the incremental toll effectiveness ratio, determined past measuring the incremental benefits (say, in life years) from a new intervention and dividing these by the incremental cost, usually relative to current do.
The apply of the incremental cost effectiveness ratio has ii important features for the purposes of our statement. Firstly, equally noted, cost and effectiveness are usually increased relative to the status quo. Secondly, information technology is mutual for results of studies that have used incremental cost effectiveness ratios to include recommendations. Our MEDLINE search of four major journals (New England Journal of Medicine, JAMA, Register of Internal Medicine, and the BMJ) from 1 January 1999 to 22 August 2001 for the terms "cost effective" or "cost effectiveness analysis" plant 132 articles. Review of the abstracts indicated that 86 articles were not relevant; 53 of these had no abstruse, and the remaining 33 were guideline reviews or non fully worked up, despite the terms appearing in the abstract. Thirty two of the 46 relevant articles belonged in cell C1, yet the interventions in these studies were described as toll effective or were recommended for use. Tabular array 3 presents a sample of these studies with their recommendations.6 – 16 To fund these more than expensive treatments, interventions for another grouping(s) would have to be sacrificed. Seven studies, also falling into cell C1, determined a ratio of costs and benefits without going on to present the results as cost effective, another vii presented results as incremental costs and benefits (with no ratio), and 1 fabricated a specific recommendation for implementation. None of the 46 recognised that extra resources would exist required to fund the "cost constructive" option. The 32 studies falling into jail cell C1 clearly contravene the points we have made in this commodity; the other 14 were indeterminate.
Table iii
Examples of the misuse of the incremental cost effectiveness ratio
| Comparators | Incremental toll effectiveness ratio | Authors′ comments/interpretations |
|---|---|---|
| Combined antiretroviral therapy for HIV v no therapy | $13 000-23 000 per QALY gained | Treatment of HIV infection with a combination of three antiretroviral drugs is a cost effective use of resources10 |
| three days' hospitalisation following acute myocardial infarction v 4 days' hospitalisation | $105 629 per life year saved | Hospitalisation of patients with elementary myocardial infarction beyond three days later on thrombolysis is economically unattractive by conventional standards11 |
| Depression molecular weight heparins five unfractionated heparin | $7820 per QALY gained | Depression molecular weight heparins are highly cost effective for inpatient management of venous thrombosis12 |
| Screening for hereditary haemochromatosis v no screening | $508 per life year saved | HFE testing for the C282Y mutation is a price effective method of screening relatives of patientsthirteen |
| Colonoscopy v occult blood testing | $11 382 per case detected | At a college full toll of screening, colonoscopy represents a cost effective culling considering additional life years are saved to justify additional costs14 |
| Specific mammography screening strategy in women over lxx 5 no screening | $66 773 per life year saved | . . . results in a small gain in life expectancy and is moderately price effective15 |
| Sildenafil v papaverine-phentolamine for erectile dysfunction | 3639 per QALY gained | Treatment with sildenafil is toll effective16 |
| Systematic diabetic eye screening five opportunistic screening | 32 per true positive identified | Replacing existing programmes with systematic screening for diabetic eye disease is justified17 |
| Ii view v i view mammography reading | 6589-6716 per case detected | Given limited resources, priority should be given to introducing double reading [as this] is more than cost effectivexviii |
Although many reviews have assessed how well studies comply with guidelines,17 ,18 no other reviews have scrutinised economic evaluations in this style. To our cognition, only one set of guidelines and two short commentaries consider that many "economic" evaluations seem to ignore some of the nuts of economics.19 – 21
Given that the incremental cost effectiveness ratio implies that more resources may need to be allocated to an area of care, information technology seems that the incremental cost effectiveness ratio has nothing to do with toll effectiveness, as it raises allocative (as opposed to technical) efficiency questions involving considerations of opportunity cost: where would these incremental resources come from, and what would have to be given upwardly? Going back to the example of alteplase, the authors state that its implementation would cost the United States most $500m a year.1 In a comparing with other interventions, these resources might be amend spent on HIV prevention or hip replacements, for example. Toll effectiveness analysis, as defined in the textbooks and in the figure, gives the impression that a more price effective treatment can be substituted for a less cost effective one, with no sacrifice involved; this is clearly not the case with incremental cost effectiveness analysis.
It is no wonder that decision makers get frustrated with health economics. Mayhap health economists have not been clear virtually limitations of economic evaluation. Recommendations that ignore opportunity costs will either non be relevant to determination makers or, if blindly followed, may result in inappropriate adoptions or rejections of treatments. This is partly the result of the electric current decision making culture, which expects an unambiguous respond. Within the confines of a particular evaluation (when report results fall into cell C1 of the effigy), however, that answer cannot be given, but only an insight on the magnitudes of the extra costs and benefits involved. Focusing on an incremental cost effectiveness ratio and whether it falls above or below unsaid thresholds of $50 000 or £30 000, or on vague comparing with "customary criteria," detracts from thinking about opportunity price, which is the basis of the economic arroyo. Making the adoption of the recommendations of the National Institute of Clinical Excellence compulsory adds a farther threat to adherence to the opportunity price principle.
Where now? Towards cost benefit analysis
Confusion abounds. Allocative efficiency questions are normally considered by price benefit analysis, which has been excluded in many national and international guidelines,22 leaving cost effectiveness assay to deal with questions of both technical and allocative efficiency. Yet toll effectiveness analysis as we have defined it is relatively uncomplicated for users of economic evaluation to translate, and it generates relatively simple decision rules. So, beyond this, where do we go?
The get-go applied message is that when a new treatment is more costly than electric current do, analysts should highlight the potential opportunity costs involved. A first step in this is to present an estimate of the extra costs of introducing the new handling, as was washed in the alteplase example. This is condign known as upkeep impact assay,23 although whether another label is needed is questionable. We already accept price benefit assay, which highlights decisions virtually allocating more than resources to an area of care, even if the benefits of doing and so are non measured in budgetary terms.
Secondly, if benefits are not measured in money, a residue sheet approach to toll benefit analysis tin can be taken.24 Costs and resources implications (whether negative or positive) are measured on i side, while benefits in terms of health and wellbeing are listed on the other. This framework is similar to the "cost consequence" blazon of analysis identified by some guidelines. Again, we question the need for adding yet another label to the economic evaluation repertoire. The same argument applies to "cost utility" assay. If we keep to definitions based on whether we are dealing with a question of technical or allocative efficiency, nosotros need only two types of evaluation characterization, cost effectiveness analysis and cost benefit assay.
Thirdly, in the C1 type of state of affairs (higher price, higher effectiveness), study authors should non be making recommendations nigh what treatments to accept or reject.
Fourthly, guidelines for economic evaluation rarely talk nearly efficiency concepts. Different types of efficiency questions which could be considered should exist outlined at the start of an evaluation, with the caveat that the economical evaluation may not give a clear cut result. Increased attending should be paid to defining efficiency in revisions of guidelines.
Conclusion
The perception that economic evaluation has been unsuccessful in health care may arise from expecting too much. In our view, classic cost effectiveness analysis has been successful. The concept of cost effectiveness does non use where new treatments crave more resources, and misuse of the incremental cost effectiveness ratio, oft by researchers, may pb to inefficient treatments being adopted. These contraindications to cost effectiveness analysis should exist considered when it is used.
Effectiveness-cost matrix for comparing of new treatment with current care
Footnotes
Funding: CD is PPP Foundation professor of health economics at the Academy of Newcastle upon Tyne; he is also Canadian Institutes for Health Research senior investigator and Alberta Heritage senior scholar at the University of Calgary. GC is an Alberta Heritage population health investigator. CM is funded by the Canadian Health Services Research Foundation. The views expressed in this commodity are those of the authors, and not of the funders.
Competing interests: None declared.
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