Primary Health Care Economic Evaluation Research Paper
What is health economics?
Health economics uses economic concepts and methods to understand and explain how people make decisions regarding their health behaviors and use of health care. It also provides a framework for thinking about how society should allocate its limited health resources to meet people’s demand/need for health care services, health promotion and prevention.Primary Health Care Economic Evaluation Research Paper
What is economic evaluation?
Economic evaluation is closely related to health economics. Economic evaluation generates evidence-based information, mainly through cost-effectiveness analysis or cost-benefit analysis, to assist and improve decision making of allocating health care resources. All public health decisions have resource implementations and it is critical to consider these when making decisions.Primary Health Care Economic Evaluation Research Paper
Relevance
Health economics and economic evaluation are two important fields. Their theoretical perspectives and empirical methodology are essential for health care workers, health and medical professionals, health policy makers and others who wish to pursue a professional career in health.
Clinicians working in accident and emergency (A&E) medicine will have little difficulty accepting the idea that health service resources are scarce. Increasing demands for health care and limited resources with which to meet them are a familiar part of the emergency environment. All clinicians will be aware of the need to make difficult choices in deciding which health care interventions to fund.
Health economics tackles this problem of scarcity of resources and the implicit requirement to make choices that will maximize the benefit accrued from their consumption.1 It therefore entails far more than simply accounting or attempting to cut costs. Yet many of the concepts behind economic evaluation will be unfamiliar to practicing clinicians. The aim of this article is to explain some of the basic ideas behind economic evaluation.
WHY DO WE NEED ECONOMIC EVALUATION?
Clinical trials measure health care outcomes to determine the efficacy or effectiveness of health care interventions. If resources are unlimited, this is the only information we require to decide which interventions to use. We simply choose the most effective option. However, because resources are limited we also need to know whether the intervention represents good value for money. In other words, is it cost effective?Primary Health Care Economic Evaluation Research Paper
WHAT IS AN ECONOMIC EVALUATION?
Simply measuring the costs of an intervention will not tell us whether it is cost effective. A cheap intervention may represent poor value for money if it has little effect on outcome. Economic evaluation is the process of measuring cost effectiveness.
An economic evaluation will measure two parameters—cost and outcome (effect). Because two parameters are measured, the results of an economic evaluation will not necessarily tell you which treatment option is “better” in the same way that a clinical trial might. If the cheapest option is also the most effective, it will clearly be the most cost effective. In this situation the most cost effective option is described as being dominant. However, if the cheapest option is not the most effective the decision of which intervention to choose is less clear. In this situation the results will typically take the form of an incremental cost effectiveness ratio, expressed as the additional cost incurred per additional unit of effect accrued.
When no intervention is dominant economic evaluation will tell you how much extra you will need to be prepared to pay to achieve an improved outcome. As such, health economics will inform decision making, rather than dictating a decision. The idea that economic evaluation is only about determining which is the cheapest option is a simplistic and mistaken idea. It is also a dangerous one as it risks losing the valuable insights that economics can provide.
OPPORTUNITY COST
The concept of opportunity cost is fundamental to health economics.1, 2 It is based upon the idea that scarcity of resources means that expending resources on one health care activity inevitably means sacrificing activity somewhere else. The opportunity cost of undertaking an activity is defined as the benefits that must be foregone by not allocating resources to the next best activity.Primary Health Care Economic Evaluation Research Paper
For example, you decide to employ a chest pain nurse in your department to achieve National Service Framework targets for thrombolysis. To do this you must make tough choices elsewhere. Perhaps you must do without some clinical assistant sessions? But this will cause overall waiting times to increase. The opportunity cost of employing a chest pain nurse is the benefit you must forego by being unable to fund the next highest option on your list of priorities. If your next highest priority is more clinical assistant sessions, then the cost of foregoing these (an increase in waiting times) will be the opportunity cost of employing a chest pain nurse.
THE ECONOMIC VIEWPOINT
Definition and measurement of the opportunity cost of an intervention will depend upon the economic viewpoint taken. In the above example, we have taken an extremely limited viewpoint—that of the A&E department. We are only concerned with the A&E budget and what it can fund. If we took a broader perspective, that of the whole hospital, or even the whole health service, for example, our opportunity cost might be different. The highest unfunded priority for the hospital might be a waiting list initiative to reduce the coronary artery bypass graft waiting list. Foregoing this initiative would be the opportunity cost of employing a chest pain nurse if the hospital viewpoint was taken.Primary Health Care Economic Evaluation Research Paper
The economic viewpoint could be the department, the hospital, the health service, or society as a whole. The choice of viewpoint taken for an economic evaluation should be determined by the question you wish to answer and should be made clear in any description of an economic evaluation.
If an economic evaluation were to be undertaken to inform the allocation of a fixed departmental budget, the departmental perspective would be appropriate. However, if the evaluation is to inform a case for extra funding for the department from within the hospital budget then the hospital perspective is the most appropriate. It is good practice to take as broad a perspective as possible (that is, societal). The societal perspective encompasses the data for all other perspectives and ensures that decisions are made with the best information possible. An overly narrow perspective can fail to identify important “knock on” effects that can impact upon the success or failure of an intervention in the long term. For example, an economic evaluation of NHS Direct that took the primary care perspective and ignored A&E might represent a poor information base for decision making about the future of NHS Direct.Primary Health Care Economic Evaluation Research Paper
ECONOMIC EFFICIENCY
We often talk about trying to make the most efficient use of our available resources. Achieving economic efficiency entails obtaining maximum benefit from our given resources. There are two types of economic efficiency—technical efficiency and allocate efficiency.2
Technical efficiency simply entails achieving a given objective with the least possible expenditure. If our objective is to reduce A&E waiting times, we could achieve this by employing more medical staff or by training nurse practitioners to assess and treat patients with specific complaints. The most technically efficient option will be that which reduces waiting times at the lowest cost. We are simply concerned with how we meet our specified objective—reducing waiting times.
Allocative efficiency entails deciding what objectives we will attempt to meet and the extent to which we will try to meet them. Determining allocative efficiency entails making a value judgement about the relative merits of different objectives. The example given earlier, where we had to decide whether to allocate resources to employing a chest pain nurse to achieve door to needle time targets for thrombolysis, or employ clinical assistants to reduce overall waiting times, is an example of a decision relating to allocative efficiency. It is not simply a matter of deciding which intervention will best meet our objective, we must decide which objective is most worthwhile meeting.Primary Health Care Economic Evaluation Research Paper
Questions of technical efficiency are unsurprisingly rather easier to answer than those relating to allocative efficiency. Economic evaluation may be used to inform and illuminate issues of allocative efficiency, but because a value judgement is required, decision making will ultimately be up to clinicians, patients, politicians, and health care managers. Health economic data may tell us how much we will need to pay to achieve our objectives—reducing door to needle times and reducing overall waiting times. Health economic data can also tell us what health benefits we might expect from achieving certain targets, such as how many lives will be saved by reducing door to needle time by a specific amount. More controversially, comparisons between interventions, such as those presented in a “marginal cost per QALY league table” (see below), can address some of the issues of allocative efficiency. Ultimately, however, deciding which benefits are worthwhile will entail some sort of value judgement.
WHAT ARE THE KEY FEATURES OF AN ECONOMIC EVALUATION?
An economic evaluation is a comparison of the costs and outcomes of health care interventions. As such it provides a measurement of economic efficiency. To be an economic evaluation a study must have two essential features:Primary Health Care Economic Evaluation Research Paper
Both costs and outcomes must be analyzed, and
More than one alternative strategy must be compared.
It should be clear by now that economic evaluation is not simply a matter of measuring costs of interventions and then choosing the cheapest option. This is clearly foolish and not an approach any of us would take in our lives outside health care. If you wanted to buy a product you wouldn’t simply buy the cheapest available regardless of quality, your personal preference, or whether it did what it was supposed to do. Equally, we do not always buy the best product available as we wish to have money left to buy food. Cost is important, but no more important than the outcome from the expenditure. It may ultimately be appropriate to choose on the basis of cost alone, but only if we can show that outcomes are equivalent.
Measuring outcome from health care interventions is one of the great challenges of health economics. It is astonishing, considering the amount of money we spend on health care, that our ability to measure benefit from health care is only recently receiving serious attention, and remains relatively crude. We collect reams of data showing how many new patients attend our department, how many investigations we do, and how many treatments we do. Yet is any of this of any benefit to our patients?Primary Health Care Economic Evaluation Research Paper
Just as we would not accept evidence of effectiveness without comparison to a control group, we cannot measure cost effectiveness without some sort of comparison. The choice of comparative may be difficult, because we want to choose the best alternative from the point of view of both costs and benefits. For this reason, if there is no alternative strategy that is of proven effectiveness, the most appropriate comparator may well be a “do nothing” alternative. Doing nothing certainly should not cost much, and, if there is no evidence that the intervention being investigated is effective, will be relatively cost effective.