Cost Effectiveness and Resource Allocation - Latest articles

The costs of traumatic brain injury due to motorcycle accidents in Hanoi, Vietnam

2008-08-22

Background: Road traffic accidents are the leading cause of fatal and non-fatal injuries in Vietnam. The purpose of this study is to estimate the costs, in the first year post-injury, of non-fatal traumatic brain injury (TBI) in motorcycle users not wearing helmets in Hanoi, Vietnam. The costs are calculated from the perspective of the injured patients and their families, and include quantification of direct, indirect and intangible costs, using years lost due to disability as a proxy. MethodThe study was a retrospective cross-sectional study. Data on treatment and rehabilitation costs, employment and support were obtained from patients and their families using a structured questionnaire and The European Quality of Life instrument (EQ6D). Results: Thirty-five patients and their families were interviewed. On average, patients with severe, moderate and minor TBI incurred direct costs at USD 2,365, USD 1,390 and USD 849, with time lost for normal activities averaging 54 weeks, 26 weeks and 17 weeks and years lived with disability (YLD) of 0.46, 0.25 and 0.15 year, respectively. Conclusions: All three component costs of TBI were high; the direct cost accounted for the largest proportion, with costs rising with the severity of TBI. The results suggest that the burden of TBI can be catastrophic for families because of high direct costs, significant time off work for patients and caregivers, and impact on health-related quality of life. Further research is warranted to explore the actual social and economic benefits of mandatory helmet use.

People's willingness to pay for health insurance in rural Vietnam

Curt Lofgren, Nguyen X Thanh, Nguyen TK Chuc, Anders Emmelin and Lars Lindholm — 2008-08-11

Background: The inequity caused by health financing in Vietnam, which mainly relies on out-of-pocket payments, has put pre-payment reform high on the political agenda. This paper reports on a study of the willingness to pay for health insurance among a rural population in northern Vietnam, exploring whether the Vietnamese are willing to pay enough to sufficiently finance a health insurance system. Methods: Using the Epidemiological Field Laboratory for Health Systems Research in the Bavi district (FilaBavi), 2070 households were randomly selected for the study. Existing FilaBavi interviewers were trained especially for this study. The interview questionnaire was developed through a pilot study followed by focus group discussions among interviewers. Determinants of households' willingness to pay were studied through interval regression by which problems such as zero answers, skewness, outliers and the heaping effect may be solved. Results: Households' average willingness to pay (WTP) is higher than their costs for public health care and self-treatment. For 70-80% of the respondents, average WTP is also sufficient to pay the lower range of premiums in existing health insurance programmes. However, the average WTP would only be sufficient to finance about half of total household public, as well as private, health care costs. Variables that reflect income, health care need, age and educational level were significant determinants of households' willingness to pay. Contrary to expectations, age was negatively related to willingness to pay. Conclusions: Since WTP is sufficient to cover household costs for public health care, it depends to what extent households would substitute private for public care and increase utilization as to whether WTP would also be sufficient enough to finance health insurance. This study highlights potential for public information schemes that may change the negative attitude towards health insurance, which this study has uncovered. A key task for policy makers is to win the trust of the population in relation to a health insurance system, particularly among the old and those with relatively low education.

Are there differences between unconditional and conditional demand estimates? Implications for future research and policy

Budi Hidayat — 2008-08-05

Background: Estimations of the demand for healthcare often rely on estimating the conditional probabilities of being ill. Such estimate poses several problems due to sample selectivity problems and an under-reporting of the incidence of illness. This study examines the effects of health insurance on healthcare demand in Indonesia, using samples that are both unconditional and conditional on being ill, and comparing the results. Methods: The demand for outpatient care in three alternative providers was modeled using a multinomial logit regression for samples unconditional on being ill (N=16485) and conditional on being ill (N=5055). The ill sample was constructed from two measures of health status-activity of daily living impairments and severity of illness-derived from the second round of panel data from the Indonesian Family Life Survey. The recycling prediction method was used to predict the distribution of utilization rates based on having health insurance and income status, while holding all other variables constant. Results: Both unconditional and conditional estimates yield similar results in terms of the direction of the most covariates. The magnitude effects of insurance on healthcare demand are about 7.5% (public providers) and 20% (private providers) higher for unconditional estimates than for conditional ones. Further, exogenous variables in the former estimates explain a higher variation of the model than that in the latter ones. Findings confirm that health insurance has a positive impact on the demand for healthcare, with the highest effect found among the lowest income group. Conclusions: Conditional estimates do not suffer from statistical selection bias. Such estimates produce smaller demand effects for health insurance than unconditional ones do. Whether to rely on conditional or unconditional demand estimates depends on the purpose of study in question. Findings also demonstrate that health insurance programs significantly improve access to healthcare services, supporting the development of national health insurance programs to address under-utilization of formal healthcare in Indonesia.

Setting priorities for the health care sector in Zimbabwe using cost-effectiveness analysis and estimates of the burden of disease

Kristian Schultz Hansen and Glyn Chapman — 2008-07-28

Background: This study aimed at providing information for priority setting in the health care sector of Zimbabwe as well as assessing the efficiency of resource use. A general approach proposed by the World Bank involving the estimation of the burden of disease measured in Disability-Adjusted Life Years (DALYs) and calculation of cost-effectiveness ratios for a large number of health interventions was followed. Methods: Costs per DALY for a total of 65 health interventions were estimated. Costing data were collected through visits to health centres, hospitals and vertical programmes where a combination of step-down and micro-costing was applied. Effectiveness of health interventions was estimated based on published information on the efficacy adjusted for factors such as coverage and compliance. Results: Very cost-effective interventions were available for the major health problems. Using estimates of the burden of disease, the present paper developed packages of health interventions using the estimated cost-effectiveness ratios. These packages could avert a quarter of the burden of disease at total costs corresponding to one tenth of the public health budget in the financial year 1997/98. In general, the analyses suggested that there was substantial potential for improving the efficiency of resource use in the public health care sector.DiscussionThe proposed World Bank approach applied to Zimbabwe was extremely data demanding and required extensive data collection in the field and substantial human resources. The most important limitation of the study was the scarcity of evidence on effectiveness of health interventions so that a range of important health interventions could not be included in the cost-effectiveness analysis. This and other limitations could in principle be overcome if more research resources were available. Conclusion: The present study showed that it was feasible to conduct cost-effectiveness analyses for a large number of health interventions in a developing country like Zimbabwe using a consistent methodology.

Decision maker views on priority setting in the Vancouver Island Health Authority

Francois Dionne, Craig Mitton, Neale Smith and Cam Donaldson — 2008-07-21

Background: Decisions regarding the allocation of available resources are a source of growing dissatisfaction for healthcare decision-makers. This dissatisfaction has led to increased interest in research on evidence-based resource allocation processes. An emerging area of interest has been the empirical analysis of the characteristics of existing and desired priority setting processes from the perspective of decision-makers. Methods: We conducted in-depth, face-to-face interviews with 18 senior managers and medical directors with the Vancouver Island Health Authority, an integrated health care provider in British Columbia responsible for a population of approximately 730,000. Interviews were transcribed and content-analyzed, and major themes and sub-themes were identified and reported. Results: Respondents identified nine key features of a desirable priority setting process: inclusion of baseline assessment, use of best evidence, clarity, consistency, clear and measurable criteria, dissemination of information, fair representation, alignment with the strategic direction and evaluation of results. Existing priority setting processes were found to be lacking on most of these desired features. In addition, respondents identified and explicated several factors that influence resource allocation, including political considerations and organizational culture and capacity. Conclusion: This study makes a contribution to a growing body of knowledge which provides the type of contextual evidence that is required if priority setting processes are to be used successfully by health care decision-makers.

Cost-effectiveness of ranibizumab for neovascular age-related macular degeneration

Susan F Hurley, Jane P Matthews and Robyn H Guymer — 2008-06-24

Background: Intravitreal ranibizumab prevents vision loss and improves visual acuity in patients with neovascular age-related macular degeneration, but it is expensive, and efficacy beyond 2 years is uncertain. Methods: We assessed the cost-effectiveness of ranibizumab compared with no ranibizumab over 10 years, using randomized trial efficacy data for the first 2 years, post-trial efficacy assumptions, and ranibizumab acquisition costs ranging from the wholesale price ($1,950 per dose) to the price of bevazicumab ($50), a similar molecule which may be equally efficacious. We used a computer simulation model to estimate the probability of blindness, the number of quality-adjusted life-years (QALYs), direct costs (in 2004 U.S. dollars), and cost-effectiveness ratios for a 67-year old woman. Costs and QALYs were discounted at 3% per year. Results: The probability of blindness over 10 years was reduced from 56% to 34% if ranibizumab was efficacious for only 2 years, 27% if efficacy was maintained for a further 2 years only (base-case scenario), and 17% if visual acuity at 4 years was then sustained. It was cost-saving under all price assumptions, when caregiver costs were included. When caregiver costs were excluded, the cost per QALY for the base-case ranged from $5,600, assuming the bevazicumab price, to $91,900 assuming the wholesale ranibizumab price. The cost per QALY was < $50,000 when the cost of ranibizumab was less than $1000. Conclusion: From a societal perspective, ranibizumab was cost-saving. From a health care funder's perspective, ranibizumab was an efficient treatment when it cost less than $1000 per dose.

Non-pharmaceutical prevention of hip fractures – a cost-effectiveness analysis of a community-based elderly safety promotion program in Sweden

Pia Johansson, Siv Sadigh, Per Tillgren and Clas Rehnberg — 2008-05-30

Background: Elderly injuries are a recognized public health concern and are due to two factors; osteoporosis and accidental falls. Several osteoporosis pharmaceuticals are considered cost-effective, but intervention programs aiming at preventing falls should also be subjected to economic evaluations. This study presents a cost-effectiveness analysis of a community-based elderly safety promotion program. Methods: A five-year elderly safety promotion program combining environmental structural changes with individually based measures was implemented in a community in the metropolitan area of Stockholm, Sweden. The community had around 5,500 inhabitants aged 65+ years and a first hip fracture incidence of 10.7 per 1,000 in pre-intervention years 1990–1995. The intervention outcome was measured as avoided hip fractures, obtained from a register-based quasi-experimental longitudinal analysis with several control areas. The long-term consequences in societal costs and health effects due to the avoided hip fractures, conservatively assumed to be avoided for one year, were estimated with a Markov model based on Swedish data. The analysis holds the societal perspective and conforms to recommendations for pharmaceutical cost-effectiveness analyses. Results: Total societal intervention costs amounted to 6.45 million SEK (in Swedish krona 2004; 1 Euro = 9.13 SEK). The number of avoided hip fractures during the six-year post-intervention period was estimated to 14 (0.44 per 1,000 person-years). The Markov model estimated a difference in societal costs between an individual that experiences a first year hip fracture and an individual that avoids a first year hip fracture ranging from 280,000 to 550,000 SEK, and between 1.1 and 3.2 QALYs (quality-adjusted life-years, discounted 3%), for males and females aged 65–79 years and 80+ years. The cost-effectiveness analysis resulted in zero net costs and a gain of 35 QALYs, and the do-nothing alternative was thus dominated. Conclusion: The community-based elderly safety promotion program aiming at preventing accidental falls seems as cost-effective as osteoporosis pharmaceuticals.

Formulas for estimating the costs averted by sexually transmitted infection (STI) prevention programs in the United States

Harrell W Chesson, Dayne Collins and Kathryn Koski — 2008-05-23

Background: Sexually transmitted infection (STI) prevention programs can mitigate the health and economic burden of STIs. A tool to estimate the economic benefits of STI programs could prove useful to STI program personnel. Methods: We developed formulas that can be applied to estimate the direct medical costs and indirect costs (lost productivity) averted by STI programs in the United States. Costs and probabilities for these formulas were based primarily on published studies. Results: We present a series of formulas that can be used to estimate the economic benefits of STI prevention (in 2006 US dollars), using data routinely collected by STI programs. For example, the averted sequelae costs associated with treating women for chlamydia is given as (Cw)(0.16)(0.925)(0.70)($1,995), where Cw is the number of infected women treated for chlamydia, 0.16 is the absolute reduction in the probability of pelvic inflammatory disease (PID) as a result of treatment, 0.925 is an adjustment factor to prevent double-counting of PID averted in women with both chlamydia and gonorrhea, 0.70 is an adjustment factor to account for the possibility of re-infection, and $1,995 is the average cost per case of PID, based on published sources. Conclusion: The formulas developed in this study can be a useful tool for STI program personnel to generate evidence-based estimates of the economic impact of their program and can facilitate the assessment of the cost-effectiveness of their activities.

Review of Australian health economic evaluation – 245 interventions: what can we say about cost effectiveness?

Kim Dalziel, Leonie Segal and Duncan Mortimer — 2008-05-20

Background: There is an increasing body of published cost-utility analyses of health interventions which we sought to draw together to inform research and policy. Methods: To achieve consistency in costing base and policy context, study scope was limited to Australian-based cost-effectiveness analyses. Through a comprehensive literature review we identified 245 health care interventions that met our study criteria. Results: The median cost-effectiveness ratio was A$18,100 (~US$13,000) per QALY/DALY/LY (quality adjusted life year gained or, disability adjusted life year averted or life year gained). Some modalities tended to perform worse, such as vaccinations and diagnostics (median cost/QALY $58,000 and $68,000 respectively), than others such as allied health, lifestyle, in-patient interventions (median cost/QALY/DALY/LY all at ~A$9,000~US$6,500). Interventions addressing some diseases such as diabetes and impaired glucose tolerance or alcohol and drug dependence tended to perform well (median cost/QALY/DALY/LY < A$3,700, < US$5,000). Interventions targeting younger persons < 25 years (median cost/QALY/DALY/LY < A$41,200) tended to perform less well than those targeting adults > 25 years (median cost/QALY/DALY/LY < A$16,000). However, there was also substantial variation in the cost effectiveness of individual interventions within and across all categories. Conclusion: For any given condition, modality or setting there are likely to be examples of interventions that are cost effective and cost ineffective. It will be important for decision makers to make decisions based on the individual merits of an intervention rather than rely on broad generalisations. Further evaluation is warranted to address gaps in the literature and to ensure that evaluations are performed in areas with greatest potential benefit.

Is the value of a life or life-year saved context specific? Further evidence from a discrete choice experiment

Duncan Mortimer and Leonie Segal — 2008-05-20

Background: A number of recent findings imply that the value of a life saved, life-year (LY) saved or quality-adjusted life year (QALY) saved varies depending on the characteristics of the life, LY or QALY under consideration. Despite these findings, budget allocations continue to be made as if all healthy life-years are equivalent. This continued focus on simple health maximisation is partly attributable to gaps in the available evidence. The present study attempts to close some of these gaps. Methods: Discrete choice experiment to estimate the marginal rate of substitution between cost, effectiveness and various non-health arguments. Odds of selecting profile B over profile A estimated via binary logistic regression. Marginal rates of substitution between attributes (including cost) then derived from estimated regression coefficients. Results: Respondents were more likely to select less costly, more effective interventions with a strong evidence base where the beneficiary did not contribute to their illness. Results also suggest that respondents preferred prevention over cure. Interventions for young children were most preferred, followed by interventions for young adults, then interventions for working age adults and with interventions targeted at the elderly given lowest priority. Conclusion: Results confirm that a trade-off exists between cost, effectiveness and non-health arguments when respondents prioritise health programs. That said, it is true that respondents were more likely to select less costly, more effective interventions – confirming that it is an adjustment to, rather than an outright rejection of, simple health maximisation that is required.

S4HARA: System for HIV/AIDS resource allocation

Arielle Lasry, Michael W Carter and Gregory S Zaric — 2008-03-26

Background: HIV/AIDS resource allocation decisions are influenced by political, social, ethical and other factors that are difficult to quantify. Consequently, quantitative models of HIV/AIDS resource allocation have had limited impact on actual spending decisions. We propose a decision-support System for HIV/AIDS Resource Allocation (S4HARA) that takes into consideration both principles of efficient resource allocation and the role of non-quantifiable influences on the decision-making process for resource allocation. Methods: S4HARA is a four-step spreadsheet-based model. The first step serves to identify the factors currently influencing HIV/AIDS allocation decisions. The second step consists of prioritizing HIV/AIDS interventions. The third step involves allocating the budget to the HIV/AIDS interventions using a rational approach. Decision-makers can select from several rational models of resource allocation depending on availability of data and level of complexity. The last step combines the results of the first and third steps to highlight the influencing factors that act as barriers or facilitators to the results suggested by the rational resource allocation approach. Actionable recommendations are then made to improve the allocation. We illustrate S4HARA in the context of a primary healthcare clinic in South Africa. Results: The clinic offers six types of HIV/AIDS interventions and spends US$750,000 annually on these programs. Current allocation decisions are influenced by donors, NGOs and the government as well as by ethical and religious factors. Without additional funding, an optimal allocation of the total budget suggests that the portion allotted to condom distribution be increased from 1% to 15% and the portion allotted to prevention and treatment of opportunistic infections be increased from 43% to 71%, while allocation to other interventions should decrease. Conclusion: Condom uptake at the clinic should be increased by changing the condom distribution policy from a pull system to a push system. NGOs and donors promoting antiretroviral programs at the clinic should be sensitized to the results of the model and urged to invest in wellness programs aimed at the prevention and treatment of opportunistic infections. S4HARA differentiates itself from other decision support tools by providing rational HIV/AIDS resource allocation capabilities as well as consideration of the realities facing authorities in their decision-making process.