dm/hk © 2010 health services planning in the world class commissioning environment maximising...
TRANSCRIPT
DM/HK © 2010
Health Services Planning in the World Class Commissioning Environment
Maximising Patient Care Within Available Resources
Author: David Murray BSc MSc FFPHOperational Director, Consultant in Public Health & Honorary Senior Lecturer, PHAST & Imperial College London
Public Health Module
VenueDate
DM/HK © 2010
Acknowledgements
Contributors:– Dr Richard Fordham – Senior Lecturer/Deputy Associate
Dean, Health Economics Group, University of East Anglia– Dr Peter Brambleby – Director of Public Health, North
Yorkshire & York PCT
DM/HK © 2010
Aim
To explore the principles and practice of investment decision-making to maximise population health within available resources.
DM/HK © 2010
Contents
1. The under-pinning concepts of health economics, including:– The economics perspective– Key economic principles – efficiency & equity
2. Information and evidence on costs and benefits:– Measurement of costs & benefits– Methods of economic evaluation – e.g. cost-effectiveness studies
& analyses
3. Practical methods of resource allocation/investment decision-making in health, including:– Resource allocation formulae– Programme budgeting & marginal analysis (PBMA)– Priority setting – e.g. multi-criteria analysis (MCA)
DM/HK © 2010
1. Health Planning, Investment Decision-Making, & Health Economics
Investing in health
DM/HK © 2010
Health Planning & Investment
• Consideration of comprehensive range of health improving interventions:– Promotion of health– Prevention of disease– Screening– Diagnosis– Treatment/management– Rehabilitation
• Need - Demand - Supply
DM/HK © 2010
Policy Context
• Policy context:– WCC competence 6 – Prioritise investment according to local needs,
service requirements, & the values of the NHS.– WCC competence 11 – Make sound financial investments to ensure
sustainable development & value for money. – Care Quality Commission: PCT Commissioning standards – Domain 2:
Clinical & cost effectiveness
• Combined perspective – health planning & health economics
DM/HK © 2010
"World Class Commissioning“ (2008)
• "Investment decisions will be made in an informed and considered way, ensuring that improvements are delivered
within available resources" (DH, 2007a)
• PCTs will be able to: "Prioritise investment by having a thorough understanding of the needs of different sections of the local population ...
• Make confident choices about the services that they want to be delivered, and acknowledge the impact that these choices may have on current services and providers..."
(DH, 2007a)
DM/HK © 2010
NHS Confederation Guidance to PCTs (2008)
• The 'primacy of prioritisation must be a fundamental principle of public sector resource allocation'.
• A 'whole system' approach must be taken which takes account of and is applicable to all health service delivery in a given area
• Avoid unintended consequences and opportunity costs associated with narrower priority setting or decision making processes
DM/HK © 2010
2. Health Economics Perspective
A room with a different view
DM/HK © 2010
Source: Rupert Fawcett Cartoons
DM/HK © 2010
DM/HK © 2010
Economics
Greek: oikonomos, "one who manages a household" ..oikos, "house"
and nemein, "to manage"
DM/HK © 2010
Group Discussion - Household Investment Decision-making
• Think of 2 or 3 recent decisions you have taken to make a substantial purchase in your household
• Discuss how you came to the decision to make the purchase & how you chose the particular product
DM/HK © 2010
Health Economics
• A framework for the systematic consideration of costs & benefits across society in support of priority setting/ investment decision-making
DM/HK © 2010
Finance & economics
FINANCE/MONEY = measure & store of value, means of exchange (usually reflected in price)
ECONOMICS = what is produced; how resources used up in producing it; how these products are exchanged and by whom
MONEY is only a currency!
DM/HK © 2010
What you already know about economics (but might have been totally unaware of !)
• Humans are quite ‘rational’ economic beings (most of the time) ..
• We all satisfy our own needs rationally… ‘maximise our own personal ‘utility’ subject to a resource constraint’
• We want to maximise gain and minimise pain!• But it’s not just about self-interest! eg. altruistic or
communal gifts• Why should society be any different? – it’s only the sum of
its parts
DM/HK © 2010
Health Economics Perspective 1
• Acceptance of resource/budget limitations• Scope – societal vs public sectors vs NHS• Long-run timeframe• Cost vs price• Opportunity cost – all investment choices & uses result in other
lost opportunities• Demand = willingness & ability to pay at a given price
DM/HK © 2010
Health Economics Perspective 2
• 2 concepts of efficiency:– Technical: Doing things well/at least cost for a given output
at a given quality– Allocative: Doing the right things to maximise benefit from
available resources• Marginal analysis – measurement of costs/savings & benefits
additional to the current baseline• Equity – consideration of the spread/allocation of fair/ethical
costs & benefits across society
DM/HK © 2010
3. Costs & Benefits
Weighing it up
DM/HK © 2010
Weighing up the input & outputs in alternative uses of resources ...
Resources Outcomes
?
DM/HK © 2010
Group Discussion – Resources & Benefits
• Briefly discuss the ‘resources’ & ‘benefits’ we would need to weigh-up in introducing a ‘hospital at home’ service
DM/HK © 2010
Economic approach
• Weighing up the costs and the benefits of alternative courses of action (Drummond, 1987)
• Costs (full resources) to whom?• Benefits…to whom? Concern with equity.• Divergence of personal and social costs• Wider scope of benefits in public health
DM/HK © 2010
Production Costs & prices
• Fixed cost – constant over a period of time regardless of workload
• Semi-fixed/stepped cost – constant within given production limits (e.g. additional staff)
• Variable cost – vary in proportion to workload• Sunk cost – investment that cannot be re-invested
• Price = cost + profit/surplus
DM/HK © 2010
Costs
• Total cost• Unit cost = 1 unit/patient• Average cost = total cost/N• Marginal cost = cost of producing one additional unit• Cost curves• Opportunity cost = foregone opportunity to produce the next
best alternative use of resources
DM/HK © 2010
Economies of scale
• Constant returns to scale • Diseconomies and economies of scale
DM/HK © 2010
Costs
• Direct cost – e.g. health care staff time & consumables• Indirect costs – e.g. catering• Overhead costs – e.g. management, heating• Intangible costs – e.g. pain, inconvenience
DM/HK © 2010
Health Benefits
• Survival/death• Treatment• Cure• Cases/infections prevented• Length of life• Quality of life• Function
DM/HK © 2010
Societal Benefits
• Productivity:– employment– education– caring
• Participation (e.g. politics, arts)• Independence
DM/HK © 2010
4. Efficiency & Equity
Doing the right things, well, & for all the right people
DM/HK © 2010
Technical efficiency - Inputs and outputs
• Maximise output subject to budget/cost limit or minimum• Minimise costs subject to a fixed or maximum level of output• No resources wasted in production of a given product at an
accepted quality
DM/HK © 2010
Productivity
• Measure of technical/productive efficiency• Amount of output per unit input in producing a given
product e.g:– Factory hours to make a product– Number of products produced by a factory per day– Patients treated per hour/per clinic
DM/HK © 2010
Allocative efficiency
• Allocative efficiency is where organisation is producing a combination of goods that maximises the overall level of satisfaction or welfare of the population of interest
• Global efficiency – allocative efficiency across all productive activities in society as whole e.g. education, health, welfare benefits, industry, etc
• Where no further reallocation of resources at the margins of production could improve social welfare function (=∑individual welfare functions) – i.e. social welfare is maximised
DM/HK © 2010
Pareto optimality
• The theoretical condition as a result of perfect global efficiency, where it is impossible to make one person better off without making someone else in society correspondingly worse off is called a Pareto optimal allocation of resources– How do we know when NHS organisation(eg. PCT) is
allocatively efficient?
– What type of market conditions are likely to lead to the
allocative efficiency?
DM/HK © 2010
Ethics, equity, & economics
• Ethics - theories of social justice/fairness• Equity - treatment according to need/access/ demand/use• Economics – equity (distribution/shares of benefit) vs efficiency
(total benefit)
DM/HK © 2010
Common equity dimensions
• Age• Gender• Sexuality• Geography• Socio-economic status• Ethnicity• Religion• Disease/condition• Severity/prognosis
DM/HK © 2010
Equity not necessarily = equality
• Equity concerned with ‘fairness' ‘justice’ (i.e.ethical theories)• May not necessarily be identical to equality (e.g.minimum
standards of care, ‘positive’ discrimination) due to taking account of need
• However, equity usually synonymous with equality of something (e.g. right to equal opportunity to access)
DM/HK © 2010
‘Definitions’ of equity
• Equal ‘chance’ of treatment - lottery• Equal expenditure per capita - geography• Equal expenditure/resources for equal ‘need’ (i.e. weighted
capitation e.g.‘premature’ mortality)• Equal access (opportunity to use) for equal need (e.g. equal
waiting time per ‘condition’) & physical/geographic access• Equal utilisation for equal need (e.g. equal length of stay
per ‘condition’)• Equal treatment rates for equal need• Equal ‘health’
DM/HK © 2010
Equity : Efficiency Trade-off
• Explicit equity weighting remains controversial unless considering ‘total social welfare’ rather than economic efficiency alone
• Access to primary/secondary/tertiary care (e.g. GP vs NICU)• NICE willingness to pay Cost per QALY for treatments
prolonging life in terminal cancer conditions• Targeted out-reach initiatives for ‘hard to reach’ groups
DM/HK © 2010
5. Economic Evaluation
DM/HK © 2010
Key Methods of Economic Evaluation
• Cost Consequence Analysis• Cost-Minimisation Analysis• Cost Effectiveness Analysis (CEA)• Cost-Utility Analysis (CUA)• Cost-Benefit Analysis (CBA)• Modelling
DM/HK © 2010
Length & quality of life 1
• Length of life– Mortality (numbers, rates, SMRs)– Life expectancy – Healthy life-years (eg. QALYs)– Disability-free life years (eg. DALYs)
DM/HK © 2010
Length & quality of life 2
• Measures of (Health-related) Quality of life:– Numerous QoL measures (generic & disease specific)– SF-36– Nottingham Health Profile– Symptom Checklist– Hospital anxiety and depression scale
DM/HK © 2010
Quality Adjusted Life Years (QALYS)
Adjusts data on quantity of life years saved to reflect a valuation of the quality of those years.
If healthy: QoL = 1.0
If dead QoL = 0
e.g. 5yrs survival gain at ½ QoL = 5 X 0.5 = 2.5 QALYs
DM/HK © 2010
Disability Adjusted Life Years (DALYS)
• Measure of burden of disease adjusted for lost function/productivity (WHO)
• World Bank, Global Burden of Disease (1996)• Years of life lost due to premature death + years lived with
disability (mortality + morbidity)• Better reflection of burden due to chronic disease rather than
due to common causes of death
DM/HK © 2010
Issues in Economic Evaluation 1
• Taken up by research community, good journals, etc• Used nationally - e.g. NICE• Still ignored by local decision-makers• Suspicion from clinicians• Resistance from public
DM/HK © 2010
Issues in Economic Evaluation 2
• Lack of good cost data to use• May not capture all the benefit dimensions required by
decision makers• Controversy about methods and values used
in techniques
DM/HK © 2010
Steps in costing
1. Defining the perspective/viewpoint
2. Identification of costs to include in the appraisal
3. Measurement of the resources used (how much of each item?)
4. Valuation of the resources used
(what does each item cost?)
DM/HK © 2010
Identifying costs
• A full identification of important and relevant costs should be provided and any omissions justified– Trade-off between time and effort involved in collection and potential
impact on results– What are the key cost drivers likely to be?
• Include free costs e.g.volunteer and patients’ leisure time and donated clinic space
• Not all costs that are identified have to be measured and valued
DM/HK © 2010
Measure how much of each item used?
• Number of medical visits, tablets consumed, hours of staff time…
Sources include:• Health insurance accounting systems• Computerised hospital and primary care records• Reports from health professionals, patients and carers• Standards (guidelines, best practice) - medical notes often assumed most accurate
DM/HK © 2010
What does each item cost?
• Use existing market prices where appropriate
• Unit costs from local sources of national statistics:- NHS reference costs and PbR tariff- BNF drug costs- PSSRU health and social care services
DM/HK © 2010
Valuation(Unit prices)
DM/HK © 2010
Example: cost-effectiveness of splinting and surgery for patients with Carpal tunnel syndrome
Identification and measurement
*mean (standard deviation);
DM/HK © 2010
Comparing costs
Korthals-de Bos et al, Surgery is more cost-effective than splinting for carpal tunnel syndrome in the Netherlands: results of an economic evaluation alongside a randomized controlled trial, BMC Musculoskeletal Disorders 2006, 7:86
DM/HK © 2010
Further methodological issues
• How long to track costs for? • Discounting• Annuitisation of capital assets• Purchasing power parity (not exchange rates)• Dealing with shared costs/overheads (light, heat)• Uncertainty and sensitivity analyses• Transfer payments • Drummond appraisal checklist
DM/HK © 2010
Cost Minimisation Analysis
• Comparative costing of alternative treatments which are proven or assumed to have equivalent outcome in order to identify the least cost option
• No outcomes measurement
DM/HK © 2010
Cost Consequence Analysis
• Collation of information of cost & outcome consequences of alternative interventions, but without calculation of cost effectiveness ratios
DM/HK © 2010
Cost-consequences analysis
Coast J. 2004. ‘Is economic evaluation in touch with society’s health values?’ BMJ 329: 1233-12236
DM/HK © 2010
Cost Effectiveness Analysis (CEA)
• Comparison of alternative interventions with same outcomes, using non-monetary natural units of outcome measurement – e.g. survival, life years gained, reductions in units of BP, cardiac events prevented, tumour response
DM/HK © 2010
Cost effectiveness of shared care and nurse practitioner care
Nurse Care
Shared Care
Incremental costs and benefits
NHS Cost (£)
5343 6319 6319-5343=976
No. Patients benefit
202 220 220-202=18
Average cost-effectiveness
26.45
(5343/202)
28.72
(6319/220)
Marginal CE 54.2(976/18)
Torgerson and Spencer, BMJ 1996;312:35-36
DM/HK © 2010
Cost Utility Analysis (CUA)
• ‘Utility’ = positive well-being• Comparison of alternative interventions, using generic non-
monetary valuation units of outcome measurement – e.g. quality adjusted life years (QALYs)
• Requires research to establish value of outcomes.• Allows comparison of interventions achieving different health
outcomes (e.g. prevention vs treatment, CHD vs cancer)
DM/HK © 2010
Cost Benefit Analysis (CBA)
• Comparison of alternative investments where both costs & benefits are measured in monetary terms, to calculate a net cost : benefit sum
• Allows comparison across widest range of investments/interventions beyond health – e.g. education vs health
• Requires monetary valuation of all benefits
DM/HK © 2010
Decision analytic modelInitial three months Next three-month cycles
Death
DeathDeath
WC75WC75
WC50WC50
NCNC
WC75
WC50 [+]
NC [+]
Standard Tx
Death
DeathDeath
WC75WC75
WC50WC50
NCNC
WC75
WC50 [+]
Switch to Standard TxStandard Tx
DeathDeath
NCNC
NC
No switch
Switch due to AE to Standard Tx
Rufinamide (RUF)
Topiramate (TPM) [+]
Lamotrigine (LTG) [+]
DM/HK © 2010
Practical Approaches to Resource Allocation
1. Population capitation formulae2. Programme budgeting & marginal analysis3. Priority setting/investment decision-making
DM/HK © 2010
NHS Capitation Funding
• Formula driven funding (based on PCT population)
• Weighted capitation (age, deprivation etc) (revised 2003)
• Gets PCTs onto a level playing field wrt. population need (in theory!)
• ‘PCTs make decisions on investing these ‘cash’ resources
DM/HK © 2010
The underlying principle
• The objectives of the weighted capitation formula are to determine PCTs' target shares of available resources to enable them to commission similar levels of healthcare for populations with similar healthcare need, and to reduce avoidable health inequalities (eg. cancer treatment)
See: Resource allocation: weightedcapitation formula (sixth edition) DH 2008
DM/HK © 2010
Four elements are used to set PCTs’ actual allocations
a) PCT populations adjusted for:- (i) their age distribution(ii) additional need over and above that relating to age (ie. deprivation)(iii) unavoidable geographical variations in the cost of providing services (themarket forces factor (MFF)
b) Recurrent baselines – which represent the actual current allocation which PCTs receive
c) Distances from targets (DFTs) – which are the differences between (a) and (b)
d) Pace of change policy – which determines the level of increase which all PCTsget to deliver on national and local priorities and the level of extra resources tounder target PCTs to move them closer to their weighted capitation targets.
NB. PCTs do not receive their target allocation immediately but are moved to it over a number of years.
DM/HK © 2010
Investment priority setting
Context
DM/HK © 2010
Worldwide: WHO-CHOICE‘CHOosing Interventions that are Cost Effective’
“Top 10” buys include:• speed bumps to reduce traffic injuries;• insecticide-treated bed nets to prevent malaria;• increased taxes on tobacco• Directly Observed Therapy short course (DOTS) for TB;• birth attendants;
• salt fluoridation to prevent dental caries
See: http://www.who.int/choice/en/
DM/HK © 2010
Cancer prioritisation and cost in UK
NHS Budget Impact
Saving 2
No additional resources required 3
Cost < £10m 11
Cost between £10-20m 6
Total 22
Cost per QALY
< £20K 4
£20- £30K 3
> £30K 2
Cost per LYG
< £20K 8
£20- £30K 4
> £30K 1
Total 22
35 Cancer technologies appraisals by NICE to May 2005
DM/HK © 2010
Potential resistance to economic decision making!Williams and Bryan (2007) identify the following reasons why policy makers do
not use economic studies:• Transparency: policy makers simply do not understand the study or
methods used;• Validity: policy makers do not believe the study outcomes;• Relevance: the study does not provide information relevant to decision-
making context, such as the impact on local budgets;• Clarity: the presentational style is inaccessible (see 1);• Comparability: variations in methods make comparing
Interventions difficult;• Affordability: policy makers have insufficient budget to commission
economic studies;• Objectivity: policy makers question the independence of those undertaking
the work;• Philosophy: policy makers reject the principles underlying
economic evaluationWilliams I, Bryan S (2007) ‘Cost-effectiveness analysis and formulary decision making in
England: findings from research’, Social Science and Medicine 65: 2116–2129
DM/HK © 2010
Disinvestment vs Always expecting more?
‘’a culture of expecting more resources rather than having to make trade-off decisions and reallocations’’
Mitton and Donaldson (2004)
DM/HK © 2010
Experience of decommissioning
A recent survey has shown that the total value of services decommissioned across the 60 PCTs that responded was £14m - a tiny fraction of the £70bn PCTs spend each year.
The majority of Trusts (40 out of 60) said they had not decommissioned anything!
(HSJ, October 2008)
DM/HK © 2010
Process Benefits of Investment Decision-making Tools
• Promoting the bigger picture• Soft intelligence• Clinical & expert advice• Clinical & organisational engagement• Ownership & commitment to implement agreed changes
DM/HK © 2010
Programme Budgeting Marginal Analysis (PBMA)
DM/HK © 2010
PB vs Finance Information – Alternative Dimensions
• Financial/accountancy - inputs:– Functional/organisational (e.g. GPs vs hospital)– Funders– Debtors– Staff/employees
• PB – combining resource information with that on:– Population needs/outcomes
– Strategic goals (e.g. prevention vs treatment)
DM/HK © 2010
Questions to ask
• Do you know where the NHS money in your local health economy goes at present, by age group, disease group, prevention spend or clinical specialty?
• Do you have adequate data on patient outcomes and satisfaction, (ie what good that investment of resources is doing, in these areas?)
• Do you have any evidence (or even a gut feeling!) of where those same resources could be moved from one area of activity to another to generate greater health gain?
• Can you list, in priority order, where new investment should go first in order to do the greatest good for the client group or population you look after?
• Is it reasonable to try to engage your local clinicians, commissioners and public in discussions about doing things differently without such information?
DM/HK © 2010
If your answer to any of these questions was “No”, then Programme Budgeting and Marginal Analysis
(PBMA) may be a technique that can help!
DM/HK © 2010
Definitions
• Programme budgeting is a retrospective appraisal of resource allocation broken down into meaningful programmes, with a view to tracking future resource allocation in those same programmes
• Marginal analysis is the appraisal of added benefits and added costs when new investment is proposed (or lost benefits and lower costs when disinvestment is proposed), in an incremental way
Mooney G, et al, Choices for Health Care, MacMillan, 1986
DM/HK © 2010
It is rocket science!• Its first major application was
not in health care but in the US Department of Defence in the 1960s.
• Cost accounting tool that could display, over time, the deployment of resources that supported specific military objectives, like wars overseas, the support of NATO or defence of the homeland, rather than the conventional budgetary approach of tanks, missiles or diesel fuel.
• Allocation of new resources, or shifts between budgets, could be judged on their relative contribution to the main objectives – a much more meaningful way of making decisions.
DM/HK © 2010
Right for health?
• Outcome based funding Instead of looking at the investment in a particular hospital or drug budget, the focus becomes “reducing heart disease death rates”, “improving indicators of child health”, “reducing the burden on family carers of patients with senile dementia”, etc
• The focus is on objectives - maximising health gain by deploying resources to best effect
DM/HK © 2010
Marginal Analysis
• What would you do with 10 % more on your annual budget that you can’t do now? ‘WISH LIST’
• What would you cease to do if you had to make do with 10% less? ‘HIT LIST’
• So those things on your HIT LIST have a lower MB at current levels of activity than those things on your WISH LIST
• If you can’t think of anything with more benefit or prefer not to give up anything currently to carry on what you’re doing then you are probably allocatively efficient!
DM/HK © 2010
PBMA: eight steps
1. Choose a set of meaningful programmes to work with – perhaps age groups, disease groups or clinical directorate groups
2. Identify current activity and expenditure in those programmes (programme budgeting). Try to account for the total budget, to avoid the risk of omissions but double-counting
3. Be creative - consider improvements and linkages in pathways and patterns of care, within and between these programmes
4. Weigh up extra costs and increased benefits (or decreased benefits and reduced costs) of the improvements you have thought of (marginal analysis)
5. Consult widely - there may be options, trade-offs and value judgements to explain
6. Decide - and make that decision public7. Make the change happen! This is the essence of management8. Evaluate progress - check that the anticipated costs, savings and
outcomes materialised in practice, then repeat the exercise
DM/HK © 2010
PBMA: CHD programme
• Population lifestyle social marketing programme• General Practitioner Quality Outcome Framework Coronary
Heart Disease programme• Statins• Rapid access chest-pain clinics• Revascularisation• Cardiac rehab
DM/HK © 2010
PB Tools & Resources
• DH PB tool: 2008/09 release• NHS National Knowledge Centre – greater functionality
linking with need/epidemiology/PH area data• YHPHO PCT Spend & Outcomes Factsheets & Tool (SPOT)• DH. Programme budgeting guidance manual. Revised 23
May 2007• Peter Brambleby, Andrew Jackson, J.A. Muir Gray
Programme-based decision- making for better value healthcare: The 2nd annual population value review. October 2008. NHS Knowledge Service/DH
• Ruta D et al. (2005) ‘Programme budgeting & marginal analysis: bridging the divide between doctors & managers’. BMJ 330: 1501-3
DM/HK © 2010
DH National PB Project
DM/HK © 2010
DH Programme Budgeting PCT Benchmarking Tool 2008/09
DM/HK © 2010
DH Programme Budgeting PCT Benchmarking Tool 2008/09
DM/HK © 2010
DH Programme Budgeting PCT Benchmarking Tool 2008/09
DM/HK © 2010
DH Programme Budgeting PCT Benchmarking Tool 2008/09
DM/HK © 2010
DH Programme Budgeting PCT Benchmarking Tool 2008/09
DM/HK © 2010
DH Programme Budgeting PCT Benchmarking Tool 2008/09
DM/HK © 2010
Spend & Outcome Factsheets & Tool (SPOT) – Kirklees [YHPHO]
Spend and Outcome relative to other PCTs in England
Soc Pois
Mat,Neo
Trauma
Musc Skin,Hlth Gastro
Dent
RespCirc
Hear VisionNeuro
LD
MHEnd
Blood
Canc
Inf,GU
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
-2.5 -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5
Spend per head Z Score
Hea
lth
Ou
tco
me
Z S
core
Lower Spend, Better Outcome
Lower Spend,Worse Outcome
Higher Spend,Worse Outcome
Higher Spend,Better Outcome
DM/HK © 2010
Practical priority setting
Multi-criteria analysis
DM/HK © 2010
Multi Criteria Analysis (MCA)
• Point scoring system that takes account of multiple criteria:– Criteria are locally determined– Weighted to give precedence to those of most relevance– Allows alternative interventions/services/programmes to be scored
against these criteria
• Divide cost by point score to give ‘cost-effectiveness’• Compile a ranking to guide decision making
DM/HK © 2010
The Process
Define the criteria
Weight the criteria
Cost the options
Produce ranking in order of cost-effectiveness
Score the options
DM/HK © 2010
Defining the Criteria
• Derived from objectives of service• Generic not specific
• “Improves rehabilitation and after-care” rather than “employs more district nurses”
• Should be identifiable and measurable • E.g. life-years gained, effectiveness estimate
• Need to be “mutually preference independent”• Able to assign preferences against one criterion
independently of preferences against other criteria
DM/HK © 2010
Deriving the benefit criteria What Do I Want in a New Car?
• Safety• Style• Fuel economy• Space• Acceleration• Reliability• Comfort/accessories• Etc etc...
DM/HK © 2010
Weight the Criteria
• Are some criteria more important than others?
• Safety• Style• Fuel economy
50%20%30%
DM/HK © 2010
Score Each Car against Criteria
Score Weight Weighted ScoreSafety 7
Style 10
Fuel economy 6
1.0
0.5
0.2
0.3
3.5
2.0
1.87.3
DM/HK © 2010
...Then Divide by Net Lifetime Cost
£15,000
7.3= £2,055
DM/HK © 2010
...Do the same for the alternative and rank them by Cost-Effectiveness
Car £ per point
Volvo £1,642
MX3 £2,055
VW £5,340
Skoda £14,310
DM/HK © 2010
Example Criteria Weights1. Addressing inequalities 14
2. Whole person approach, choice 6
3. Fit with national/local objectives 10
4. Needs assessment 14
5. Size of population who will benefit 5
6. Effectiveness for patients and/or population 19
7. Sustainable benefits 7
8. Preventive, self-help 9
9. Accessibility 9
10. Feasibility 7
TOTAL 100
DM/HK © 2010
Effectiveness, Efficiency, & Equity - Worked Example (Brambleby) [1]
• Our mission is to secure the most effective, equitable and efficient services for our population, within the resources entrusted to us.”
DM/HK © 2010
Effectiveness, Efficiency, & Equity – Worked Example (Brambleby) [2]
• Cancer X - universally rapidly fatal if not treated• Incidence of “X” is 300 new cases per year • 3 possible treatment packages, A, B & C• Good trial evidence on typical outcomes and typical costs• Newly enhanced budget is £1,500,000
DM/HK © 2010
Effectiveness, Efficiency, & Equity – Worked Example (Brambleby) [3]
• Treatment options:– “A” adds 3 years of life @ £5,000(current treatment) – “B”adds 5 years of life @ £6,000– “C”adds 6 years of life @ £15,000
DM/HK © 2010
Effectiveness, Efficiency, & Equity – Worked Example (Brambleby) [4]
• Equity consideration – number of people with Cancer X in the population benefiting from treatment:– A @ £1,500,000/£5,000 = 300 people– B @ £1,500,000/£6,000 = 250 people– C @ £1,500,000/£15,000 = 100 people
DM/HK © 2010
Effectiveness, Efficiency, & Equity – Worked Example (Brambleby) [5]
Therapy Cost (£)
Effectiveness (years added per patient)
Equity (patients treated from budget)
Efficiency (total years gained from budget)
A 5,000 3 300 900
B 6,000 5 250 1250
C 15,000 6 100 600
DM/HK © 2010
Effectiveness, Efficiency, & Equity – Worked Example (Brambleby) [6]
• A is the most equitable; everyone has access• B is the most efficient; maximises total population health gain
from fixed budget• C is the most effective• A & B satisfy the “utilitarian” ethic• C satisfies the “Hippocratic” ethic
DM/HK © 2010
Quality of Life Adjustment (Brambleby) [7]
DM/HK © 2010
Incorporating cost-utility (Brambleby) [8]
LoL x QoL QALYs Population Health Gain (QALYs)
A 3 x 0.7 2.1 2.1 x 300 = 630
B 5 x 0.5 2.5 2.5 x 250 = 625
C 6 x 0.8 4.8 4.8 x 100 = 480
DM/HK © 2010
Seven key organisational challenges to PBMA & priority setting
• Time (having enough of it!); • Good data; • Disinvestment incentives; • Identifiable programme budgets; • Outcome measurement; • Public involvement;• Organisational behaviour.
Mitton and Donaldson (2004)
DM/HK © 2010
Organisational behaviour
• Formal v. informal process going on?• ‘Transactions costs' to participants are critical to success of
PBMA (Jan, 2000)• Individuals will only engage with PBMA if there are
opportunities to expand/protect their own budgets and/or restrict the expansionary tactics of rival claimants!
DM/HK © 2010
Priority setting - summary
• Prioritisation by order of cost-effectiveness ensures best value for money from public funds
• Weighted benefit score captures all dimensions of ‘benefit’ in a single index
• Combining score with resource use data allows a crude cost-effectiveness ratio to be calculated
DM/HK © 2010
Participant Evaluation
• Lilac = What did you learn?
• Yellow= What worked well for you in the workshop
• Blue = Is there anything you would do differently, if so, what and how?
• Green = What are your future needs?