economic analysis and management todd wagner, phd
Post on 18-Dec-2015
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TELL ME WHY WENEED DRUG ELUTING STENTS.
AND DON’T GIVE METHE CONDESCENDINGSIMPLE VERSION FOR MANAGERS. I WANT THEFULL TECHNICAL DESCRIPTION.
EARLY CIVILIZATIONSHAD NO CONCEPT OFZERO.
GOON.
Why Would Managers Care?
• CEA is being used to decide about:– formulary– adoption of new technology– scope of benefits– strategies for management of care– organization of health care
Management Misperceptions
• Only three types of economic analyses exist– Cost identification– what does X cost
– CEA
– Return on Investment
Researcher Misperceptions
• Managers do not understand economics
• Managers want CEAs
• A CEA must reflect a societal perspective and lifetime costs and benefits
Basic Rules
1. Set the stage: ask questions & listen
2. Avoid jargon and use the word “no” liberally
3. Build in feedback (interim results)
4. Help the manager: write a good report
5. Help yourself: publish the results
What is the Study Type?• Cost identification
• Cost minimization
• Cost consequences
• Cost-effectiveness analysis
• Cost-benefit analysis
• Cost-utility analysis
• Other: efficiency, demand
Return on Investment (ROI)
• A type cost-benefit analysis
• Compares input costs to all monetary outputs
• Time frame is often very short (1 or 2 years)
• ROI lacks context when talking about health care.
What is the cost?
• Do we know the cost?
• How precise are our cost estimates?
• How do costs vary over time?
• What affects the cost?
Is Treatment Effective?
• Is there evidence?
• How strong is the evidence?
• A meta analysis may be necessary (http://www.cochrane.org/).
Is a CEA Warranted?
Change in Effectiveness
Changein
Cost
Standard care preferred+
-- +
Intervention preferred
?
?
CEA is more helpful
Net Benefit Model
• In many cases, the QALYs are not well known
• Two approaches:– A net benefit model (Hoch, 2002, Health Economics);
capitalize on effectiveness data
– A break even analysis; how many QALYs would be required for the intervention to be more cost-effective than than control at $50,000 per QALY?
Comparison Group
• An intervention or treatment can never be cost effective by itself
• CEA is always a relative decision– Need at least one comparison group– Treatment X is more cost-effective than Y
Comparison Group (cont.)
• Important to identify the important comparison group(s) for managers
• Many clinical trials use placebo controls
• A CEA with an active comparison may require modeling
Perspective
• Focus on a payer’s costs/benefits rather than on society’s costs/benefits
• Congress might be interested in Medicare’s bottom line
• Excluding patient costs can be important for LTC, RX and some chronic illnesses (e.g., UI)
Transfer Payments
• Welfare and governmental income assistance programs redistribute money.
• Transfer payments may be important, although they are not “real” to society.
• Transfer payments are important for governmental agencies.
• Always include any administrative fees (usually very small).
Changing Assumptions
• Managers might want CEA tailored to their situation
• Consider– Patient population– Clinical risks– Patient volume and costs
Other Outcomes
• Externalities, such as the effect of substance use treatment on crime may be important
• Labor force participation and productivity may be particularly important for employers or means tested programs (e.g., Medicaid)
Measurement of Costs
• VA or non-VA costs?– Pharmaceuticals in the VA are much less
expensive than outside the VA– VA salaries tend to be lower– VA inpatient stays tend to be longer
• Which VA cost data: DSS, HERC national or HERC local?
Main vs Secondary Analyses• Wise to conduct an analysis that
conforms to the Gold Book, even if this is not the manager’s desire
• A second analysis can focus on the question outlined for management.– Encourages standardization– Prevents misuse of the results in the future
Use of CEA by Management
• Q: Is it used?
• A: Never as the only piece of information, and sometimes not at all.– Hagen MD, Garber AM, Goldie SJ, et al.
Does cost-effectiveness analysis make a difference? Lessons from Pap smears. Symposium. Med Decis Making. Jul-Aug 2001;21(4):307-323.
Too Quickly, Too Little
• Managers want the answer immediately, and may not be willing to pay
• Retrospective studies often take 6 months or more
• The cost and time frame for a prospective study depend on the level of costing and the length of the study (generally 25% of the total budget)
Managers May Not Know
• Managers may not know what is wanted (they may be the intermediary)
• Ask many questions; the Gold Book can be used to identify key issues
• Try to find out what other stakeholders might want to know