cost and consequences

Question 1

Costs

Answer 1

are calculated to estimate the resources (or inputs) used to produce a good or service.

Question 2

opportunity cost

Answer 2

value of the best alternative or one choice over another

Question 3

fixed vs variable cost

Answer 3

fixed Cost The cost does not vary with the quantity or volume of the output provided in the short run.
variable cost: The cost varies with changes in the output volume

rent, insurance, salaries of permanent staff,

variable costs include raw materials, direct labor electricity consumption

Question 4

average and marginal costs?

Answer 4

average costs: The total cost of healthcare intervention provided, divided by the total quantity of the intervention
marginal costs:
the change in the total cost of producing one more or one less unit of the output

Question 5

Cost Categories

Answer 5

1.Direct medical costs
2.Direct nonmedical costs
3.Indirect costs
4.Intangible costs

Other categories (Drummond et al)
a.Healthcare sector costs
b.Costs to other sectors
c.Patient and family costs
d.Productivity costs

Question 6

Direct Medical Costs and direct non medical costs

Answer 6

direct medical These are the medically related inputs used directly to provide the treatment.

**non med: **Costs that are associated with treatment but are not medical in nature

Pharmaceuticals
▪ Diagnostic tests
▪ Physician & pharmacist visits ▪ Emergency department visits
▪ Hospitalizations

• Transportation
  ▪ Childcare services
  ▪ Food and lodging

Question 7

Indirect Costs and intangible costs

Answer 7

Involve the costs that result from the loss of productivity because of illness or death.

Intangible costs include the costs of pain, suffering, anxiety, or fatigue that occur because of an illness or the treatment of an illness

Question 8

Incremental cost

Answer 8

It refers to the extra cost required to buy an additional unit of benefit for one therapeutic alternative compared to the other.

Question 9

Opportunity cost

Answer 9

It refers to the economic benefit that is relinquished while choosing one therapeutic alternative over the other, i.e., Money spent on one resource that cannot be spent for other purposes; the value of the next best use that is forgone.

Question 10

Healthcare sector costs
Other sector costs
Patient & family costs
Productivity costs

Answer 10

• Include medical resources consumed by healthcare entities, Similar to direct medical costs but do not include direct medical costs paid for by the patient
• Some diseases and their treatment impact other non-healthcare sectors such as housing, homemaker services, and educational services.
• These costs include the patient’s or family’s share of direct medical as well as direct nonmedical costs.
• Similar to indirect costs but has the advantage of not being confused with the accounting term with the same name.Drummond et al. advise against using the term intangible

Question 11

II. CONSEQUENCES “outcomes”

Answer 11

defined as the effects, outputs, and outcomes of the program or treatment alternative (drug therapy).

Question 12

Economic outcomes
clinical outcome
humanistic outcome
positive outcome
negative outcome
intermediate coutcome

Answer 12

Economic outcomes: Comparing direct, indirect, and intangible costs with the consequences of
medical treatment alternatives
▪Clinical outcomes: Medical events occur as a result of disease or treatment (e.g., safety and
efficacy endpoint)
Humanistic outcomes:Consequences of disease or treatment on patient function status as physical function, social function, general health and well-being, and life satisfaction
**Positive outcome: **The desired effect of the drug, i.e., the best therapeutic outcomes.
▪ Negative outcomes: Adverse reaction or toxicity of the drug
▪ Intermediate outcomes: It can serve as a proxy for the more relevant final outcome

Question 13

PERSPECTIVE

Answer 13

Perspective refers to the point of view from which the economic (i.e., PE) analysis is performed

Question 14

▪ Patient

Answer 14

From patients’ perspective, costs are essentially what they pay for a product or service (the portion not covered by insurance).

Question 15

▪ Provider

Answer 15

From a healthcare professional or care organization, costs are the actual costs of providing a product or service, regardless of the charge.

Question 16

▪ Payer

Answer 16

From insurance companies, government, or employers’ perspective, the cost to the payer is the charges for healthcare products and services allowed (reimbursed) by the payer.

The payer perspective involves estimating costs for third-party plans, patients, or a combination of patient co-pay and third-party plan costs

Question 17

▪ Society

Answer 17

Costs include patient morbidity and mortality costs and the overall costs of giving
and receiving medical care.

Question 18

most common perspective used in PE studies

Answer 18

The most common perspectives used in PE studies are those of institutions or providers, or payers, as they are more pragmatic in answering the question at hand

The analysis should differentiate between actual costs, charges, and reimbursed amounts

hosipital: actual cost.
payer: reimbursed amounts
patient: out of pocket expense: co-payments, deductibles, lost wages, and transportation costs.

Question 19

Standardization of Costs.

Answer 19

To ensure fair comparisons between groups, adjustments to costs are necessary when estimating costs from information collected over a year(s) before the study