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fph exam > 4D health economics > Flashcards

4D health economics Flashcards

1
Q

what is economics?

A
  • the social science of how goods are produced, distrusted and consumed
  • the science of how to make choices about the use of scare resources
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2
Q

Give 2 different ways that economics can be divided

A
  1. macro/micro economics
  2. positive/ normative economics
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3
Q

What is Microeconomics?

A
  • deals with elements within the economy

ie individuals, households, firms, buyers, sellers, markets

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4
Q

what is macroeconomics?

A
  • deals with the whole economy
    ie unemployment, inflation, economic growth, monetary policy (ie interest rates)
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5
Q

What is positive economics?

A
  • describes the economic sphere as it is, it makes no value judgements

ie how markets work, how interventions affect outcomes

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6
Q

what is normative economics?

A
  • a perspective of ‘what ought to be’ rather than what actually is
    ie what should be produced, what resources to use, how to distribute goods
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7
Q

what is scarcity

A
  • a central concept in economics
  • there is infinite demands but only finite resources (ie demand will always exceed supply), resources are therefore scarce
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8
Q

what is scarcity in healthcare

A
  • the amount of resources that could be spent on healthcare is infinite, therefore the resources that are actually available for health care will always be relatively scarce
  • that means choices must be made about how to spend healthcare budgets
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9
Q

How can health care be viewed as a production process?

A

Healthcare can be viewed as a production process that uses inputs to produce outputs

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10
Q

what are the 4 types of inputs when viewing healthcare as a production process?

A
  1. LAND (physical resources of the planet including mineral deposits)
  2. CAPITAL (resources created by humans to aid production ie tools, machinery, factories)
  3. LABOUR (human resource with people as workers)
  4. ENTERPRISE ( the human resource organising the other 3 factors to produce goods and services)

none of these 4 inputs are infinite, therefore every choice that is made involves a sacrifice ie using a worker for one task means they do not do another;

  • this sacrifice is the opportunity cost.
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11
Q

what is the opportunity cost?

A
  • the benefit forgone by not using the resources for the next best alternative
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12
Q

what is opportunity cost used for in healthcare economics

A
  • in healthcare economics a calculation of opportunity cost is often used to value the benefits of a service
  • for example the benefits may be quantified as the health benefits (in terms of ie QALYs gained) that would have been achieved if the money had been spent on the next best alternative intervention.
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13
Q

Give 2 ways that opportunity cost can be calculated directly

A
  1. cost effectiveness analysis
  2. cost utility analysis
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14
Q

What are the differences between demand and need

A
  • where need is not identified, healthcare is not demanded
  • Not all healthcare that is demanded is needed
  • healthcare may not always lead to an improvement in health
  • there is a difference between demand for health and demand for healthcare
  • demand for healthcare is a derived demand (demand for an intermediate good that occurs as a result of demand for a final good) ie healthcare is demanded as a means to improving health
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15
Q

What is need for healthcare? what are the different types?

A
  • need is a capacity to benefit from healthcare
  • Bradshaw identified 4 types of need- felt, expressed, comparative, normaitve
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16
Q

What is demand for healthcare? how is it expressed?

A
  • a request for healthcare
  • the amount of a good or service that consumers are willing to purchase at a given price
  • must be expressed by people doing one of the following:
    1. attending the place the service is provided
    2. waiting for the service
    3. paying for the service
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17
Q

Why is demand for healthcare rising in developed countries (5)

A
  1. changing demographics (ageing population)
  2. Innovation (we can do more in healthcare now)
  3. Information (educated consumers)
    4 Lifestyle (sedentary lifestyle, alcohol, smoking9)
  4. Rising standards of living ( people have higher quality of life expectations)
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18
Q

What are the 4 determinants of demand?

A
  1. PRICE OF HEALTH/ HEALTHCARE (when user fees are introduced to healthcare systems demand drops- this is known as price elasticity of demand)
  2. INDIVIDUALS INCOME (studies have shown that the introduction of user fees reduces demand disproportionately in people on lower incomes ie their demand is more income elastic than people with higher incomes)
  3. TASTES AND PREFERENCES
    (people place different values on the benefits of healthcare, some are more likely to seek healthcare for a particular condition than others)
  4. PRICE AND AVAILABILTIY OF COMPLEMENTS AND SUBSTITUTES
    - substitutes for healthcare may include other types of healthcare (ie complementary medicine)
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19
Q

What is a substitute?

A
  • products where an increase in price for one good will cause an increase in demand for the other good

ie 2 different brands of the same vaccine

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19
Q

What is a complement?

A
  • products where the rise in price in one good will cause a reduction in demand for the other

ie syringes and needles

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19
Q

Describe a demand curve

A

price in the y axis
quantity in the x axis

the Demand curve slopes Downward

As the price of a product falls consumers are normally willing to buy more of it

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20
Q

Describe ways in which movement of the demand curve can occur

A
  • all other things being equal, a change in price tends to cause movement along the demand curve
  • however, some over factors can cause a shift in the curve
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21
Q

How does a fall in price effect the demand curve

A

fall in price –> more product demanded–> movement rightwards along the demand curve

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22
Q

How does an increase in price effect the demand curve

A

Increase in price-> leads to less product demanded –> leftward movement along the demand curve

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23
Q

How does a fall in income effect the demand curve

A

fall in income–> purchasers are not willing to pay as much–> leftward shift of the demand curve

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24
Q

How does an increase in population/ increased income/ change in taste (ie due to advertising) affect the demand curve

A

these factors –> purchasers are willing to pay more –> rightward shift of the demand curve/

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25
Q

What is price elasticity of demand? How is it calculated?

A

a measure of how sensitive the demand for a particular good is to changes in price

PED= % change in quantity demanded/ % change in price

When interpreting it you should consider the absolute value (ie get rid of +/-)

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26
Q

How to interpret Price elasticity of demand

A

PED>1 = price elastic= large response in demand to changes in price

PED=1= unit elastic= response in demand is proportionate to change in proce

PED<1= Price inelastic= small response in demand to changes in proce

PED=0 = perfectly inelastic= no response in demand to changes in price

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27
Q

What is income elasticity of demand? How is it calculated?

A

Measure of how sensitive demand for a particular good is to changes in income

IED= % change in quantity demanded/ % change in income

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28
Q

How to interpret the income elasticity of demand?

A

IED >1= luxury goods= disproportionately large amounts of good are demanded as income rises

IED=0 = Normal goods= the amount of good demanded changes in line with income

IED <0 = inferior goods = larger amounts of goods are demanded when income falls

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29
Q

what is supply?

A

The amount of goods or services that produces are willing to, or able to, sell at a given price

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30
Q

What 4 things determine supply

A
  1. the price of the good
  2. the price of production
  3. the number of other suppliers
  4. the price of related goods
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31
Q

give 4 things supply in healthcare may be quantified by

A
  1. staffing ie number of nursers
  2. beds
  3. equipment
  4. budges
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32
Q

Describe the supply curve

A

Price on y axis
quantity on x axis

If a product sells at a low price producers wont want to make much of it, as the selling price increases they will want to make more

therefore the sUpply curve slopes Upwards

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33
Q

describe how movement along/shifts of the supply curve can occur

A

Rise in price of good–> suppliers will make more –> rightward movement along the supply curve

fall in price of goods –> suppliers will make less –> leftward movement along the supply curve

Cost of inputs reduces/ more labour –> producer able to produce more product–> supply curve shifts rightwards

cost of inputs increases/less labour–> produces finds it more difficult to produce the product –> supply curve shifts leftward

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34
Q

what is a market

A

A market is a place (physical or virtual) where consumers and suppliers trade goods or services

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35
Q

What is market equilibrium?

A
  • the price of a good reaches equilibrium at the intersect of the supply and the demand curves
  • if the price is set higher than the equilibrium price then producers will want to produce more the the good. However, when the price is set higher fewer consumers will be willing to pay, thereby returning the price back to the equilibrium point
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36
Q

Give 3 key features of a perfect market

A
  • the supply and demand of goods should be determined independently (ie producers determine the supply and consumers determine the demand)
  • the price of good rises or fall until equilibrium is reached
  • demand will equal supply
  • no perfect markets exist in the real world
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37
Q

Give the 6 characteristics of a perfect market

A

HAFPEN

Homogeneity= identical products
Atomicity= many buyers, many sellers
Free entry= sellers are free to enter and leave the market
Perfect information = all buyers and sellers know the products and prices of all sellers
Equal access= all sellers have equal access to production technology
No externatlities= an externality is a benefit or disbenefit to someone other than the purchaser (ie herd immunity is an externality if immunisation)

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38
Q

Causes of market failure in healthcare are

A
  • a market may fail due to lack of any one of the 6 characteristics of a perfect market
  • the principle causes of market failure in healthcare are (GIMPE)
  1. MERIT gOODS
    belief that certain goods ie healthcare are special
  2. IMPERFECT INFORMATION
    - agency (patients do not normally have perfect knowledge of healthcare, they rely on doctors as their agents)
    - uncertainty - people are not able to predict their demand ie when they will need trauma care
    -Moral hazard-when their is a lack of incentive to guard against risk when one is protected from its consequences (ie NHS is free to use)
    - Adverse selection (ie in systems with a commercial insurance market such as US those at lowest risk tend to opt out of paying for healthcare
  3. MARKET CONTROL
    a properly functioning market relies on lots of sellers and buyers (atomicity). A market may fail if there is monopoly or oligopoly or monopsony or oligopsony
  4. PUBLIC GOODS
    these are extreme externalities such as a health promotion poster campaign. Public goods are characterised by
    Non-rivalness - when one person reads a poster others do not suffer
    Non-excludability- it is impossible to stop someone from reading the poster
  5. Externalities- a benefit or disbenefit to someone other than the purchaser. Positive externalities= beneficial. Negative externalities= harmful
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39
Q

what is Agency and how does it apply to healthcare markets?

A
  • one of the reasons healthcare markets are imperfect is that consumers lack perfect knowledge about the complexities of healthcare
    -Instead they rely on agents ie doctors/nurses to inform them of what services they need
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40
Q

What would a perfect agent have to balance?

A
  • a perfect agent does not exist
  • they would have to balance 3 conflicts:
    1. health status of individual patient
    2. preferences of individual patient
    3. utility to society
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41
Q

Agency: what is supplier induced demand?

A
  • when agents act in their own interest ie recommending more treatment than is necessary
  • difficult to demonstrate but say if cost of dental treatment increased when more suppliers entered the market then that market would be demonstrably abnormal and supplier induced demand will have been detected
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42
Q

Agency: what is supplier reduced demand? how can it be prevented

A
  • when healthcare is very scarce, supplier reduced demand may be seen
  • agents may not recommend treatment when the perfect agent would
  • it makes it appear as if there is less demand than is actually the case
  • policy makers can design contracts to reduce this ie linking payment to quality indicators
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43
Q

how do you define margins?

A

the incremental variation in inputs that is required to have a corresponding variation in outputs

  • choices made by consumers often result in small increases or decreases in the demand for one product relative to another
  • these fluctuations are known las marginal changes
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44
Q

What is marginal cost?

A
  • cost of producing one extra unit of service
  • the cost will reflect any stepped costs that are encountered (ie the cost of opening a new operating theatre because existing theatre capacity has been exceeded)
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45
Q

what is marginal benefit?

A
  • the benefit derived from one extra unit produced
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46
Q

what does the process of marginal analysis involved? what can it help identify? (3)

A
  • involves examining the effects of small changes on the existing patterns of expenditure
  • this can help identify:
    1. where additional resources should be targeted
    2. where reductions should be made
    3. how resources can be reallocated to achieve a gain in benefit without a change in expenditure
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47
Q

What does the cost curve for production of a good look like? how is this related to economies and diseconomies of scale?

A
  • generally as the amount of a good you produce increases the cost decreases
  • this applies up until a point when factors such an organization becoming so large it becomes unweildy and diseconomies of scope come into play
  • the cost curve for production of a good is therefore U shaped.

Price on the y axis, quantity on the x axis.

  • as price of production falls with increasing quantity this - Ecomony of scale
  • as price of production climbs with increasing quantity produced this is diseconomy of scale
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48
Q

what is efficiency?

A
  • efficiency is a measure of how much good is being achieved from the available resources
  • there are 3 types:
    1. technical efficiency
    2. economic efficiency
    3. allocative efficiency
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49
Q

Efficiency: what is technical efficiency

A

Technical efficiency is the maximum output for the given inputs
- it involves using resources to their maximum advantage
- ie it is technically efficient to use the lowest dose of a drug that achieves the same effect

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50
Q

Efficiency: what is economic efficiency?

A
  • maximisation of an output for a given cost
  • ie if you can use a cheaper diagnostic test with the same results that is more economically efficient
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51
Q

Efficiency: what is allocative efficiency? what 3 systems can be used in decision making?

A
  • allocative efficiency is achievement of the best combination of healthcare programmes to maximise the health of society
  • allocative efficiency is achieved when resources are allocated so as to maximise the welfare of the community
  • takes into account the technical and economic efficiency but always the way in which outcomes are distributed within the community
  • given that there is always scarcity a decision making system is required- there are 3 options
  1. FREE MARKET - healthcare resources are allocated according to consumers purchasing behaviours
  2. COMMAND SYSTEM- planning so that healthcare is allocated according to some predetermined criteria such as need
    3 MIXED SYSTEM- combines the 2 above
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52
Q

What is discounting?

A

a method used in economics to deal with the phenomena of ‘positive time preference’

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53
Q

What is positive time preference? how does this apply to public health campaigns?

A
  • the human nature of preferring benefits to be realised now and costs to be borne in the future
  • this is logical as the future is uncertain
  • many public health campaigns (ie stop smoking) have cost now and benefits only years down the line
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54
Q

How are discounting rates used?

A

-positive time preferences can be adjusted for in calculations of costs and benefits using a discounting rate
- typically discounting rates used vary between 0-6% and the same rate does not have to be used for both the costs and the benefits
- the rate used should reflect the magnitude of the positive time preference
- because of the large impact of discounting on public health interventions sensitivity analysis should always include a range of discounts for both costs and benefits.

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55
Q

What features make health care a special case in economics? (6)

A
  1. Supply and demand (they are not independent in healthcare)
  2. Agency (the nature of healthcare required is often largely decided by professionals)
    3.Uncertainity (illness is often unpredictable)
  3. Immediacy (life and death decisions are often needed in short time frames)
  4. Imperfect markets (all healthcare markets (particularly publicly funded ones) are imperfect)
  5. Necessity (healthcare is often an unavoidable commodity)
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56
Q

Financial resource allocation in healthcare: what is it?

A

Financial resource allocation involves transfer of funds from purchasers to providers in order to meet healthcare objectives

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57
Q

From what sources is healthcare funded in England?

A
  • primarily from general taxation and national insurance contributions
  • small amount from user fees
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58
Q

How has financial resource allocation for healthcare changed in England?

A
  • many changes over the past 15 years
  • initially department of health provided funding to primary care trusts
  • this changed and NHS England and public health England were established in 2013. The department of health provided funding to these 2 bodies
  • NHS England provided funding to clinical commissioning groups who commissioned GP and hospital services.
  • now Public health England has been replaced by UKHSA and OHID
  • CCGs have been replaced by integrated care systems which commission GP and secondary care services
  • local authorities receive a portion of the public health grant to commission community health services.
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59
Q

what are the 3 principle methods of funding health care?

A
  • private insurance
  • social insurance
  • public funding
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60
Q

Funding healthcare: how does private insurance work and what are the pros and cons

A
  • individual take out healthcare insurance and pay ie monthly
  • private insurance may be provided through a persons employer

pros:
-may incentivise insurers to decrease costs, increase quality of service
- providers may be incentivised to improve cost and service quality so insurers choose to work with them

cons:
- adverse selection, those at low risk may choose not to pay (increasing costs for rest of the pool- this can be avoided by compulsory insurance or community ratings)
- may leave people with no healthcare insurance and liable to big costs
- generally leads to an inefficient system

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61
Q

Funding healthcare: how does social insurance work and what are the pros and cons

A
  • a social insurance fund is greated out of contributions from employers, employees and government
  • used to pay for healthcare for employees and there dependents
  • advantages
  1. government is a key player so can influence price
  2. generally lower cost than private insurance
  • disadvantages
    1. only covers employed so another government scheme is needed for others
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62
Q

Funding healthcare: how does public funding work and what are the pros and cons

A
  • healthcare paid for by taxation
  • may be supplemented by user chargers
  • providers may be public (ie NHS trusts) or private (ie private hospitals providing NHS care)
63
Q

Payment of providers: what are the 4 main methods?

A
  • salary
  • block contract
  • capitation
  • fee for service
64
Q

Payment of providers: what are the pros and cons of salary payments

A
  • provider is paid a salary
    PROS
  • simple
    CONS
  • no incentive to see additional patients or provide good service
65
Q

Payment of providers: what are the pros and cons of fee for service payment

A
  • payments for services provided

PROS
increases the number of patient seen and services provided

CONS
can make clinicians more likely to refer for more expensive services for which they get paid more money

66
Q

Payment of providers: what are the pros and cons of block contracts

A
  • a lump payment for a specific, often broad service ie acute surgical care
    PROS
  • simple to administer
    -cost is known in advance

CONS
- doesn’t take into account changes in demand which may lead to unexpected costs
- no incentive to improve care or services provided

67
Q

Payment of providers: what are the pros and cons of capitation

A
  • providers are paid a price per head of a population to provide some or all of the healthcare for a target population

PROS
- provider can decide to spend the money on the services best for the population
- can be cost effective

CONS
- providers are paid regardless of what they deliver so no incentive to improve care
- does not take into account changing level of demand

68
Q

How can financial incentives be used in healthcare and list 4 types used

A
  • financial incentives can be used to encourage or discourage behaviours from providers (ie provision of a service) or patients (ie uptake of a service)
  1. quality outcome framework
  2. Payment by results
  3. Readmission costs
  4. fee for service
69
Q

Financial incentives: what is the quality outcome framework?

A
  • QoFs are a voluntary GP incentive scheme aiming to improve GP quality of care
  • financial rewards are obtained for hitting targets in certain, government defined, areas
70
Q

Financial incentives: what is the payment by results

A
  • should really be call payemet by activity
  • hospitals are paid for provided care for a patient based on the national average cost of delivering that healthcare resource group
  • this provides an incentive for hospitals to provide service for less than the average cost
71
Q

Financial incentives: what are readmission costs?

A
  • hospitals are liable for costs of any unpanned readmissiosn within 30 days, this aims to reduce premature discharges an disprove post discharge care
72
Q

Financial incentives: what is fee - for -service

A
  • aims to increase services provided it vaccinations by GPs
73
Q

what is social care? who does it help

A
  • care provide to assist people with activities of daily living
  • helps many groups, mainly:
    1. older people
    2. learning disabilities
    3. mental health
    4. looked after children
    5. families (with CP risk or unwell)
    6. ex offenders
74
Q

who monitors performance of providers and commissioners?

A

The CQC

75
Q

what is economic appraisal/economic evaluation?

A
  • 2 different names given to research studies that compare the costs of an action against the potential benefit that it provides.
76
Q

What is an options appraisal?

A
  • typically used for large scale projects that require considerable outlay of public funds
  • it is the process of determining and comparing different options for meeting an objective
  • generally 2 or more new options are compared (ie not what is already being done)
  • options appraisal usually include an economic appraisal (commonly a CBA but could be CEA, CUA, CMA, CCA) as well as assessment of factors such as affordability, achievability and impact.
77
Q

Type of economic analysis: cost benefit analysis

A
  • involves calculating the costs and benefits of an intervention in monetary terms and calculating the difference between the 2
  • How are costs valued? Monetary
  • How are benefits valued? monetary
  • Result: Net benefit (ie benefits minus costs)
  • Advantages: Can compare value of different interventions across different sectors of the economy (ie not just health), therefore it can examine allocative efficiency
  • Disadvantages: requires monetary value to be put on life/health which can be hard
78
Q

Type of economic analysis: cost Efficiency analysis

A
  • compares the cost of different interventions that aim to achieve the same outcome
  • Valuation of costs? Monetary
  • Valuation of benefits? Clinical (ie mmHg BP reduced by)
  • Result: Incremental cost effectiveness ratio
    -Advantages: useful for comparing different interventions for the same disease/ issue ( ie assessing economic and technical efficiency)
  • Disadvantages: cannot be used to compare across different disease areas or conditions
79
Q

Type of economic analysis: cost utility analysis

A

-measures outcome in terms of QALY or DALY to enable comparison to be made across different disease areas
- Valuation of costs? Monetary
- valuation of benefits? DALY or QALY
- Result: Incremental cost effectiveness ratio
-Advantages: can compare interventions for different medical conditions therefore allowing some assessment of allocative efficiency
- Disadvantages: cannot be used to compare with interventions from other non-health sectors of the economy

80
Q

Type of economic analysis: cost minimisation analysis

A
  • A type of cost effectiveness analysis where the effect of each intervention on the outcomes is the same (ie simply assesses how the cost of 2 or more interventions differ from each other)
  • ie treatment A and treatment B both prevent 100 strokes per year. CMA is used to work out which is cheaper
81
Q

Type of economic analysis: cost consequence analysis

A
  • In this type of analysis the different consequences of each option are simply listed rather than attempting to express the consequence is the same units
  • it is therefore a disaggregated approach and costs and benefits are bot combined into a single figure like the ICER
  • In England NICE allows CCA to be used for assessing public health interventions
82
Q

What economic evaluations give an incremental cost effectiveness ratio?

A
  • CEA
  • CUA
  • CMA
83
Q

How can the IECR be plotted on a 4 quadrant chart- what are the 4 possible quadrants in which it can fall?

A
  • put scale of more effective than current treatment to less effective than current treatment on one axis
  • put scale of costs more than current treatment to costs less than current treatment on the other axis
  • 4 possibilities are:
    1. costs more and more effective
    2. costs less and more effective
    3. costs more and less effective
    4. costs less and less effective

if the answer is 2 or 3 the choice is obvious
-However 1 and 4 require some trade offs
- calculating the ICER can help interpret how the additional costs compare with the additional benefits

84
Q

How do you calculate the incremental cost effectiveness ratio? What is the units if it is a CUA?

A

ICER= (cost of new intervention- cost of current intervention)/ (outcome of new intervention- outcome of current intervention)

  • if ti is a CUA the outcomes are measured in QALYs
  • the ICER is therefore in cost per QALY
    -DONT FORGET the ICER indicates the cost effectiveness of one intervention relative to another
85
Q

What is NICE’s cost per QALY threshold-

A

won’t define one
- however treatment with an ICER <£20000- 30 000 are likely to be accepted.

86
Q

Costs in economic evaluations: what 2 factors influence the decision on which costs to include in economic evaluations?

A
  1. the PERSPECTIVE (ie the viewpoint from which the costs and benefits are regarded)
  2. The TIMEFRAME for the evaluation
87
Q

Costs in economic evaluations: List 5 potential costs which may be included in economic evaluations

A
  1. costs to other departments (ie social care)
  2. costs to family
  3. out of pocket costs to patients
  4. cost of loss of productivity
  5. future costs
88
Q

Costs in economic evaluations: what are direct costs?

A

-costs incurred exclusively for that output (ie the cost of disposable surgical equipment for an operation)

89
Q

Costs in economic evaluations: what are indirect costs?

A

costs shared across several outputs (ie the cost of an autoclave for sterilising surgical equipment for several operations)

90
Q

Costs in economic evaluations: what are overheads?

A

-costs shared across the entire organization (ie communications department)

91
Q

Costs in economic evaluations: what are tangible costs?

A
  • costs that can be readily measured in currency terms and with certainty
92
Q

Costs in economic evaluations: what are intangible costs?

A
  • costs that are difficult to measure in currency terms (ie the psychological costs associated with illness)
93
Q

Costs in economic evaluations: what are fixed costs?

A

costs that do not vary with level of activity

94
Q

Costs in economic evaluations: what are variable costs?

A
  • costs that vary in relation to the quantity of output produced
95
Q

Costs in economic evaluations: where might the costs attributed to the value of resources be derived from for an economic evaluation?

A

values are typically derived from

  • an RCT (where each arm represents a different intervention)
  • economic modelling
96
Q

Costs in economic evaluations: what factors should be considered when valuing resources?

A

when valuing resources studies should:
1. consider the OPPORTUNITY COST ( ie the forgone value of the next best use of the resources)
2. consider the costs in the LONG RUN (ie when all inputs including capital inputs such as buildings can be altered freely).
3. should be adjusted for DISCOUNTING (costs should be adjusted for human time preference using discounting)

97
Q

Costs in economic evaluations: when costs are considered in the long run what does the average cost equate to?

A
  • the marginal cost

Cost of producing one extra unit of service reflecting any stepped costs that are encountered.

98
Q

what are the 2 main elements to assessing health benefits in economic evalations?

A
  1. how to measure health
  2. How to please values on different measures of health or health states (may be monetaey or non-monetary)
99
Q

Economic evaluation: what measures of health can be used? (4)

A
  • mortality (deaths averted or years of life gained)
    -morbidity (incidence, prevalence, blood test results)
  • disease specific measures (ie COPD questionnaire)
  • Generic health measures (ie SF-36 or EQ5D0
100
Q

Monetary valuation of health: what are the advantages of this approach? (3)

A
  1. outcomes can be compared directly to costs to give a net benefit (easier than considering whether cost per unit of outcome represents good value)
  2. Non- health outcomes can also be included (ie impact on family income
  3. Comparison can be made with interventions in other sectors of the economy (eg education or transport)
101
Q

Monetary valuation of health: what are the 3 principle approaches to valuing life/health in monetary terms?

A
  1. Human capital
  2. revealed preference (hedonic wage)
  3. Stated preference
102
Q

Monetary valuation of health: what is the human capital method?
what are the advantages (1) and disadvantages (4) of this method?

A
  • the expected value of an individuals productivity is calculated (both market and non market ‘household’ productivity( and then adjusted for individuals life expectancy
  • often valued using salary rates as an indicator of productivity
  • advantages: it is objective
  • disadvantages:
  1. identifying changes in productivity may not be easy
  2. the value of children, older people, unemployed appears lower than working males
  3. does not reflect how much society is willing to pay for treatment
  4. Improvements in health are valued only for their improvement in productivity
103
Q

Monetary valuation of health: what is the revealed preference (hedonic wage) method?What are the advantages (2) and disadvantages (4) of this method?

A
  • revealed preference methods infer willingness to pay based on individuals actual behaviours in markets related to health risk
  • the hedonic wage method considers how individuals preferences regarding the value of a health risk or benefit are traded against income (ie in the UK a soldiers wage is higher than comparable public sector post because soldiers face substantial risks during their service life)

ADVANTAGES
- based on actual consumer choices
- provides insight into an individuals valuation on their own life

DISADVANTAGES
- focussed on immediate accidental death rather than death due to chronic exposure (ie asbestos)
- biased towards working aged males
- ignores that labour markets are imperfect (ie imperfect knowledge of risks, few job options)
- limited generalisability (people who undertake risky jobs are unlikely to be representative of the population)

104
Q

Monetary valuation of health: what is the stated preference method? What are the advantages (2) and disadvantages (3) of this method?

A
  • individuals are asked what they would choose given different hypothetical situations
  • different methods may be used:

CONTINGENT VARIATION
- where an attempt is made to elicit a persons maximum willingness to pay to avoid a risk or improve health

DISCRETE CHOICE
- experiments where people are asked to choose between different interventions taking into account cost

ADVANTAGES
- measures strength of preference
- can be applied to any intervention

DISADVANTAGES
- stated preferences may not reflect reality
- requires large and costly surveys
- issues with validity, reliability and bias (people may state different preferences from those they actually hold)

105
Q

Name 2 non- monetary valuations of health, why are they often preferred?

A

QALY and DALY

  • often preferred because of the difficulties placing a monetary value on health
106
Q

Non-monetary valuations of health: what is a QALY and how is it commonly used?

A
  • A QALY is a utility measure (the value that individuals or society give to a particular health state)
  • QALY combines quality and duration of life into a single measure
  • in the UK NICE collects evidence on the cost per QALY produced by the treatments it appraises
107
Q

Non-monetary valuations of health- QALYS: how are QALYs calculated and interpreted

A

QALY= utility value in health state x years of life in that state

  • the benefit of an intervention is the number of QALYS that it produces

Normally utility values range 0 (dead)–>1 (perfect health) but numbers less than 0 can be used for health states worse than death

108
Q

Non-monetary valuations of health- QALYS: calculate the QALYS for 2 years in perfect health followed by 3 years in a health state with a utility value of 0.6

A

3.8 QALYs

109
Q

Non-monetary valuations of health- QALYS: Name the 2 principle approaches to assigning utility values to health states. Which method is more commonly used?

A
  1. provide scenarios of disease states and value the disease state directly
  2. Use a disease measure if EQ5D to score a disease state. Each EQ5D score is allocated a utility value that was determined using a general population sample ( different countries have different value sets)

the second method is more commonly used as it is less time consuming

110
Q

Non-monetary valuations of health- QALYS: Name 4 methods in which utility values can be assigned (ie to a score on the EQ5D)

A
  1. Rating scales
  2. Time trade
  3. Standard Gamble
  4. Person trade off
111
Q

Non-monetary valuations of health- QALYS: Assigning utility values- what are rating scales?

A
  • subjects are asked to attribute a value between 0 and 1 to a series of health states
  • doubtful interval properties
112
Q

Non-monetary valuations of health- QALYS: Assigning utility values- what is the time trade method?

A
  • respondents are asked how many years of life in the disease state they are willing to give up for 1 year of full health
113
Q

Non-monetary valuations of health- QALYS: Assigning utility values- what is the standard gamble method?

A
  • respondents are asked to imagine that they have a disease and are asked to gamble of taking a hypothetical treatment that will either fully cure or kill them
  • the probability of full cure is varied
  • biased by respondents attitude to risk
114
Q

Non-monetary valuations of health- QALYS: Assigning utility values- what is the person trade off method?

A
  • subjects are asked to imagine a group of patients with a severe disease (X ) and a mild disease (Y). They are then told that there is a cure for both diseases and enough money to pay for cure of one person with disease X or (n) of disease Y. Subjects are asked to chose what they would do. The number of (n) is varied until the subject is indifferent.
  • Maybe affected by factors other than health state alone
115
Q

Non-monetary valuations of health- QALYS: What factors effect the value of QALYs

A
  1. the method used to assign utility values (ie person trade off, standard gamble, time trade, rating scales)
    2 WHO is asked (the values change radically depending on who makes the value judgement- should it be HCP, public, patients with the disease?)
  2. HOW questions are asked (how questions are asked effects the values given, remember responses are given to imagined situations and may not accurately reflect real life)
116
Q

Non-monetary valuations of health: what is a DALY?

A
  • DALYs also combine life expectancy and morbidity into a single factor
  • DALYs are focused on measuring burden of disease rather than quality of life
117
Q

Non-monetary valuations of health: how are DALYs calculated?

A

DALY= years of life lost + years lived with disability (x age weighting and discounting at 3%)

years of life lost (usually up to age 75 years)= (75- average age of death from the condition) X number of deaths from the condition

Years lived with disability= Number of cases X disability weight X average length of time lived in that disease state

118
Q

Non-monetary valuations of health: how are DALYs interpreted?

A
  • the benefit of a health intervention is the number of DALYs averted
  • one DALY represents the equivalent of loss of 1 year lived in full health
  • a low number of DALYs is therefore good
119
Q

Non-monetary valuations of health: how are the disability weights used in DALYs derived?

A
  • disability weights used in DALYs were derived by 12 experts using the person trade off method
120
Q

Non-monetary valuations of health: what are the advantages of QALYs (3)

A
  • combines quality of life and mortality
  • allows comparison of health outcomes across different medical specialities
  • can be specific to a population of interest and therefore more valid
121
Q

Non-monetary valuations of health: what are the disadvantages of QALYs (3)

A
  • QALYs may not be equal and therefore not comparable (depends WHO was asked and HOW they were asked)
  • Not weighted therefore no consideration as to whether some QALYs are worth more than others (ie age, productivity, family circumstances)
  • May not be generalisable to countries where measures such as EQ5D have not be validated
122
Q

Non-monetary valuations of health: what are the advantages of DALYs (4)

A
  • combines life expectancy and morbidity
  • good for international comparisons or disease burden
  • good for previously neglected areas such as mental health
  • discounting is used (discounting varies with QALYs)
123
Q

Non-monetary valuations of health: what are the disadvantages of DALYs (3)

A
  • disability weights based on ‘expert’ rather than population opinions which can be controversial
  • age weighting may be criticised as being discriminatory (should childhood be valued less than adult life?)
  • requires good data on disease morbidity and mortality for the country in question
124
Q

Non-monetary valuations of health: similarities between QALYs and DALYs

A
  • combines mortality and morbidity into a single dimension
125
Q

Non-monetary valuations of health: differences between QALYs and DALYs

A
  • DALYs measure disease burden (rather than quality of life)
  • DALYS are age weighted
  • DALYs are discounted at a rate of 3% (discounting varies with QALYs)
126
Q

areas for consideration when critically appraising an economic evaluation? (12)

A
  1. objectives
  2. audience
    3 type of evaluation
  3. perspective
  4. target population
  5. boundaries
  6. time horizon
  7. defining the intervention
  8. comparators
  9. cost data
  10. outcome data
  11. design
127
Q

Critically appraising a economic evaluation: what needs to be considered in terms of objectives?

A
  • what were the objectives of the study- to add to the knowledge base? to aid making a specific decision?
128
Q

Critically appraising a economic evaluation: what needs to be considered in terms of audience?

A
  • who is the intended audience, who will be using the information?
    -eg government, health service, pharmaceutical company
129
Q

Critically appraising a economic evaluation: what needs to be considered in terms of type of evaluation?

A

is it a CBA, CEA, CUA, CMA, CCA

130
Q

Critically appraising a economic evaluation: what needs to be considered in terms of perspective?

A
  • the perspective affects which costs and outcomes are included. usually one of 3 perspectives is adopted:

SOCIETAL the broadest perspective, considers all of the costs and benefits regardless of who pays/receives them

HEALTH SERVICE

PATIENT

131
Q

Critically appraising a economic evaluation: what needs to be considered in terms of target population?

A
  • who are the group of patients for whom the intervention is intended?
  • may also identify subgroups for a separate analysis (for whom the costs and benefits may differ)
132
Q

Critically appraising a economic evaluation: what needs to be considered in terms of boundaries?

A
  • many interventions have spillover effects (ie a stop smoking programme for mothers may benefit mothers health but also the health of their children)
  • boundaries may also be set around the type of health considered (ie mental health, physical health etc)
133
Q

Critically appraising a economic evaluation: what needs to be considered in terms of time horizon?

A
  • time horizon should extend far enough into the future to capture all of the important outcomes and costs (eg lifetime horizon)
    -the difficulty is that data tend to only be available for a limited period, beyond which the parameters will need to be modelled. The further into the future the less accurate these tend to be
134
Q

Critically appraising a economic evaluation: what needs to be considered in terms of Defining the intervention?

A
  • definition should be clear- WHO does WHAT, to WHOM, WHEN, HOW often, WHERE?
135
Q

Critically appraising a economic evaluation: what needs to be considered in terms of comparators?

A
  • if resources were unlimited the ideal situation would be to compare all possible interventions, generally this is not feasible
    -the most relevant comparison is usually current practice, although this can sometimes be difficult to define
  • note that current practice may not always be efficient and therefore the next best alternative or the do nothing option are used
136
Q

Critically appraising a economic evaluation: what needs to be considered in terms of cost data?

A

the costs included generally depend on the perspective and the timeframe for the evaluation

137
Q

Critically appraising a economic evaluation: what needs to be considered in terms of outcome data?

A
  • consider how health was measured and how a value was put on different health statuses
138
Q

Critically appraising a economic evaluation: what needs to be considered in terms design?

A
  • RCT (piggy back studies) where healthcare utilisation data are collected during an RCT and used to assess costs. However, this approach may only include the costs and benefits seen during the trial period. Moreover the costs and benefits seen under trial conditions may not be generalisable.
  • Modelling studies (where decision analytic models are populated with data from a variety of sources)
    -combination studies: most economic evaluations use a combination of RCT and modelling
139
Q

Economic modelling: what is an economic model?

A
  • models are simplifications of the real world where only the important components in a problem are considered
  • some economic evaluations are based on a single RCT but most draw on data from several sources- these data can be combined in a economic model
140
Q

Economic modelling: what are the advantages of using economic models (4)

A
  • they can link information from various sources
  • they can extrapolate beyond the data observed in a RCT
  • they can generalise data to other settings
  • they can simulate head to head comparisons that have not been conducted in reality
141
Q

Economic modelling: what are the 2 most commonly used models in health economics

A
  • decision trees
  • markov models
142
Q

Economic modelling: Decision trees

A
  • the first branch in a decision tree represents the old and the new treatments
  • subsequent branches show potential outcomes for each treatment (ie either unproblematic or side effects)
  • subsequent branches how the potential considers of those side effects (ie recovery, death, morbidity)
  • each final branch is assigned a cost (£) and a benefit (QALY)
  • for the old and new treatment the sum of the benefits and costs are added together and multiplied by the branch probabilities
  • the ICER represents the incremental cost and benefit of moving from the old to the new treatment
143
Q

Economic modelling: Markov modelling

A
  • Markov models are useful for modelling chronic diseases
  • large circles represent a health state (eg well, diseased, dead(
  • individuals move from one state to another over a time period of 1 cycle (ie 1 cycle might = 1 year) according to a set of TRANSITION PROBABILITIES
  • costs and utility values can be assigned to each state
  • the model is run with a hypothetical population for a defined time horizon (ie 20 years or until all have died)
  • costs and outcomes for each option are then calculated based on the simulation

ADVANTAGES
- incorporates time by having cycles
-facilitates modelling of repeat events

DISADVANTAGES
- difficult to include interactions between patients (therefor not good for infectious diseases without modification)
- they are ‘memory less’ (the model ignores how long a patient has been in a disease state which could effect transition probabilities)
- as with all models markov models depend on availability and accuracy of data to put into them

144
Q

Economic modelling: Sensitivity analysis- what is it?

A
  • validity of models is always questioned as their outcome could be easily changed by manipulating one parameter slightly
  • sensitivity analysis addresses the issue or parameter uncertainty by varying different parameters across their range of plausible values and seeing how that effects the model outcome ICER
145
Q

Economic modelling: name 5 types of uncertainty in economic evaluation (there is a mnemonic)

A

Many Predictions Might Have Gaps

  1. METHODOLOGICAL UNCERTAINTY: uncertainty in the methodological approach (ie which perspective is the most appropriate)
  2. PARAMETER UNCERTAINTY: unexplained variation, sampling variation, random variation may lead to different possible values for parameters
  3. MODEL STRUCTURE UNCERTAINTY: Uncertainty about the assumptions within the model (ie discounting rate)
  4. HETEROGENEITY: different subgroups with different parameters (ie treatment might work better in females than males)
  5. GENERALISABILITY: uncertainty about whether the results apply in other contextx
146
Q

Economic modelling: sensitivity analysis: how many parameters can be varied at once?

A

parameters can be varied:
1. one at a time (one way sensitivity analysis)
2. multiple at a time (multiway sensitivity analysis or probabilistic sensitivity analysis)

147
Q

Economic modelling: sensitivity analysis: what are the 2 key types of sensitivity analysis?

A
  1. Deterministic sensitivity analysis
  2. Probabilistic sensitivity analysis
148
Q

Economic modelling: sensitivity analysis: what is deterministic sensitivity analysis?

A
  • involves modelling different plausible parameter values AND model assumptions (ie discounting value, time horizon) and seeing how they effect the ICER
  • parameters may be varied one at a time (one way) or several at a time (multiway)
149
Q

Economic modelling: sensitivity analysis: what is probabilistic sensitivity analysis?

A
  • incorporates parameter uncertainty into the model by defining parameters as distributions (rather than point estimates) and sampling from the distribution in a cohort simulation
  • this method can consider variation across all parameters simultaneously
  • the result of probabilistic sensitivity analysis is a COST EFFECTIVESNESS ACCEPTABILITY CURVE
  • this displays the probability of an intervention being cost effective at different willingness to pay values
150
Q

Decision analysis: what is decision analysis? 3 three things does it involve? how is the outcome decided

A
  • a process that involves:
    1. division of problems into simple, manageable components
    2. detailed examination of each component
    3. formation of components into a logical sequence so as to identify the best solution

all of the options are first identified, together with the probability and utility of each possible outcome (very like a decision tree in economic modelling!!). Probabilities and utilities along branches are then multiplied together and added to assess which option gives the best overall utility. A sensitivity analysis should then be conducted by varying probability and utility values within their confident intervals to test the robustness of the conclusion

see notes for a useful example

151
Q

Economic evaluation and priority setting: how are economic evaluations used in priority setting?

A
  • both CUA and CBAs allow interventions with disparate health outcomes to be assessed on the same scale
  • such interventions may include public health interventions
  • in England NICE provides priority setting advice as part of their health technology appraisals (which also consider, ethics, medical and social aspects of new health technologies)
152
Q

Economic evaluation and priority setting: What is the basic process of NICE health technology assessments for priority setting?

A
  1. IDENTIFICATION OF THE EVIDENCE a search of published and unpublished quantitative and qualitative literature is undertaken
  2. CRITICAL APPRAISAL quality of individual studies is appraised according to the hierarchy of evidence where RCTS are particularly highly valued
  3. SYNTHESIS OF EVIDENCE assessment of applicability, construction of evidence tables, meta-analysis and summaries of the evidence in the form of evidence statements
153
Q

Economic evaluation and priority setting: NICE evaluation of public health interventions- what is the process NICE uses for evaluating public health interventions

A
  1. BACKGROUND WORK
    - topics for evaluation are set by ministers. Stakeholders are identified who will scrutinise and validate the evaluation process and quality assurance arrangements are put in place
  2. PRELIMINARY WORK
    - scope of the evaluation is determined (ie definition, settings, population, exclusion criteria).
    - preliminary literature search
  3. DETAILED WORK
    - analytic framework is constructed, review of evidence is conducted, evidence is synthesised into evidence statements
154
Q

Economic evaluation and priority setting: NICE evaluation of public health interventions- what discounting rate does NICE use?

A

3.5% for both costs and benefits

155
Q

Economic evaluation and priority setting: NICE evaluation of public health interventions- what perspectives does NICE use?

A

NCE adopts 3 perspectives:
-NHS
-Society
- patient

156
Q

Economic evaluation and priority setting: NICE evaluation of public health interventions- what is the final output?

A
  • for each question addressed by the evaluation NICE produces an evidence statement that documents the strength of the evidence and its applicability to the target population
157
Q

Economic evaluation and priority setting: NICE evaluation of public health interventions- why and how does NICE use cost consequences analysis?

A
  • because of the complexities of public health intervention NICE sometimes uses CCA alongside CUA
  • this techniques allows non-quantifiable outcomes such as distributive justice to be considered in an explicit way
  • it presents a table of lifetime impact of the new treatment on individuals or groups of individuals in terms of:
  1. Resource use (both health care and loss of productivity)
  2. Health outcomes (QoL, life expectancy, symptoms)

fph exam (29 decks)

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