COSTINGS

Question 1

UK spending on healthcare?

Answer 1

9.7% of GDP is spent on healthcare

In England alone, the budget for health and social careis £139.3 billion in 2019/20

Question 2

Definition of Costs?

Answer 2

Sacrifice (of benefit) made when a give resource is consumed in an intervention/treatment … attention should be on expenditure and other resources where the consumption is not adequately reflected in market prices

Question 3

Assumptions made about costs during economic evaluation?

Answer 3

OPPORTUNITY COSTS

1. Allocating resources to one healthcare intervention means fewer resources available to other interventions – ∴ healthcare is excludable and rivalrous
2. Committing more resources to health means less resources available elsewhere – such as for education, or for private consumption

Question 4

Why do we need to account for costs in economic evaluation?

Answer 4

Estimation of ICERs requires reliable estimates of costs for both existing and new treatments

Question 5

What are the 2 main approaches to costing?

Answer 5

1. TOP DOWN
2. BOTTOM UP

Differentiate between the two approaches based on whether per-patient resource use is broken down into its constituent parts

Question 6

What is Top-Down Costing?

Answer 6

Using a defined metric to assign total/average costs for a system to indv. services
- use of pre-existing data on total/average costs and then apportion to the options being evaluated

Question 7

What is Bottom-Up Costing?

Answer 7

Assesses the amount of each resource that is used to produced an indv. service and assigns costs accordingly to generate aggregate costs for a system
- each element is estimated indv. and then summed

Question 8

How are costs accounted for in economic evaluation?

Answer 8

1. IDENTIFICATION … what resources
2. MEASUREMENT … quantities of resources
3. VALUATION … applying unit costs to the resources

Question 9

Definition of Identification?

Answer 9

Establish the different categorises of resources likely to be required

Question 10

What resources are required for intervention/treatments?

Answer 10

Identification requires knowledge of resources to perform the intervention and the disease process – both during and after treatment

• Resources for pre-intervention e.g. GP visits, scans
• Resources for intervention e.g. theatre staff, equipment, hospital beds
• Resources for post-intervention e.g. recovery time, surgical complications, re-admissions

Question 11

What impacts the identification process?

Answer 11

The resources included depend on the perspective of the analysis

Approach to identifying resources used will also depend on the general approach to costing being adopted

1. Top-down costing … resources are viewed in bundles
2. Bottom-up costing … identification of all underlying activities which form the hospital day

Question 12

Definition of Measurement?

Answer 12

Estimating how much of each resource category is required (quantify changes in resource use in physical units)

Question 13

How do know how much resources we require (measurement)?

Answer 13

Measurement often depends on specific context of the evaluation

• If evaluation is being conducted alongside a clinical trial … data on resource quantities may be routinely collected at source from case report forms for the trial
• If evaluation is a stand-alone economic evaluation … resource quantities could be estimated from data systems

Question 14

Sources of measurement?

Answer 14

1. Clinical trial data
2. Patient reported resource use
   
   • typically uses a questionnaire for a given time period regarding patient’s resource use … which services have you used in the past 6 weeks
   • :( people will forget
3. Routinely available administrative data/records
   
   • e.g. The Hospital Episode Statistics (HES)
   • most countries will have a similar form of database

Question 15

What is the Hospital Episode Statistics?

Answer 15

Routinely available administrative record … National dataset for England of the care provided by NHS hospitals, and for NHS hospital patients treated elsewhere

• Contains data on every single visit to hospitals in England
• Anonymised, but contains age/diagnoses/procedures
• On basis of these, visits classified into one of c.3500 groups
• Data is provided for different types/settings of care … in-patient, out-patient, A&E
• Includes information relating to payment for activity undertaken

Question 16

Definition of Valuation?

Answer 16

Applying unit costs to each resource category (value the resources)

Question 17

How does valuation take a pragmatic approach?

Answer 17

In THEORY … when assigning unit costs to resources … price for a resource should be its opportunity cost

In PRACTICE … assumed that the market price is a reasonable approximation of opportunity cost … more readily available for resources e.g. drugs and salaries
- to remove profit from market prices … adjust market prices for the estimated excess profit using cost-to-charge ratios which indicate how the price could be deflated to reflect real opportunity costs more accurately (societal opportunity costs)

Question 18

How are non-market resources valued?

Answer 18

1. use market wage rates
   
   • e.g. valuing volunteer time and patient/family leisure time
2. use shadow pricing
   
   • If a comparable item price does exist this might be used
   • :( tricky and is subject to substantial uncertainty

Question 19

Source of Valuation?

Answer 19

1. NHS’s Healthcare Resource Groups (HRGs)
2. NHS Drug Tariffs
3. Personal Social Services Research Unit (PSSRU) Unit Costs of Health and Social Care

Question 20

What is the NHS’s Healthcare Resource Groups?

Answer 20

Groupings of clinically similar treatments which use common levels of healthcare resource

• Show details of unit cost, average length of stay, and activity levels for a wide range of services
• updated annually to enhance the system - reflect changes in clinical practice and included changes to policy

HRGs are used by ‘Payment by Results’ [an activity based payment system rolled out in the NHS in England from 2004] to determine the income hospitals in England get for given hospital stays and procedures

E.g. there are a number of different knee-related procedures that all require similar levels of resource; they may all be assigned to one HRG

Question 21

What is the NHS Drug Tariff?

Answer 21

Lists reference amounts paid for different types of drugs, by dosage
- Use tariffs only if there is a clear indication that it represents a reasonable approximation of the actual costs

NHS Prescription Services produces the NHS Drug Tariff on a monthly basis on behalf of the Department of Health and Social Care

E.g. Jan 2020 - Aspirin 75mg tablets, by dosage 28 tablets: base price of 141p

Question 22

What is the Personal Social Services Research Unit (PSSRU) Unit Costs of Health and Social Care?

Answer 22

Gives estimated average costs for many types of care

- e.g. cost of GP appointments, prescription costs per consultation

Question 23

Should all costs of a new intervention be accounted for?

Answer 23

Depends on the PERSPECTIVE of the economic evaluation /analysis

Question 24

Types of perspectives of analysis?

Answer 24

1. HEALTH AND SOCIAL CARE SYSTEM
   - Only consider costs borne by those inside the health and social care system … cost perspective adopted for the primary analysis should be that of the NHS and personal social services (PSS) only
2. GOVERNMENT
   - Include spillover costs onto rest of public sector
3. SOCIETAL
   - Including cost of absence from work, shadow priced informal care, other out of pocket expenses
   - Looking at productivity costs … :( discriminates against those not in the labour market
   - Human Capital Approach … estimates productivity costs as the expected or potential earnings lost due to illness
4. PATIENT
   - Including cost of absence from work, childcare costs
   - Informal care costs

Question 25

What perspective does NICE for costing in economic evaluation?

Answer 25

Health and Social Care System perceptive
- Rationale is that the role of NICE is to maximise value for money from the NHS budget … thus excluding productivity costs

Question 26

What do we need to do once all the costs have been collected?

Answer 26

ADJUSTMENTS may be needed for the data

Inflation

• Costs for a particular intervention can be incurred at different times (e.g. replacing heart valve after 10 years)
• It is important all costs have a common base year and if necessary adjusted for inflation
• The NHS publish own deflators for costs in health service