Economic Evaluation

Sanju gautam

Economic Evaluation

• Comparative analysis of alternative courses of actionin terms of both costs and consequences

• Sometimes called Efficiency evaluation

8/18/2014Shiva Raj Adhikari Health

Economist

Economic evaluation

•It concerns with scarce resources, choices/ trade-off and opportunity cost•Finds the best possible way to get health objectives using scarce resources.•It deals with both the inputs and outputs.

•It helps make evidence based decision

Without systematic analysis, it is difficult to identify

clearly the relevant alternatives.

Why Economic Evaluation is needed?

Economic EvaluationBasic Concept

Choice

Program A

Comparator B

Consequences A

Consequences B

Costs A

Costs B

Δ Cost =

Costs A – Costs B

Δ Consequences

Δ Cost

Compare

Δ Conseq =

Conseq A – Conseq B

Types of economic evaluation

• Cost-minimization analysis

A simple form of evaluation where the outcomes of two or more

alternatives are assumed (or known) to be the same. The aim

of the evaluation is therefore to assess which alternative can

achieve the outcome using the least amount of health care

resource

• Cost-effectiveness analysis

Where the outcomes are expressed in natural units, which usually

means in terms of clinical outcomes related to the specific

form of health care under investigation. Examples might be

unwanted pregnancies averted (contraception A vs.

Contraceptive B),

Contd…..• Cost-utility analysis

Where outcomes are measured in a common unit of generic health outcome. For example, the quality-adjusted life year (QALY) has been developed to address the need to compare interventions that have an impact on quality and quantity of life. Only alternatives that have an impact on health gain can be compared.

• Cost–benefit analysis

Where outcomes are translated into monetary units in order to compare the value of diverse programmes. For example, the benefit of a sexual health awareness campaign might be compared with a community literacy programme, In practice, this type of analysis is rarely performed in health economic evaluation due to the problems of translating these very diverse outcomes into monetary values.

Importance of economic evaluation

• Most people would agree that “life is the most precious good

and can not be measured with respect to money.” However,

decisions affecting lives are not only made by the individual,

but also by governments and health authorities. This implies

weighing the preservation of human life against the

opportunity cost of the scarce resources. Hence, prolonging

human lives requires sacrificing the consumption of goods and

services that could be produced using these resources.

• For example, the provision of a mobile coronary unit with

total costs of several million pounds may help treat heart

attack patients on the spot, serving to significantly reduce the

number of those dying prior to arriving at the hospital.

Contd……

• Managers want to know about the effects of a change in policy

to their population, or to subgroups within the population.

They want to understand the effects beyond the end of the

period of the trial, and to understand the impact of the

intervention on the future needs of the population. For

example, where an intervention saves lives, those people who

no longer die prematurely will continue to benefit into the

future as well as to consumer resources. In these

circumstances, economic modelling can be a very useful tool

for assessing the cos and outcome impacts of interventions

beyond the restrictive confines of a clinical study (Legood &

McInnes 2005).

• Economic evaluation helps in decision making tiers.

8/18/2014Shiva Raj Adhikari Health

Economist

Decision-Making Tiers

Implications for nurse managers

• Economic evaluation aims to provide a framework to compare different uses of scarce resources and to make better decisions .

• There are shortcomings of the approach, and in particular measurement of benefits mainly focuses on functional issues such as pain, self-care and mobility

• Evidence of cost-effectiveness in clinical nurse interventions is scarce, and this makes such interventions difficult to compare and difficult to compare with other uses of resources.

• Despite these problems economic thinking can be very useful,and will continue to expand in its application to health care priority setting.

References

• Senior notes

• Economic evaluation journals

• Health economics yale university journal

• Journal of Nursing Management, 2005, 13, 419–427

• HOSPITAL COSTING MODEL MANUAL-William Newbrander Elizabeth Lewis