economic evaluation in healthcare
TRANSCRIPT
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ECONOMIC EVALUATION
PRESENTED BY:Ramvilas Reddy
Post-graduate Public Health Dentistry
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ACKNOWLEDGEMENT I thank Dr. Shakeel Anjum Sir M.D.S Professor, Public Health
Dentistry, for guiding me to prepare the presentation and Dr.
Shibu Sebastian M.D. S for providing the study material.
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CONTENTS Introduction
What is economic evaluation of health?
Why Is Economic Evaluation important?
Benefits of Economic Evaluation
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….
Different Structures of Economic Evaluation Cost Minimization Analysis (CMA) Cost Effective Analysis (CEA) Cost Utility Analysis (CUA) Cost Benefit Analysis (CBA)
Other Forms of Economic Evaluation
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Check List For Evaluating The Health Care Programs
Economic Evaluation In Dentistry
Limitations
Future development of Economic Evaluations (Oral Health Care)
Conclusion
References
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Adam smith (1776) “a branch
of the science of a statesman
or legislator [with the two-fold
objectives of providing] a
plentiful revenue or
subsistence for the people
[and] to supply the state or
INTRODUCTION
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Economics is defined as “the science which studies human
behavior as a relationship between ends and scarce means
which have alternative uses” (Robbins 1935).
Economics is the social science that describes the factors
that determine the production, distribution and consumption of
goods and services.
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The objective of economics is to maximize human welfare or utility
and it is important that the allocation of resources in society is done
as efficiently as possible.
In economic terms, an efficient allocation of resources is defined as
one that takes advantage of every opportunity to ensure that some
individuals will be better off while not making anyone else worse off.
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ECONOMIC EVALUATION?? Economic evaluation is the process of systematic
identification, measurement and valuation of the inputs and
outcomes of two alternative activities, and the subsequent
comparative analysis of these.
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ECONOMIC EVALUATION OF HEALTHCARE ?
According to WHO it is defined as “that which seeks
inter alia-to quantify over times, the resources used in
health service delivery, their organization functioning
and the efficiency with which the one resources
allocated and used for health purposes and the effect
of preventive curative and rehabilitative health
services on individual and national productivity”.
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Drummond et al (1987) defined as “comparative analysis of
alternative courses of action in terms of both their costs and
consequences.”
Economic evaluation of healthcare programs is now common-
place in medicine and is becoming increasingly important in
dentistry.
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Any economic analysis involves measurement of both the
benefits of healthcare and also the costs.
It aims to answer two main questions:
Is the health procedure in question worth doing compared
with other things we could do with the same resources?
Are we satisfied that the healthcare resources should be
spent in this way rather than in any other way?
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HISTORY OF ECONOMIC EVALUATION…
The code of Hammurabi in ancient Egypt prescribed
fiduciary rewards for physicians who successfully treated
patients.
In the 1800s, mortality statistics were the primary
outcomes reported by the healthcare institutions, with no
regard for the results of the operations and interventions
that were performed within their institutions.
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Apart from small experiments in collecting outcome data and
relating it to healthcare interventions, very few advances were
made in the first half of the 19th century.
Donabedian’s work was the first to assess the healthcare
interventions using the concepts of structure, process and
outcomes.
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Because of a lack of uniformity in approach , these early
economic analyses were of limited use in aiding decisions
about which treatments to fund and for whom.
The early and ambitious use of economic evaluation occurred
through the Oregon Initiative in 1989.
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Economic evaluation deals with costs and benefits and only
when information is available.
Decisions are made regarding the combination of health care
interventions which should be made available to maximize
benefits from the available budget.
The basics involve identifying, measuring, valuing and
comparing the costs and benefits of alternatives being
considered.
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BENEFITS Comparing the benefits of treatment.
Out comes are measured in common natural units.
Outcomes are measured in similar health state values based on individual
preferences.
Outcomes can be measured in similar or different units and are always
valued in monetary units.
It attempts to incorporate the concept of quality of life.
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DIFFERENT STRUCTURES OF ECONOMIC EVALUATION
The four main approaches that are currently in use are:
Cost-minimization analysis
Cost-effectiveness analysis
Cost-utility analysis
Cost-benefit analysis.
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COST-MINIMIZATION ANALYSIS(CMA)
The benefits of two or more health care technologies being compared are assumed to be equivalent, hence the analysis focuses on the cost alone.
Which costs should be included?? When the evaluation is made from the society as a whole– the three main
categories of costs must be included; Health service costs Costs borne by patients and their families External costs borne by rest of the society
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EXAMPLES The costs of laparoscopic and ‘open’ procedures to treat appendicitis are compared. Both types of procedure have an equivalent outcome but laparoscopic appendicectomy has a higher cost
Cost-minimization analysis of a tailored oral health intervention designed for immigrant older adultsKaleed A et al. 1999 Cost minimization analysis of laparoscopic and open appendicectomy. European Journal of Surgery 165: 579–582
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ADVANTAGES
It is simple to conduct.
It focuses on cost alone.
It assumes that equivalence of benefits has been proved unambiguously,
much research effort would be needed to demonstrate.
DISADVANTAGES
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COST-EFFECTIVE ANALYSIS(CEA)
This type of analysis is used to compare health care technologies that
have different outcomes , common one dimensional health benefits
and which are measured in the same units.
CEA can be used to compare both across and within disease groups
as long as the effectiveness can be measured in common units.
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For example, costs can be compared using common units,
such as ‘per lives saved’ or ‘per pain free day’.
A CEA can therefore be used to compare heart surgery and
kidney transplantation.
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It is essential to specify which costs are included in a
cost-effectiveness analysis and which are not, to ensure
that the findings are not subject to misinterpretation.
Large number of evaluation studies in the dentistry are are
comparison of costs of preventive strategies with their
effectiveness.
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The results of CEA are usually presented in the form of a ratio, ex;
cost per life year gained.
If two treatments A & B are compared, costs are lower for A and
the outcomes are better, then the treatment A is said to dominate
and on the basis of health economic analysis. Incremental cost effectiveness = (cost of B-cost of A)
(benefits of B – benefits of A)
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EXAMPLES It is used to compare coronary artery bypass grafts with breast cancer screening, if in both the cases, years of life gained in over riding benefit of interest.
Cost effectiveness of a school based sealant program. Examining cost effectiveness of early dental visits.
Lee et al. Examining the cost effectiveness of early dental visits. Pediatric Dentistry. 2006; 28:2. 102–105.
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ADVANTAGES This method is used when the programs may have differential success in outcome, as well as differential costs, but the outcome must be common to both programs.
To find the most efficient treatment option in terms of cost per unit effect.
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DISADVANTAGE The disadvantage of the cost-effectiveness approach is that it
cannot be used to assess a single program or to compare
interventions which have several different clinical effects.
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COST UTILITY ANALYSIS To overcome the concerns of expressing all benefits in terms
of money an alternative measure used is this concept of utility.
Utility value lie between 0 and 1.
To compare the costs and benefits of health care technologies.
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It is a method of choice when quality of life is an important outcome.
It is also the ideal method when interventions affect both morbidity
and mortality or when treatments have a wide range of different
outcomes and a common unit is required.
Benefits are measured in terms of quality adjusted life years (QALY).
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QALY is calculated by multiplying the change in utility value as
a result of medical intervention by the years of life remaining.
The principle behind CUA is that a QALY gained is considered
to be worth the same no matter who receives it.
This is a useful method of economic analysis when looking at
dental interventions which produce changes in quality of life.
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EXAMPLE For example, a treatment is available for condition X. without
treatment A, a patient is likely to survive for five years and have a
relatively poor quality of life. A panel is asked to decide on the
numerical value which they would allocate to this health state -1
equating to health worsens the value and falls closer to 0.
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A cost–utility analysis of patients undergoing
orthognathic treatment for the management of
dento-facial disharmony. ( Cunningham SJ)
Management of dentofacial discrepancies using orthognathic
treatment. Twenty-one patients were interviewed five times during
treatment using the time trade-off (TTO) method to establish utility
values.
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ADVANTAGES Allows comparison across different health programs and
policies by using a common unit of measure (money/QALYs
gained).
CUA provides a more complete analysis of total benefits than
simple cost–benefit analysis does.
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DISADVANTAGES Elderly individuals are assumed to have lower QALYs since
they do not have as many years to influence the calculation of
the measurement.
Specific health outcomes may also be difficult to quantify, thus
making it difficult to compare all factors that may influence an
individual’s QALY.
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COST BENEFIT ANALYSIS Comprehensive and theoretically sound form of economic
evaluation.
CBA seeks to place monetary values on both the inputs and
outputs i.e. treatment costs and consequence costs.
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Since both costs and consequences are measured in monetary
units, it is possible to calculate whether a treatment delivers
an overall gain to society.
The effects of treatments, such as complications, number of
disability days, and number of life years gained, need to be
converted into costs.
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THE HUMAN CAPITAL APPROACH.
According to this method “humans are similar to pieces of equipment, and are expected to form a product or activity of some monetary value in future years (Mushkin, 1978).”
The benefits of health care can be measured in terms of future income that would have been lost Using a technique called ‘time discounting’, the amount of money foregone is adjusted according to the number of years over which it would have been expected to accumulate.
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The human capital approach places a monetary value on human
life and, in the past, ethical objections have been raised.
There is no measure of the benefits of not having to actually go to
work, or of the benefits of reduced pain and suffering due to
illness.
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FRICTION COST METHOD Estimates the value of human capital when another person from the unemployment pool replaces the present value of a worker's future earnings until the sick or impaired worker returns or is eventually replaced.
It is presumed that the FCM will estimate a lower cost than the human capital method in the long run.
FCM assumes that impairment or premature death will not affect the total productivity following the friction period,
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WILLINGNESS TO PAY APPROACH
Using interviews or questionnaires, subjects are asked how
much they would be prepared to pay, in order to obtain the
benefits of a treatment, or to avoid the costs of ill health.
For example, an opening bid is made which the subject can
accept or reject.
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The subject is often presented with a series of prices and is
asked to offer a yes/no answer depending on their willingness
to pay (Robinson, 1993).
Problems may arise because the amount different people are
willing to pay for a benefit is variable and influenced by their
income.
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EXAMPLES Cost-Benefit Analysis of a Worksite Oral-Health Promotion
Program.
Cost-Benefit Analysis of the Age One Dental Visit for the Privately Insured.
Ichihashi1 T, Muto T, Shibuya K. Cost-Benefit Analysis of a Worksite Oral-Health Promotion Program. Industrial Health, 2007;45: 32–36.
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ADVANTAGES Allows comparisons between a wide range of programs of both within
health sector and between the health and non-health sectors.
DISADVANTAGES Places monetary value on life which is considered as priceless.
Practical problems in evaluating the health.
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COST CONSEQUENCE ANALYSIS
Costs and effects are calculated but not aggregated into quality
adjusted life years or cost effectiveness ratio
This analysis provides the most comprehensive presentation of
information describing the value of intervention and has the advantage
of being more readily understandable and more likely to be applied by
health care decisions makers.
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EXAMPLE For example two programs aimed at improving fuel efficiency might have
a variety of outcomes, ex., warmer home, reduced heating bills and lower
incidence of childhood asthma.
It would be appropriate to present the results in a disaggregated form in
order that all of the outcomes can be carefully considered within a
framework of evaluation.
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DRAWBACKS Decision made at the individual decision maker’s might not be
made in the patient’s or societies best interests.
All of the data are not comparable quality.
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COST-OF-ILLNESS STUDIES Attempt to represent the burden of disease from a particular
ailment or medical condition in monetary terms.
Estimate the maximum amount that could potentially be
saved or gained if a disease were to be eradicated.
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The costs associated with an illness and do not consider
benefits, therefore this is a true economic evaluation.
Knowledge of the costs of an illness can help policy makers to
decide which diseases need to be addressed first by health
care and prevention policy.
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In addition to their use by government organizations, cost-of-
illness studies are often cited in disease studies that attempt
to highlight the importance of studying a particular disease, as
well as in cost-effectiveness and cost-benefit studies. Hodgson, Cai. Medical care expenditures for hypertension, its complications, and its comorbidities. Medical Care 2001;39(6):599–615.
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DRAWBACKS Cost-effectiveness and cost-benefit analyses provide additional
information not included in cost-of-illness studies that can be used to determine the best course of action with respect to the disease studied.
They are limited in determining how resources are to be allocated because they do not measure benefits.
Studies can vary by perspective, sources of data, inclusion of indirect costs, and the time frame of costs.
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PROGRAM BUDGETING & MARGINAL ANALYSIS
Program budgeting is the notion that is important to understand how
resources are currently being spent before thinking about ways of
modifying this pattern of resource use.
This is a retrospective appraisal of resource allocation, broken down into
meaningful programs, with a view to tracking future resource allocation
in those same programs.
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Marginal analysis is the appraisal of added benefits and added
costs when new investment is proposed (or lost benefits and
lower costs when disinvestment is proposed), in an incremental
way.
Marginal analysis seeks to explain that in order to have more of
some services, it is necessary to have less of others or if
growth monies are available.
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STAGES OF PBMA Identify your program.
Statement of expenditure and activity by sub- programs (i.e. the 'program budget')
Decide on services which are candidates for expansion or introduction and services which are candidates for reduction.
Measure costs and benefits of proposed changes (i.e. 'marginal analysis’)
Make recommendations
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PBMA is the framework that highlights the use of local cost and
activity data, accessibility and availability of effectiveness evidence
and the many decisions are still based on the judgments.
It starts by analyzing the activity and expenditure data of existing
services and then goes on to examine marginal changes in those
services, rather than starting with a blank piece of paper and
attempting to allocate in some hypothetical fashion.
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EXAMPLE
Holmes RD,Steele J, Exley CE, Donaldson C. Managing resources in
NHS dentistry: using health economics to inform
commissioning decisions.
The aim of this study is to develop, apply and evaluate an
economics-based framework to assist commissioners in their
management of finite resources for local dental services.
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SENSITIVITY ANALYSIS In economic evaluation, some form of sensitivity analysis is
frequently carried out in order to allow for uncertainty.
This uncertainty may be present in the evaluation for several
reasons:
Data are unavailable and assumptions are necessary
Available but inaccurate
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In this type of analysis the values recorded for important
parameters are varied, usually one at a time, in order to
determine whether the results are sensitive to the
assumptions made.
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TYPES OF SENSITIVITY ANALYSIS
Simple sensitivity analysis entails varying one or more of the
components of an evaluation to see how it affects the results.
An extreme scenario is another form of sensitivity analysis.
Probabilistic sensitivity analysis assigns ranges and distribution
to variables and computer programs are used to select values
at random from each range and to record the results.
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By using these different methods of sensitivity analysis it is
possible to show whether the results of a particular study over
a range of assumptions or hinge on the accuracy of particular
assumptions.
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CHECK-LIST FOR EVALUATING HEALTH CARE PROGRAMS
Decision makers, faced wit allocating resources among competing health programs, must identify relevant studies that have been published and determine which studies are useful to help inform the decision.
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Was a well-defined question posed in answerable form?
Was comprehensive description of the competing alternatives given?
Was the effectiveness of the program or services established?
Were all the important and relevant costs and consequences for each
alternative identified?
Were costs and consequences measured in appropriate physical
units?
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Were costs and consequences valued credibly?
Was an incremental analysis of costs and consequences of
alternatives performed?
Was uncertainty in thee estimates of costs and consequences?
Did the participation and discussion of study results include all
issues concern to users?
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ECONOMIC EVALUATION IN DENTISTRY
It is likely there will be an increased demand for economic analyses of
dental interventions by the public and by those funding the health care.
To date most of the analyses that have been used most frequently are
cost-effectiveness and cost-benefit, and the studies have focused
largely on comparison of restorative materials.
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Cost effectiveness and cost benefit studies are carried out
much more frequently than cost utility studies.
The cost utility method would be particularly useful in the field
of dentistry.
QALY based investigations in dentistry would also allow some
method of comparing dental interventions with other forms of
medicine.
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Cost effectiveness and cost benefit studies are majorly done in
comparing the restorative materials and cost implications of
fluoride, fissure sealants and caries prevention.
Severens et al assessed the short term cost effectiveness of
pre-surgical orthopedics in babies with complete unilateral
cleft of the lip and palate.
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Klock looked at CBA and CEA of a preventive program
(including oral hygiene, fluoride application and fissure
sealants) and found that in spite of a reduction in caries
activity the program was uneconomic when compared with the
traditional dental care.
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A number of cost effectiveness studies have looked at different
restorative materials.
Mjor studied the cost effectiveness of restorative materials of
two surface and three surface restorations undertaken in
Norway and found amalgam to be most cost-effective.
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Jacobson et al undertook utility based investigations in which
implant retained prostheses and conventional denture were
compared using a rating scale method. They concluded that this
was reliable measure of patients preferences and the implant
group rated a successful implant supported prosthesis as higher
than a functional, fitting , esthetic than conventional denture, in
spite of higher costs and longer periods of non-function.
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In Restorative Dentistry: Fyffe and Kayy (1992) assessed the average
utility values for four different “tooth states” in which the highest mean
utility values were for the restored tooth and lowest values for the
decayed and painful posterior tooth.
Downer and Moles (1998) used a computer simulation to study the
influence of relevant factors on health gain from restorative treatment
under varying assumptions and compared this with a ‘do nothing’
approach.
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Maxillofacial Surgery:
Armstrong et all (1995) and Brickley et al (1995) studied
relative utility values for the management of third molars .
Downer et al (1997) used a convenience sample to elicit the
public’s perceptions of different oral cancer states (pre-cancer,
small cancer and large cancer).
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Downer had found the utility values of 0.92 for pre-cancer,
0.88 for stage I cancer and 0.68 for stage II cancer.
These values then allow the QALY’s gained and the cost per
QALY involved in the treatment of such lesions to be
calculated.
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LIMITATIONS Determination of the effectiveness of a program:
If the effectiveness of an intervention has not been established, an
economic evaluation should not be considered, since there is no
basis on which to estimate the health consequences.
Data may be available for many community based health
programs, but its quality and usefulness must be assessed.
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EQUITY AND DISTRIBUTION OF COSTS AND HEALTH CONSEQUENCES
Health programs for certain high risk groups may never be
shown to be cost-effective relative to other health programs;
however, these high risk groups may be the most vulnerable
individuals in a population, and programs aimed at improving
their health status may be of highest priority.
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Use of saved resources
Economic evaluations assume that resources freed or saved by
adopting more cost-effective programs will be used in
alternative ways that are also cost-effective.
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Resources Required to Conduct Economic Evaluation
Conducting a cost-effectiveness analysis to determine how best
to allocate 1000$ may require that a sizeable of the sum be
spent in conducting the evaluation itself.
In this case economic evaluation may not be justified.
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FUTURE DEVELOPMENT OF ECONOMIC EVALUATIONS (ORAL HEALTH CARE)
It is used less frequently in dentistry.
At present many studies in the literature are generally focused
on the comparison of restorative materials and the cost
implications of fluoride, fissure sealants and caries prevention
programs.
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The demand for health economics analysis is bound to increase
with both public health services and private insurance companies
looking for the evidence of value for money in a field where some
therapies can be seen as providing ‘cosmetic’ treatment.
Methodological developments aimed at incorporating an equity
dimensions into current economic evaluations are needed.
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Where the inequalities in oral health are of concern in many
countries, the discipline of health economics may prove to be
useful tool in addressing the issue in future.
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CONCLUSION Health economics: the science of optimism?
Health economists should be creative agents concerned with
improving population health at least cost health economics.
The number of economic evaluations undertaken will only increase
if the quality of the underlying scientific evidence improves.
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The application, in the last three decades, of the techniques of economic
evaluation.
Economic evaluation of health care has developed quite significantly in
the past thirty years.
Efforts to improve guidelines for the conduct of economic evaluation
might have some positive effect on raising standards but are a fairly
indirect approach.
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As a fraternity of public health, we are also concerned with the
issue of equity in policy making decisions.
The economic evaluation of health care has been labelled a
half-way technology in that it has not yet reached an advanced
stage where it can be applied routinely.
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Pine C. Community Oral Health. 2nd ed. Germany: Quintessence Publishing Co;2005.
Cunningham S J. Current Products and Practice: An Introduction to Economic Evaluation of Health Care. JO. 2001;3: 246-250.
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Cunningham S J. Economic Evaluation of Healthcare- Is It Important to Us?. British Dental Journal. 2000;188(5): 250-254.
Robinson R. Economic Evaluation and Health Care- What Does it Mean?. BMJ. 1993;307: 670-673.
Shiell, Donaldson, Mitton, et al. Health Economic Evaluation. J Epidemiol Community Health. 2002;56:85-88.
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Kumar S, Williams AC, Sandy RJ. How Do We Evaluate the
Economics of Health care?. European Journal of Orthodontics.
2006;28:. 513-519.
THANK YOU
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