UK spending on healthcare?
9.7% of GDP is spent on healthcare
In England alone, the budget for health and social careis £139.3 billion in 2019/20
Definition of Costs?
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
Assumptions made about costs during economic evaluation?
OPPORTUNITY COSTS
- Allocating resources to one healthcare intervention means fewer resources available to other interventions – ∴ healthcare is excludable and rivalrous
- Committing more resources to health means less resources available elsewhere – such as for education, or for private consumption
Why do we need to account for costs in economic evaluation?
Estimation of ICERs requires reliable estimates of costs for both existing and new treatments
What are the 2 main approaches to costing?
- TOP DOWN
- BOTTOM UP
Differentiate between the two approaches based on whether per-patient resource use is broken down into its constituent parts
What is Top-Down Costing?
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
What is Bottom-Up Costing?
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
How are costs accounted for in economic evaluation?
- IDENTIFICATION … what resources
- MEASUREMENT … quantities of resources
- VALUATION … applying unit costs to the resources
Definition of Identification?
Establish the different categorises of resources likely to be required
What resources are required for intervention/treatments?
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
What impacts the identification process?
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
- Top-down costing … resources are viewed in bundles
- Bottom-up costing … identification of all underlying activities which form the hospital day
Definition of Measurement?
Estimating how much of each resource category is required (quantify changes in resource use in physical units)
How do know how much resources we require (measurement)?
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
Sources of measurement?
- Clinical trial data
- 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
- Routinely available administrative data/records
- e.g. The Hospital Episode Statistics (HES)
- most countries will have a similar form of database
What is the Hospital Episode Statistics?
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
Definition of Valuation?
Applying unit costs to each resource category (value the resources)
How does valuation take a pragmatic approach?
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)
How are non-market resources valued?
- use market wage rates
- e.g. valuing volunteer time and patient/family leisure time
- use shadow pricing
- If a comparable item price does exist this might be used
- :( tricky and is subject to substantial uncertainty
Source of Valuation?
- NHS’s Healthcare Resource Groups (HRGs)
- NHS Drug Tariffs
- Personal Social Services Research Unit (PSSRU) Unit Costs of Health and Social Care
What is the NHS’s Healthcare Resource Groups?
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
What is the NHS Drug Tariff?
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
What is the Personal Social Services Research Unit (PSSRU) Unit Costs of Health and Social Care?
Gives estimated average costs for many types of care
- e.g. cost of GP appointments, prescription costs per consultation
Should all costs of a new intervention be accounted for?
Depends on the PERSPECTIVE of the economic evaluation /analysis
Types of perspectives of analysis?
- 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 - GOVERNMENT
- Include spillover costs onto rest of public sector - 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 - PATIENT
- Including cost of absence from work, childcare costs
- Informal care costs
