Resource Allocation PDF

Resource Allocation Leases Health and disease in Society { Session 8} Learning outcomes You should be able to: ∙ Discuss the impact of scarce resources on the work of doctors ∙ Explain the inevitability of rationing in health care systems ∙ Describe a range of approaches to resource allocation i...

Resource Allocation Leases Health and disease in Society { Session 8} Learning outcomes You should be able to: ∙ Discuss the impact of scarce resources on the work of doctors ∙ Explain the inevitability of rationing in health care systems ∙ Describe a range of approaches to resource allocation in healthcare ∙ Explain and distinguish between cost effectiveness, cost benefit, cost utility, and cost minimization analyses ∙ Consider the advantages and disadvantages of using QALYs as a method of resource allocation. refrain 60 years of NHS expenditure ·1949/50 gross NHS expenditure was £447m (4% of Gross Domestic Product) ·2008/9 gross NHS England expenditure was £94bn (8% of GDP) Why set priorities? Healthcare expenditure is rising worldwide ospw.mx Healthcare systems worldwide confront the problem of allocating limited healthcare resources in relation to competing demands No country can keep up ·Demography ·Technology ·Consumerism ·Demand always greater Need real terms growth of 3-4% His 5 21 s Demand driven by demographics ·By 2031, the number of over 75s will increase to 8.2mpeers.EE (currently 4.7m) ·60% of those aged over 65 have a long term condition I I ·Increased incidence (1.5%) and prevalence (3%) of cancer Costs of new technology ·New cancer therapies are often very expensive generally expand the pool of candidates (e.g. Broader indications, fewer side effects) ·Often don’t cure but offer increased survival – cetuximab costs ·Preventer drugs Technological Advances •“With the rapid advances in modern medicine, most people accept that no publicly funded healthcare system, including the NHS, can possibly pay for every new medical treatment which becomes available. •The enormous costs involved mean that choices have to be made. • It makes sense to focus on treatments that improve the quality and/or length of someone’s life and, at the same time, are an effective use of NHS resources.” {National institute for Health and Care Excellence} (NICE) Why set priorities? •Fundamentally priority setting is needed because snios of scarcity of resources – demand outstrips 90 Ñ supply. •Difficult decisions have to be made Levels of rationing a 1.How much toisallocate to national health system compared to other government priorities (e.g. education)? 2.How much to allocate across sectors e.g. mental health, cancer? 3.How much to allocate to specific interventions within sectors? 4.How to allocate interventions between different patients in same group e.g. which patients with advanced cancer should be treated? 5.How much to invest in each patient once an intervention has been initiated e.g. how low should cholesterol be lowered in treated patients? Rationing in the Health System: 5Ds ·Deterrent – demands for healthcare are obstructed (e.g. prescription and dental charges) ·Delay – waiting lists ·Deflection – GPs deflect demand from secondary care ·Dilution – e.g. fewer tests, cheaper drugs ·Denial – range of services denied to patients e.g. reversal of sterilization, infertility treatment Implicit or explicit? ·Having accepted that difficult decisions are needed, two forms of rationing sit –Explicit: based on defined rules of entitlement –Implicit: Care is limited, but neither the decisions, nor the bases for those decisions, are clearly expressed Implicit rationing ·Before 1990 reforms, NHS relied mainly on •implicit rationing ·Clinicians made decisions within overall budgetary constraints ·Patients believed care was offered (or withheld) on basis of clinical need Implicit rationing ·Can lead to inequities and discrimination ·Open to abuse ·Decisions based on social deservingness ·Doctors appear increasingly unwilling to do it ·But it does have supporters ·Mechanic D. Dilemmas in rationing health care services: the case for implicit rationing. · BMJ 1995;310:1655-1659. ·“Despite its limitations, implicit rationing at the point of service is more sensitive to the complexity of medical decisions and the needs and personal and cultural preferences of patients”. Explicit rationing ·Care is limited and the decisions are explicit, as is the reasoning behind those decisions ·Technical processes –e.g. Assessments of efficiency and equity ·Political processes –E.g. Lay participation Explicit rationing • ADVANTAGES DISADVANTAGES ii is ·Transparent, accountable Very complex ·Opportunity for debate Heterogeneity of patients and illnesses ·Use of EBP ( Evidence based practice) Patient and professional hostility ·More opportunities for equity in decision- making Threat to clinical freedom Oh Evidence of patient distress If you were responsible for prioritizing health services, how would you prioritize the things on this list, in rank of 1 to 10? Managers Doctors General public Services or treatment 1 5 5 8 9 4 6 1 7 2 8 9=9 3= 5 1 2 3 4 5 6 7 Childhood immunization Screening for Breast cancer Care offered by GPs Intensive care for premature babies Heart transplant Support for cares for elderly people Hip replacement for elderly people 2= 3= 8 Education to prevent young people smoking 7 10 6 9= 9 10 Treatment for schizophrenia Cancer treatment for smokers Let the public decide… ·Public priorities differ from those of doctors and policy makers ·Public priorities may be contrary to spirit of equity and equal access according to need e ·Public priorities may go against cost effectiveness data Introduction to Healthcare Economics •Learning outcomes ·Explain and distinguish between cost effectiveness, cost benefit, cost utility and cost minimization analyses. ·Consider the advantages and disadvantages of using QALYs as a method of resource allocation. Health economics •Provides: –a way of thinking –a set of techniques •Aims to assist decision making to promote: – efficiency – equity •Economics is about maximizing social benefits subject to the constraints imposed by resource availability Why is health economics important? ·Doctors are involved in decisions about resource allocation ·Health economics helps to make some of the principles for resource allocation explicit ·Need to understand basics of economic evaluation to contribute to/learn from evidence id Basic concepts in health economics •SCARCITY – need outstrips resources. Prioritisation is inevitable · EFFICIENCY – getting the most out of limited resources · EQUITY – the extent to which distribution of resources is fair · EFFECTIVENESS – the extent to which an intervention produces desired outcomes · UTILITY – the value an individual places on a health state · OPPORTUNITY COST – once you have used a resource in one way, you no longer have it to use in another way Opportunity cost ·When deciding to spend resources on a new treatment, those resources cannot now be used on other treatments. ·The opportunity cost of the new treatment is the value of the next best alternative use of those resources. •– Cost is viewed as sacrifice rather than financial expenditure ·Opportunity cost is measured in BENEFITS FOREGONE ( what we lost based on this decision) Opportunity cost – example ·A community psychiatric nurse is hired at a cost of 20,000 USD Alternatively, this money could have been used to provide 50 overnight hospital stays acutely ill children (cost = 400 USD each). ·FINANCIAL COST of nurse = 20,000 USD ·OPPORTUNITY COST = lost benefit to 50 children needing overnight observation had money not been spent instead to fund psychiatric care. Opportunity cost of IVF •One course of IVF treatment is 2700 USD . Three courses of IVF (8100 US$) increase probability of pregnancy by 30%. Good value for money? •Opportunity costs are the benefits of: –1/3 of a cochlear implant –1 heart bypass operation –11 cataract removals –150 MMR vaccinations –50% of a junior school teaching assistant for a year Opportunity cost ·From a limited budget, the most efficient mix of services to fund will be that which generates the greatest aggregate (overall) benefit ·The aim of economics is to ensure that we do those activities whose benefits outweigh their opportunity cost (i.e. we do the most beneficial things with the resources at our disposal) in Choices and efficiency: technical and allocative efficiency ·Technical – you are interested in the most efficient way of meeting a need (e.g. cheapest way of meeting need for antenatal care – community or hospital-based?) ·Allocative – where you are choosing between the many needs to be met (e.g. fund hip replacements or neonatal care?) Economic evaluation ·Is the comparison of resource implications and benefits of alternative ways of delivering healthcare can facilitate decisions so that they are more transparent and fair ·Supported by concepts of –Scarcity/sacrifice –Efficiency –Opportunity cost –Utility Economic decision making • INPUTS • INPUTS OPTION 1 OPTION 2 OUTPUTS OUTPUTS • An economic analysis compares the inputs (resources) and outputs (benefits and value attached to them) of alternative interventions. • This allows better decisions to be made about which interventions represent best value for investment. How do you measure and compare costs and benefits? ·Identify, quantify and value resources needed ·Many different costs: –Direct costs –Indirect costs –Intangible costs –Recurring/non-recurring costs –Start up/maintenance costs… How do you measure and compare costs and benefits? –Direct costs – staff costs, capital costs, overheads… –Indirect costs ( worker morbidity----------→ reduced productivity) –Intangible costs ( cannot be quantified or easily estimated ) Common intangible costs include impaired goodwill, loss of employee morale, or brand damage. While not directly measurable} –Recurring/non-recurring costs (A recurring cost is one that occurs at regular intervals and is anticipated. The cost to provide electricity to a production facility is a recurring cost. A non-recurring cost is one that occurs at irregular intervals and is not generally anticipated.) –Start up/maintenance costs… How do you measure and compare costs and benefits? ·Benefits are harder to measure ·Improved (or maintained) health hard to value ·Four types of economic evaluation 1.Cost minimisation analysis 2.Cost effectiveness analysis 3.Cost benefit analysis 4.Cost utility analysis Serpens Types of economic evaluation • KEY Is there good evidence on effectiveness of interventions being compared? • Yes No Costing study Are the interventions equally effective? No Yes Costing minimization study Yes Can all outcomes be valued in monetary terms ( willingness to pay)? Cost benefit analysis No Can outcomes be measured as quality adjusted life years? • Adapted from Stavros No Cost effectiveness analysis Yes Cost- utility analysis Cost minimization analysis IMP ·Outcomes assumed to be equivalent ·Focus on measurement is on costs (i.e. only the inputs) ·Not often relevant as outcomes rarely equivalent ·Possible example •– Say all prostheses for hip replacement improve mobility equally. Choose the cheapest one. Cost effectiveness analysis ·Used to compare drugs or interventions which have a common health outcome e.g. reduction in blood pressure ·Compared in terms of cost per unit outcome e.g. cost per reduction of 5mm/Hg ·If costs are higher for one treatment, but benefits are too, need to calculate how much extra benefit is obtained for the extra cost · Key Question : Is extra benefit worth extra cost? Cost benefit analysis ·All inputs and outputs valued in monetary terms ·Can allow comparison with interventions outside healthcare ·It has methodological difficulties e.g. putting monetary value on non-monetary benefits such as lives saved ·“willingness to pay” often used but this is also problematic Cost utility analysis ·Cost utility analysis focuses on quality of health outcomes produced or foregone ·Most frequently used measure is quality adjusted life year (QALY) ·Interventions can be compared in cost per QALY terms Economic evaluation summary ·Inputs and outputs must be –Identified –Measured –Valued ·Not easy, whatever method used Additional points ·Usually based on some assumptions ·Sensitivity analysis can be used to check effects of assumptions ·Some health benefits are not felt for some years – e.g. benefits of smoking cessation ·Discounting is a method of calculating present values of inputs and outcomes which accrue in the future Why QALYs? ·To use cost-effectiveness as a guide to decision- making, we need to compare the cost-effectiveness of different uses of resources ·Therefore we need an effectiveness measure that can be used in a wide range of settings: ·Life-years gained – but only where survival is main outcome ·Quality adjusted life years (QALYs) – Composite of survival and quality of life The QALY ·Used since the 1970s ·Allows broad comparisons across differing programmes ·QALYs adjust life expectancy for quality of life ·Uses a single index incorporating quality and quantity of life ·1 year of perfect health = 1 QALY ·Assumes that 1 year in perfect health = 10 years with a quality of life of 0.10 perfect health How is quality of life measured? Measuring health on a generic HR-QoL instrument: • (Euro QOL – 5 Dimensions • • • • • Mobility Self-care Usual activities Pain/discomfort Anxiety depression} • The EQ-5D may be measured in 5 Levels or 3 Levels • Mobility 3 levels • I have no problems in walking about • I have some problems in walking about • I am confined to bed • Mobility 5 levels • I have no problems in walking about • I have slight problems in walking about • I have moderate problems in walking about • I have severe problems in walking about • I am unable to walk about How is quality of life measured? • Self-care 3 levels • I have no problems with self-care • I have some problems washing or dressing myself • I am unable to wash or dressing myself • Self-care 5 levels • I have no problems washing or dressing myself • I have slight problems washing or dressing myself • I have moderate problems washing or dressing myself • I have severe problems washing or dressing myself • I am unable to wash or dressing myself How is quality of life measured? • Usual activities • I have no problems doing my usual activities • I have slight problems doing my usual activities • I have moderate problems doing my usual activities • I have sever problems doing my usual activities • I am unable to doing my usual activities • Pain/ discomfort • • • • • I have no pain or discomfort I have slight pain or discomfort I have moderate pain or discomfort I have severe pain or discomfort I have extreme pain or discomfort • • • • • I am not anxious or depressed I am slightly anxious or depressed I am moderately anxious or depressed I am severely anxious or depressed I am extremely anxious or depressed • Anxiety/ Depression The QALY ·One year of healthy life for one person –You can trade off survival and quality of life ·1 QALY = 2 years at 50% QOL for 1 person –Each year of healthy life is of equal value ·1 QALY = 6 months of healthy life for 2 people Example: man is diagnosed with cancer ·Told he has 1 year to live if he does not have treatment ·His quality of life, without treatment, will be •0.8 of perfect health and he will then die quickly ·Without treatment = 0.8 QALYs Example: man is diagnosed with cancer ·If he receives treatment he will live for 4 years, but his QoL will be 0.2 of perfect health ·With treatment = 0.8 QALYs ·⇒ no point in treating this man Example: use of QALYs in cost utility analysis ·Female diagnosed at age 54 with peptic ulcer can expect to live 23 years ·QoL without treatment is 0.7 of perfect health · 0.7 X 23 = 16.1 ·⇒ expects to have 16.1 QALYs without treatment Example ·QoL with treatment A (ranitidine) is 0.95 of perfect health, at cost of $50 per year ( 0.95 X 23 = 21.85) ·⇒ expects to have 21.85 QALYs on A •· QALYs gained = 21.85-16.1 = 5.75 ·Total cost of treatment = 23 X 50 = $1,150 •· $1,150 / 5.75 = $200 ·Cost per QALY gained = $200 Example ·QoL with treatment B (gaviscon) is 0.80 at cost of $30 per Year ( 0.8 X 23 = 18.4) ·⇒ expects to have 18.4 QALYs on B •· QALYs gained = 18.4 - 16.1 = 2.3 ·Total cost of treatment = 23 X 30 = $ 690 •· $ 690 / 2.3 = $ 300 ·Cost per QALY gained = $ 300 ·Ranitidine is more expensive but when you compare benefits and costs, it is more cost effective Alternatives to QALYs ·The QALY has attracted considerable controversy ·You may see alternatives –Health Year Equivalents (HYEs) –Saved-young-life equivalents (SAVEs) –Disability Adjusted Life Years (DALYs) –NICE use QALY Costs per QALY used by NICE ·To assess cost-effectiveness, the QALY score is integrated with the price of treatment using the incremental cost-effectiveness ratio (ICER). ·ICER represents the change in costs in relation to the change in health status. ·The result is a ‘cost per QALY’ figure, which allows NICE to determine the cost- effectiveness of the treatment. Examples ·Intervention Cost per QALY ( USD) ·Smoking cessation 430 ·Asthma inhalers 5000 ·Zanamavir (for at risk groups) 20,400 ·Stents 25,000 ·Zanamavir (for all suitable patients) 38,000 Criticisms of QALYs ·Do not distribute resources according to need, but according to the benefits gained per unit of cost ·Technical problems with their calculations ·QALYs may not embrace all dimensions of benefit; values expressed by experimental subjects may not be representative ·Controversy about the values they embody ( demonstrate) More problems ·RCT evidence –Comparison therapies may differ –Length of follow-up –Atypical care –Atypical patients –Limited generalisability –Sample sizes ·Statistical modelling can address some problems and areas of uncertainty Conclusions: Rationing is not easy but it’s got to be done ·Move away from largely implicit rationing done by individual clinicians ·Now more explicit but there are difficulties in identifying principles that should govern decision- making ·QALYs offer a way of rationing but are very problematic DALY (Disability-Adjusted Life Years) • The overall burden of disease is assessed using the disability-adjusted life year (DALY), • a time-based measure that combines years of life lost due to premature mortality (YLLs) and years of life lost due to time lived in states of less than full health, or years of healthy life lost due to disability (YLDs) The Disability-Adjusted Life-Year (DALY) is a metric that combines the burden of mortality and morbidity into a single number. It is the primary metric used by the World Health Organization to assess the global burden of disease • One DALY represents the loss of 1 year in full health. Example: • a man who lived 5 years with diabetes (disability weight 0.20) and died 30 years before his life expectancy • He obtains 1 YLD ( 5 X 0.2 = 1 YLD) • and 30 YLL ( premature death 30 years earlier from expected 30 YLL) • which equals 31 healthy years of life lost 31 DALYs Disability weight • In calculation of DALY a weighting is used to measure the severity of disability. • The disability weight is measured on a scale of zero to one Zero (0) Full health One ( 1) Death QALY Vs DALY Both QALY and DALY use a scale of 0-1 to represent the quality of life: • QALY: “0” is equivalent to death; “1” represents perfect health. • DALY, “0” represents perfect health; “1” equates to death. • Thus, a QALY measures the number of healthy years gained, while a DALY measures the number of healthy years lost. • For this reason, health interventions seek to increase QALYs, while seeking to avert DALYs. • The cost-effectiveness of different programs described in terms of cost per DALY averted DALY calculation The basic formula for calculating YLL • YLL = N X L Where : N = number of deaths L = Standard life expectancy at age of death ( in Years) The basic formula for calculating YLD • YLD = I X DW X L Where I = number of incident cases DW = Disability weight L = Average duration of disability (in Years) Leading Causes of Attributable Global Mortality and Burden of Disease, 2004 Attributable Mortality High Blood pressure Attributable DALYs 12.8% Childhood underweight 7.8% 7.5% Tobacco use 8.7% High blood pressure High blood glucose 5.8% Unsafe sex Physical inactivity 5.5% Unsafe water, sanitation, hygiene Overweight and obesity 4.8% High blood glucose High Cholesterol 4.5% Indoor smoke and solid fuels 4.8% Unsafe sex 4.0% Tobacco use 3.9% 6.6% 6.1% 4.9% Alcohol use 3.8% Physical inactivity 3.8% Childhood underweight 3.8% Suboptimal breast feeding 3.7% Indoor smoke from solid fuel 59 million total global death ( 2004) 3.3% High cholesterol 3.3% 1.5 billion total global DALY in 2004 Age weight • There is social preference to value a year lived by a young adult more highly than a year lived by young child or at older ages • Not related to productivity but social role in caring for a young and old • Age weighting function = C X e - BX Where C = constant equal to 0.1658 B = constant equal to 0.04 e = constant equal to 2.71 X = age N.B ( just for your knowledge)