Cost-Effectiveness and Outcomes Research Setting value to what we do

n n Define CE terms n n Review methods of evaluation in health care n n Review examples n n Identify activities that may promote CE studies Objectives:

n n What it is - What is Cost-Effectiveness? n What it is not-

n n What it is - “a method for evaluating the health outcomes and resource costs of health interventions” Russell, et al., JAMA 1996;276:1172 What is Cost-Effectiveness?

Interventions –Nutrition Support –MNT Protocols – Presence of the RD on the health care team, in the public health jurisdiction, etc.

What is Cost-Effectiveness? Outcomes in CEA –Traditional Medical Outcomes –Resource Costs –Expanded definition Patient centered outcomes Quality of life; Client satisfaction

What is Cost-Effectiveness? Cost-Savings Cheaper bang Cost-Benefit Analysis All benefits cost in dollars ?? Putting dollar value on life years What it is not - n n What it is -

Health Care Expenditure as a Share of Gross National Product (%) Zweifel P: Health Economics, 1997

n n Outcome The result of the performance (or nonperformance) of a function or process(es). JCAHO 1996 n n Outcome Indicator Measures what happens (or does not happen) to a patient after something is done (or not done) to the patient. NLHI Terms

n n Cost Benefit Analysis An analytic tool for estimating the net social benefit of a program or intervention as the incremental benefit of the program less the incremental cost, with all benefits and costs measured in dollars. Cost Effectiveness in Health and Medicine. Gold, Martha, et al  1996 University Press Terms

n n Cost Effectiveness An analytic tool in which costs and effects of a program and at least one alternative are calculated and presented in a ratio of incremental costs to incremental effects. Effects are health outcomes such as cases of a disease presented, years of life gained or quality adjusted life years rather than monetary measures as in cost benefit analysis. Cost Effectiveness in Health and Medicine. Gold, Martha, et al  1996 University Press Terms

n n QALY “Quality-adjusted life year” “A measure of health outcome which assigns to each period of time a weight, ranging from 0 to 1, corresponding to the health-related quality of life during that period, where a weight of 1 corresponds to optimum health and a weight of 0 corresponds to a health state judged equivalent to death: these are then aggregated across time periods.” Gold 1996 Terms

n n DFLE “Disability-free life expectancy” Life expectancy free of class I (or worse) disability Disability classes based on person- trade off method

Terms n n DALE “Disability-adjusted life expectancy” HL x = L x ( 1 - P ix D ix ) Where: HL x =the number of years of healthy life lived at age x L x = the number of years of life lived at age x from a life table P ix =the prevalence of disabling sequelae j at age x D ix =the disability severity weight for disabling sequelae j at age x

n n Discounting The process of converting future dollars and future health outcomes to their present values. (Gold 1996) n n Bootstrapping A simulation method for deriving nonparametric estimates of variances of interest (e.g. the variance in the C/E ratio) from a data set. (Gold 1996) n n Bayesian method A branch of statistics that uses prior information on beliefs for estimation and inference. (Gold 1996) Terms

Objectives: n n Define CE terms n n Review methods of evaluation in health care n n Review examples n n Identify activities that may promote CE studies

n Outcomes Research –Process Identify the outcome (what we effect) Set a clear definition of the outcome –Implementation Measure Analyze Evaluate Features of Cost Effectiveness

Methods of Evaluation in Health Care: CEA Method of evaluation would be cost- effectiveness analysis (CEA). Only for mutually exclusive projects. t 1 CEA = costs in units of money benefits in mmHg and t 2 CEA = costs in units of money benefits in additional life years Zweifel P: Health Economics, 1997

Methods of Evaluation in Health Care Limitations of CEA n n Implies that it is not relevant who obtains the additional life years n n It does not lend itself to the evaluation of projects with several different (positive) effects. n n Provides a rank order of preference among mutually exclusive projects, it does not answer the question which of the projects should be realized and which should not Zweifel P: Health Economics, 1997

Methods of Evaluation in Health Care: Cost Utility Analysis Method of evaluation that takes account of the multidimensionality of the concept ‘health’ by trying to encompass all effects of an intervention - prolonging life and changing health status. t CUA = costs in units of money benefits in QALYs The index value may be interpreted as ‘QALYs’ gained. Again, only for mutually exclusive projects. Unlike CEA, suitable for comparing medical interventions of heterogeneous kind and purpose Zweifel P: Health Economics, 1997

Methods of Evaluation in Health Care: Cost Benefit Analysis Zweifel P: Health Economics, 1997 Monetary equivalents are assigned to prolongations of life and change of health status. t CBA = costs in units of money benefits in units of money

Methods of Evaluation in Health Care: Zweifel P: Health Economics, 1997 Unlike cost-benefit analysis, cost- effectiveness analysis and cost-utility analysis circumvent the problem of monetary evaluation of life and health. However, they provide only a relative evaluation of mutually exclusive projects, while CBA permits evaluation of each project on its own.

Objectives n n Define CE terms n n Review methods of evaluation in health care n n Review examples n n Identify activities that may promote CE studies

n n What is the question (intervention)? –Compared to what? n n Who is the decision maker? n n Over what time period for study? n n What is (are) the unit of outcome? Judith Barr, ScD; Director, National Education and Research Center for Outcomes Assessment in Healthcare Northeastern University, Boston MA Fundamental Health Economic Questions

Hoch JS: Health Econ. 11: 415–430 (2002), Published online 31 January 2002 in Wiley InterScience (

Intervention -- Weight Reduction Program Comparing usual care to dietitian consult Your Effects usual Your $ < usual A B Your $ > usual C D What can be said about A, B, C, and D? D -- Need for incremental cost-effectiveness Judith Barr, ScD; Director, National Education and Research Center for Outcomes Assessment in Healthcare Northeastern University, Boston MA Incremental Economic Analyses: 4 Possible Situations

Dietitian Usual Care Costs $2,500 $2,200 Effects 15 lbs 10 lbs n n What is the additional cost for an additional unit of gain? < ($2, ,200)/(15lbs-10lbs) = $300/5 or $60 for each additional pound lost. Judith Barr, ScD; Director, National Education and Research Center for Outcomes Assessment in Healthcare Northeastern University, Boston MA Incremental Cost-effectiveness

Dietitian Usual Care Costs $2,500 $2,200 Effects 20% 16% reduction in Hemoglobin A1c What is the additional cost for an additional unit of gain? Judith Barr, ScD; Director, National Education and Research Center for Outcomes Assessment in Healthcare Northeastern University, Boston MA Incremental Cost-effectiveness

Dietitian Usual Care Costs $2,500 $2,200 Effects 20% 16% n n ($ )/(20-16% reduction in HbA1c) n n $300/4% reduction in HbA1c n n $75/1% reduction in HbA1c Judith Barr, ScD; Director, National Education and Research Center for Outcomes Assessment in Healthcare Northeastern University, Boston MA Incremental Cost-effectiveness

League Tables progressive listing of costs per unit of effectiveness/outcome Unit of Outcome: Cost per Life Year Saved –Hypertension screening < 40 year male$9,800/LY < 40 year female$45,869/LY –Mammography 55-65yr women$44,550/LY –Pap screening (Pap Net) 20-65y$122,888/LY –Exercise ECG 40 yr male$135,116/LY –Exercise ECG 40 yr female$364,170/LY Judith Barr, ScD; Director, National Education and Research Center for Outcomes Assessment in Healthcare Northeastern University, Boston MA Cost-Effectiveness League Tables

n n American Society for Internal Medicine and American College of Physicians used CEA in recommendations concerning: –hypertension –exercise ECG –screening < breast < prostate < cervical Judith Barr, ScD; Director, National Education and Research Center for Outcomes Assessment in Healthcare Northeastern University, Boston MA Are CEA Studies Being Used?

n n MAJOR midwest hospital with strong ties to managed care organizations and industry n n Used it over last few years for policy –hepatitis B screening for neonates –Smoking cessation –cystic fibrosis –flu inoculation reminders –anticoagulation clinic –lipid management –some drug formulary decisions Judith Barr, ScD; Director, National Education and Research Center for Outcomes Assessment in Healthcare Northeastern University, Boston MA Are CEA Studies Being Used?

Activities on CE Lewin Study n n A study at Group Health Cooperative in Puget Sound Area n n Covered dietitian services as a supplemental benefit for Medicare enrollees covered under risk contract n n Examined use and costs over time of services in this Medicare population with diabetes and CVD who did and did not use RD services Judith Barr, ScD; Director, National Education and Research Center for Outcomes Assessment in Healthcare Northeastern University, Boston MA

Activities on CE Lewin Study n n For DM patients using RD services hospital admissions were reduced by 9.5% and MD visits by 23.5% n n For CVD the use of RD services was associated with an 8.6% decrease in hospital utilization and a 16.9% decrease in MD visits. Judith Barr, ScD; Director, National Education and Research Center for Outcomes Assessment in Healthcare Northeastern University, Boston MA

Barriers and Limitations Expectations Training Support Outcomes difficult to measure Time of follow-up Co-Morbidities Research training

Strengths Documentation of worth Benchmark for change

Objectives: n n Define CE terms n n Review methods of evaluation in health care n n Review examples n n Identify activities that may promote CE studies