1. Farid Abolhassani What is economic evaluation 16

2. Learning Objectives After working through this chapter, you will be able to: Define and set up a cost analysis Define and give examples of each of the following types of costs: financial and economic costs; direct, indirect and intangible costs; capital and recurrent costs; fixed and variable costs Calculate the following as they relate to an intervention: total costs; annual and annualized costs; average costs; and marginal costs Explain why discounting may be necessary

3. Key Terms Burden of Disease

4. Key Terms

5. Why Is Economic Evaluation Necessary In perfectly competitive markets, efficiency is the outcome of market mechanisms. When market mechanisms do not end in efficiency, economic evaluation should be used to make the best use of limited resources.

6. How is the burden of a disease manifested? Physical disability Morbidity and mortality Emotional distress Social difficulties and isolation Financial and economic losses

7. The burden of disease can be measured as: The number of cases The number of deaths The amount of disability, pain or suffering The number of people with a risk factor! The amount of money spent on the health problem The amount of lost income due to a health problem

8. The burden of the death during childbirth of a mother who already has two children and who is the only schoolteacher in the village A ‘case’ of maternal mortality The number of years of life she has lost by dying prematurely The amount of her wages that her family will no longer receive The loss of her wages, particularly on her school-age children who can’t be educated because the money for school fees is no longer available The loss to her husband who misses her company and her skills as a housekeeper and part-time farmer The loss of her guidance and training for her young children The loss of the investment her own parents made in training and educating her to be a teacher The loss to the school system which now has to hire or train new teachers to replace her.

9. Resources Personnel Buildings and space Equipment Supplies and pharmaceuticals Transportation Training Social mobilization and publicity including information, education and communication Costing

10. The Outcome How to measure outcome Before and after the intervention With and without the intervention The Difference in Burden with and without intervention The Difference in Burden with and without intervention

11. Economic Evaluation Cost/Effectiveness Ratio Program A Comparator B Input A Output A Input B Output B Costs A - Costs B Conseq A - Conseq B  Cost  Conseq

12. Analytic Techniques Analytic technique Measure of costs Measure of consequences Cost-Effectiveness Analysis Money unitsPhysical units Cost-Utility Analysis Money unitsQALYs or DALYs Cost-Benefit Analysis Money units

13. QALYsQALYs Duration (Years) Health-related Quality of Life Without program With program Death 1 Death 2 Quality-Adjusted Life Years Gained 0 1 Perfect Health B A

14. DALYsDALYs Duration (Years) Health-related Quality of Life Without program With program Death 1 Death 2 B A Disability-Adjusted Life Years Saved 1 0 Perfect Health Expected Death Perfect Health

15. Steps of Economic Evaluation Framing the evaluation Identifying, quantifying and valuing the resources needed Identifying, quantifying and valuing the health consequences

16. Framing the Evaluation The statement of purpose should include: The intervention The health problem addressed by the intervention The reason for conducting the evaluation and its importance The units of analysis Time frame Perspective