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How To Incorporate Measuring Costs into Research Design

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1 How To Incorporate Measuring Costs into Research Design
3/3/2011 3/3/2011 3/3/2011 3/3/2011 How To Incorporate Measuring Costs into Research Design ‹#› 1 ‹#› ‹#›

2 Table of Contents Introduction Economic Evaluation Cost Analysis
3/3/2011 3/3/2011 3/3/2011 Table of Contents Introduction Economic Evaluation Cost Analysis Cost Effectiveness Cost Utility Analysis Cost Benefit Analysis Review Questions ‹#› ‹#›

3 3/3/2011 3/3/2011 3/3/2011 3/3/2011 Introduction When conducting research, measuring cost is an important concept of research findings. Evaluating costs helps guide decision makers as to the value of adopting beneficial research findings. ‹#› 2 ‹#› ‹#›

4 3/3/2011 3/3/2011 3/3/2011 3/3/2011 The dollars and cents approach to measuring research may be a foreign concept to those starting out in healthcare research. However, it is important to be introduced to it because it might hold the key to closing the deal in conducting research and implementation of research findings. ‹#› 3 ‹#› ‹#›

5 3/3/2011 3/3/2011 3/3/2011 3/3/2011 Scenario Let’s say you have discovered an intervention that reverses plaque accumulation in coronary arteries. To the researcher, there is no question as to the value of this finding; it would be championed by patients and clinicians alike! One would expect that there would be immediate adoption of the intervention. Without a doubt. Right? ‹#› 4 ‹#› ‹#›

6 3/3/2011 3/3/2011 3/3/2011 3/3/2011 The reality is that in today’s economic climate, many ideas and research findings are competing for the monetary resources that make them possible to be implemented. Maybe not! ‹#› 5 ‹#› ‹#›

7 You must take your research a step further by
3/3/2011 3/3/2011 3/3/2011 3/3/2011 You must take your research a step further by measuring costs of the intervention you are researching so you can “sell it” to those important stakeholders who hold the purse strings that will fund your findings. ‹#› 6 ‹#› ‹#›

8 These stakeholders (decision makers) include:
3/3/2011 3/3/2011 3/3/2011 3/3/2011 These stakeholders (decision makers) include: Patients Clinicians Administrators Legislators Insurance companies ‹#› 8 ‹#› ‹#›

9 The stakeholders speak in a language called Economic Evaluation.
3/3/2011 3/3/2011 3/3/2011 3/3/2011 The stakeholders speak in “dollars and cents” and “the bottom line”, and come from a perspective that looks at both quality AND cost. The stakeholders speak in a language called Economic Evaluation. ‹#› 7 ‹#› ‹#›

10 3/3/2011 3/3/2011 3/3/2011 3/3/2011 Economic Evaluation Economic evaluation converts research results into economic language, so researchers can present the findings to financial stakeholders in a language they understand. ‹#› 10 ‹#› ‹#›

11 3/3/2011 3/3/2011 3/3/2011 3/3/2011 This doesn’t necessarily mean that the cheapest method is chosen however. So, even though a healthcare intervention is costly, if it significantly improves a healthcare outcome for patients, it is deemed cost-effective. Conversely, if a healthcare intervention does not improve outcome, it is not cost-effective at any price. ‹#› 11 ‹#› ‹#›

12 Incorporating Measuring Costs into Research Design
3/3/2011 3/3/2011 3/3/2011 3/3/2011 Incorporating Measuring Costs into Research Design First, you need an intervention study. Then, you must to determine if the intervention is efficacious: does it produce results? If you have conducted research on an intervention with great results, next you want to determine: How much did the improvement cost? ‹#› 14 ‹#› ‹#›

13 3/3/2011 3/3/2011 3/3/2011 3/3/2011 An economic analysis will help determine the answers to questions such as: “Is it cost effective?” “Was the improvement in function or prevention of health problems worth it?” ‹#› 15 ‹#› ‹#›

14 Factors to consider before initiating an economic evaluation
3/3/2011 3/3/2011 3/3/2011 3/3/2011 Factors to consider before initiating an economic evaluation From whose perspective: patient, provider, payers, or societal? Time frame of the intervention. ‹#› 16 ‹#› ‹#›

15 Methods of Measuring Economic Evaluations
3/3/2011 3/3/2011 3/3/2011 3/3/2011 Methods of Measuring Economic Evaluations Cost Analysis Cost Effectiveness Cost Utility Analysis Cost Benefit Analysis ‹#› 17 ‹#› ‹#›

16 3/3/2011 3/3/2011 3/3/2011 3/3/2011 1. Cost Analysis ‹#› 18 ‹#› ‹#›

17 Cost Analysis First and most basic economic evaluation
3/3/2011 3/3/2011 3/3/2011 3/3/2011 Cost Analysis First and most basic economic evaluation Straightforward process Compares cost only. Assumes that the alternative intervention(s) produce the same level of effectiveness ‹#› 19 ‹#› ‹#›

18 Cost Analysis comparing cost for Drug A and Drug B to lower Bp
3/3/2011 3/3/2011 3/3/2011 3/3/2011 Decreases Bp 20mmHg Costs $4 Drug A Decreases Bb 20mmHg Costs $10 Drug B Both drugs have the same efficacy, but Drug A costs less. Cost Analysis comparing cost for Drug A and Drug B to lower Bp ‹#› 20 ‹#› ‹#›

19 2. Cost effectiveness The next level of economic evaluation 3/3/2011
‹#› 23 ‹#› ‹#›

20 Economic evaluation of alternative interventions.
3/3/2011 3/3/2011 3/3/2011 3/3/2011 Cost Effectiveness Economic evaluation of alternative interventions. This analysis looks at the cost and effectiveness of an intervention and compares it to the cost and effectiveness of an alternative intervention (or interventions) so a decision can be made regarding the more cost-effective choice in light of available resources. Effectiveness needs to be measured in the same unit for alternative interventions. ‹#› 24 ‹#› ‹#›

21 3/3/2011 3/3/2011 3/3/2011 3/3/2011 Scenario: Let’s say we have two Bp medications and we want to know which one is more cost effective. An equation is used that shows us the differences between the costs and effectiveness of the two medicines to help make this decision. ‹#› 25 ‹#› ‹#›

22 Cost Effectiveness Equation
3/3/2011 3/3/2011 3/3/2011 3/3/2011 Cost Effectiveness Equation ICER : Incremental Cost-Effectiveness Ratio ‹#› 26 ‹#› ‹#›

23 ICER difference simply means
3/3/2011 3/3/2011 3/3/2011 3/3/2011 how much additional cost was intervention A to produce the additional effectiveness compared to intervention B. ICER difference simply means ‹#› 27 ‹#› ‹#›

24 3/3/2011 3/3/2011 3/3/2011 3/3/2011 ∆Costs The numerator is made up of the difference in costs of the two interventions. Cost of Drug A – Cost of Drug B ‹#› 28 ‹#› ‹#›

25 3/3/2011 3/3/2011 3/3/2011 3/3/2011 ∆Effectiveness The denominator is made up of the difference in effectiveness of the two interventions Effect of Drug A – Effect of Drug B ‹#› 29 ‹#› ‹#›

26 3/3/2011 3/3/2011 3/3/2011 3/3/2011 We want to determine the more cost effective drug to use to lower Blood pressure You compare two drugs: Drug A and Drug B. Drug A Drug B ‹#› 30 ‹#› ‹#›

27 Drug A Drug B Cost $5 $2 Effectiveness Decreases Bp 20mmHg
3/3/2011 3/3/2011 3/3/2011 3/3/2011 Drug A Drug B Cost $5 $2 Effectiveness Decreases Bp 20mmHg Decreases Bp 10mmHg ‹#› 31 ‹#› ‹#›

28 Cost Effectiveness Equation
3/3/2011 3/3/2011 3/3/2011 3/3/2011 Cost Effectiveness Equation To compare the cost effectiveness of these two drugs, we use the cost-effectiveness equation: ‹#› 32 ‹#› ‹#›

29 The ratio reflects the difference in cost between Drug A and Drug B,
3/3/2011 3/3/2011 3/3/2011 3/3/2011 The answer is a ratio of the differences: The ratio reflects the difference in cost between Drug A and Drug B, $3, to the difference in effect on Bp, 10 mmHg. These results are called the “Incremental Cost Effectiveness Ratio” or ICER. $3 10mmHg ‹#› 33 ‹#› ‹#›

30 3/3/2011 3/3/2011 3/3/2011 3/3/2011 Using our example, we say that we know that the difference between the cost of Drug A ($5) compared to the cost of Drug B ($2) is $3. For cost-effectiveness analysis, this is referred to the incremental cost or cost difference between the two. We can also think of this as “Drug A costs $3 more than Drug B”, which is another way to describe incremental cost. ‹#› 34 ‹#› ‹#›

31 3/3/2011 3/3/2011 3/3/2011 3/3/2011 In the same vein, the incremental difference in effectiveness between the two drugs is 10mmHg. Or, we can think of this as “Drug A (effectiveness 20mmHg decrease in Bp) reduces Bp 10mmHg more that Drug B (effectiveness 10mmHg decrease in Bp)”; Again this is another way to describe the incremental effectiveness or difference in effectiveness between these two drugs. In our example, the ICER (or ratio) is: “$3 more spent for Drug A to reduce additional 10mmHg Bp compared to Drug B.” ‹#› 36 ‹#› ‹#›

32 Question for decision maker:
3/3/2011 3/3/2011 3/3/2011 Question for decision maker: Do you want to spend $3 more for a medication that decreases Bp 10mmHg more? ‹#› ‹#›

33 This makes it a more limited, narrow analysis.
3/3/2011 3/3/2011 3/3/2011 3/3/2011 Also, you can only compare same effects; for our example, the effect of the change in Bp. This makes it a more limited, narrow analysis. In cost effectiveness analysis, you may use different disease groups; however you must use the same outcome for comparison. ‹#› 38 ‹#› ‹#›

34 3. Cost Utility analysis The next level of economic evaluation is
3/3/2011 3/3/2011 3/3/2011 3/3/2011 The next level of economic evaluation is 3. Cost Utility analysis ‹#› 41 ‹#› ‹#›

35 3/3/2011 3/3/2011 3/3/2011 3/3/2011 Cost Utility Analysis A specialized form of cost effectiveness analysis that the health outcome (effectiveness) is measured by utility. Here, the utility in a general sense refers to the preferences individuals or society may have for any particular set of health outcomes. The health outcomes are often measured in Quality-Adjusted Life-Years (QALY). ‹#› 42 ‹#› ‹#›

36 3/3/2011 3/3/2011 3/3/2011 3/3/2011 Scenario I have $2000 to spend on a healthcare intervention to benefit my community. I have two programs to choose from: One is an intervention for medication that decreases Bp by 20mmHg. The other is a vaccination program to protect the community from the flu. How do I decide how to spend the money between these two choices? What would benefit the community the most? How do I answer this? ‹#› 43 ‹#› ‹#›

37 On the surface, Bp control and flu prevention are not comparable:
3/3/2011 3/3/2011 3/3/2011 3/3/2011 On the surface, Bp control and flu prevention are not comparable: And different populations Bp Control Flu Prevention Different Interventions Bp Medication Flu Vaccination Health Conditions Older Adults with Hypertension Community who are vulnerable to the flu Different Outcomes Bp control Disease prevention ‹#› 44 ‹#› ‹#›

38 3/3/2011 3/3/2011 3/3/2011 3/3/2011 For the example cited, Bp control and disease prevention need to be transformed into a common measure such as “‘life years’ before you can apply the Cost effectiveness analysis. However, the same number of ‘life years’ may mean different quality or values for different people. With cost utility analysis, one can compare the value of spending the $2000 between the two programs despite their differences. ‹#› 45 ‹#› ‹#›

39 3/3/2011 3/3/2011 3/3/2011 3/3/2011 This is done by introducing “value” (or utility/preference) of people into measuring the outcomes of the alternative interventions (different quality of life years). Cost utility analysis allows the researcher to compare health outcome (effectiveness) measured in quality-adjusted life-years (QALY). ‹#› 47 ‹#› ‹#›

40 How Does QALY Work? 3/3/2011 3/3/2011 3/3/2011 ‹#› ‹#›
To make the determination, the patients’ perception of their Quality of Life (QOL) is introduced in this analysis. The patient scores the effect of the intervention on the quality of their life. A scale is used to score QOL from 0 to 1, where 0 = death and 1 = perfect health. This score is then converted to a measure of the effect of the intervention across time. ‹#› ‹#›

41 This QALY score can be changed by the intervention.
3/3/2011 3/3/2011 3/3/2011 3/3/2011 This second measurement is called a “Quality Of Life Years” or QALY (say “kwallee”) score. This QALY score can be changed by the intervention. We look for changes in the QALY score to tell us how effective the intervention we are testing is. ‹#› 50 ‹#› ‹#›

42 3/3/2011 If the QALY score has increased after an intervention is applied, we can say our intervention is effective. If the QALY score decreases, this indicates the intervention made the QOL worse, and it is considered harmful.

43 3/3/2011 3/3/2011 3/3/2011 3/3/2011 If the QALY score has no change, the intervention did not work, or it is ineffective. QALYs become the standard measurement that researchers can use to compare different programs. ‹#› 51 ‹#› ‹#›

44 3/3/2011 3/3/2011 3/3/2011 In the example we are using, a Bp medication decreases Bp by 20mmHg. The patient determines how much this changes their QOL, and that score is converted to a QALY. For our purposes here, let’s say our patient’s QALY score increased to 0. 5 after taking the medication and experiencing a decrease in Bp. This indicates that the Bp medication is effective, reflected in the increased QALY score. So we can determine that for every $1 spent on Bp medication, we have an increase in QALY score to 0.5. ‹#› ‹#›

45 3/3/2011 3/3/2011 3/3/2011 3/3/2011 For our analysis, we will compare this QALY score to that given by patients receiving the flu vaccine. To avoid flu illness and complications with the flu vaccine, a family says, “Avoiding this greatly increases our QOL”, which increases their QALY to Again, this positive increase reflects the flu vaccine is effective. So we determine that for every $1 spent on our flu vaccination program, we have an increase in QALY to 0.7. So although these two interventions cannot be compared in their original form, we have expressed the effects of the two interventions in equal measurements—dollars spent and QALYs gained—so we can compare both interventions to each other based on the benefit they produce for the cost. ‹#› 52 ‹#› ‹#›

46 3/3/2011 3/3/2011 3/3/2011 3/3/2011 In this example, we get a greater improvement in QALY per $1 spent for the flu vaccine compared to a $1 spent for the Bp medication; or I get more “bang” for my $2000 on an intervention to benefit the community with a QALY of 0.7 vs. a QALY of 0.5; so I spend the $2000 of healthcare resource money on the flu vaccination program. ‹#› 53 ‹#› ‹#›

47 3/3/2011 3/3/2011 3/3/2011 4. Cost Benefit analysis ‹#› ‹#›

48 3/3/2011 3/3/2011 3/3/2011 3/3/2011 Cost Benefit Analysis Cost Benefit Analysis involves measuring costs and benefits in proportionate terms, usually monetary. In this type of analysis, a dollar value is placed on both the cost and the effectiveness of the intervention. Cost Benefit Analysis compares cost and outcome measures to guide decisions for expenditures. ‹#› 56 ‹#› ‹#›

49 3/3/2011 3/3/2011 3/3/2011 3/3/2011 Cost benefit analysis makes it possible to determine if an individual intervention offers an overall net gain and, how the gain from that intervention compares with that from alternative interventions. By valuing all costs and benefits in the same units, cost benefit analysis compares different interventions using the net benefit criterion. It is worth noting that cost benefit analysis can be very controversial, as it involves placing monetary value on a person’s life and health; it also requires a lot of abstraction. ‹#› 57 ‹#› ‹#›

50 Scenario Let’s go to an example using Bp medication again.
3/3/2011 3/3/2011 3/3/2011 3/3/2011 Scenario Let’s go to an example using Bp medication again. We have a new Bp medication that costs $1 more to decrease Bp by an additional 10mmHg. In cost benefit analysis, this reduction is converted to a monetary value. Hypothetically speaking, let’s say 10 mmHg reduction of Bp is worth $ 20, 000 benefit. For cost benefit analysis, the effectiveness (10 mmHg reduction of Bp) is converted to a monetary value ($20, 000). Therefore, you could say that a dollar spent on Bp medication returns $20, 000 in benefits. ‹#› 59 ‹#› ‹#›

51 3/3/2011 3/3/2011 3/3/2011 3/3/2011 Summary What we have discussed is a brief overview of economic evaluation. There are many considerations to conducting economic analysis. In-depth theory and methods are behind the processes that cannot be covered easily without a specialized economic background. For your research, you MUST consult and get a cost analysis person on board to guide you. ‹#› 65 ‹#› ‹#›

52 3/3/2011 3/3/2011 3/3/2011 3/3/2011 Review Questions ‹#› 66 ‹#› ‹#›

53 "Life Years" is a common form of measurement for which analysis?
3/3/2011 "Life Years" is a common form of measurement for which analysis? A) Cost Analysis B) Cost Benefit Analysis C) Cost Effective Analyisis D) Cost Utility Analysis Correct - Click anywhere to continue Incorrect - Click anywhere to continue Your answer: You did not answer this question completely You answered this correctly! The correct answer is: Submit Clear

54 Complete the sentence below by filling in the blanks.
3/3/2011 Complete the sentence below by filling in the blanks. that the alternative interventions produce the same level of effectiveness. Analysis is One assumption of Cost Correct - Click anywhere to continue Incorrect - Click anywhere to continue Your answer: You answered this correctly! You did not answer this question completely The correct answer is: Submit Clear

55 Which analysis uses a montetary measurement
3/3/2011 Which analysis uses a montetary measurement A) Cost Analysis B) Cost Benefit Analysis C) Cost Effective Analysis D) Cost Utility Analysis Correct - Click anywhere to continue Incorrect - Click anywhere to continue Your answer: You did not answer this question completely You answered this correctly! The correct answer is: Submit Clear

56 What does QALY stand for?
3/3/2011 What does QALY stand for? A) Qualtiy Adjusted Life Years B) Quantity Added Life Years C) Quality Added Life Years D) Quantity Added Long Years Correct - Click anywhere to continue Incorrect - Click anywhere to continue Your answer: You did not answer this question completely You answered this correctly! The correct answer is: Submit Clear

57 You can compare different effects in Cost Effective Analysis
3/3/2011 You can compare different effects in Cost Effective Analysis A) True B) False Correct - Click anywhere to continue Incorrect - Click anywhere to continue Your answer: You answered this correctly! You did not answer this question completely The correct answer is: Submit Clear

58 What does "ICER" stand for?
3/3/2011 What does "ICER" stand for? A) Incremental Cost Effective Ratio B) Increasing Cost Effective Ratio C) Increasing Care Effective Rato D) Incremental Care Effective Ratio Correct - Click anywhere to continue Incorrect - Click anywhere to continue Your answer: You did not answer this question completely You answered this correctly! The correct answer is: Submit Clear

59 3/3/2011 The difference between the costs of the two drugs that are being compared is the A) Incremental Cost B) Differential Cost C) Increasing Cost D) Added Cost Correct - Click anywhere to continue Incorrect - Click anywhere to continue Your answer: You did not answer this question completely You answered this correctly! The correct answer is: Submit Clear

60 Complete the sentence below by filling in the blanks.
3/3/2011 Complete the sentence below by filling in the blanks. that one should consider when making healthcare resource decisions are two things and Correct - Click anywhere to continue Incorrect - Click anywhere to continue Your answer: You answered this correctly! You did not answer this question completely The correct answer is: Submit Clear

61 3/3/2011 Cost Benefit Analysis is not controversial becuase it places monetary values on a person's life and health A) True B) False Correct - Click anywhere to continue Incorrect - Click anywhere to continue Your answer: You answered this correctly! You did not answer this question completely The correct answer is: Submit Clear

62 Different comparisons (units) can be used in Cost Effective Analysis
3/3/2011 Different comparisons (units) can be used in Cost Effective Analysis A) True B) False Correct - Click anywhere to continue Incorrect - Click anywhere to continue Your answer: You answered this correctly! You did not answer this question completely The correct answer is: Submit Clear

63 3/3/2011 If the QALY score remained the same after an intervention is applied, the intervention is effective A) True B) False Correct - Click anywhere to continue Incorrect - Click anywhere to continue Your answer: You answered this correctly! You did not answer this question completely The correct answer is: Submit Clear

64 Question Feedback/Review Information Will Appear Here
3/3/2011 Quiz Your Score {score} Max Score {max-score} Questions Correct {correct-questions} Total Questions {total-questions} Number of Quiz Attempts {total-attempts} Question Feedback/Review Information Will Appear Here Continue Review Quiz


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