Presentation on theme: "Cost-Effectiveness Using Decision-Analytic Models"— Presentation transcript:
1 Cost-Effectiveness Using Decision-Analytic Models Kee Chan, PhDAssistant Professor, Boston UniversityVA Center for Health Quality, Outcomes and Economic Research (CHQOER), Edith Nourse Rogers Memorial Veterans Hospital, in Bedford, MassachusettsAugust 15, 2012HERC Seminar Series
2 Speaker Contact InformationKee Chan, PhDVA Center for Health Quality, Outcomes and Economic Research (CHQOER) Bedford, MassachusettsAssistant ProfessorDepartment of Health SciencesBoston University
3 OverviewThis presentation will focused on the decision-making process and fundamental models used in cost-effectiveness analysis.Examples of Cost-Effectiveness AnalysisLimitations and strengths will be discussed.Resources for further discussion.
4 Learning ObjectivesAt the end of the presentation, you will learn the following for your own study design:the decision-making process.the framework used in decision-analytic model.the application in cost-effectiveness analysis.
5 Outline of Presentation Concept of “PROACTIVE” in Modeling.Structure of Decision AnalysisComponents of Cost-Effectiveness AnalysisResearch StudiesLimitation and StrengthsResources
6 Decision Analysis“A good decision is a logical decision – one based on uncertainties, values, and preferences of a decision-maker.”Ronald HowardProfessor, Stanford University
7 Concept of PROACTIVEPROactiveStep 1: Defining the problem P: Problem R: Reframe the perspective O: Objectives of interest
8 Concept of PROACTIVEproACTiveStep 2: What are the alternatives, consequences and trade-offs? A: Consider Alternatives. C: Model Consequences T: Identify Trade-offs.
9 Concept of PROACTIVEproactIVEStep 3: Integration and exploration I: Integrate evidence V: Optimize Expected Value E: Evaluate Uncertainty.
11 Structure of Decision Analysis A Decision TreeA visual representation of all the possible options and the consequence that may follow each option.
12 Decision Analysis Tree Structure of Decision AnalysisDecision Analysis TreeStep 1: PROactiveStep 2: proACTiveStep 3: proactIVEChance nodeliveCost per Health BenefitTreatment AdieCost per Health BenefitliveCost per Health BenefitTreatment BdieCost per Health BenefitDecision nodeNo TreatmentCost per Health BenefitTerminal node
13 Components of CEACost-EffectivenessUsing decision-analytic models to consider the economics costs of health care.Health resources are consumed in order to produce health benefits.
14 Components of CEAResearch QuestionsWhat is the most efficient use of this health resources, given the alternative uses?TimeResourcesCost
15 Components of CEATime-effectivenessAn hour of a physician’s time spent with one patient is unavailable for another patient.
16 Resource-effectiveness Components of CEAResource-effectivenessHealth resources are consumed in order to produce health benefits.Resources used for one program cannot be spent to increase the program use of another or invest in new program.
17 Cost-Effectiveness Graph Components of CEACost-Effectiveness GraphEffect+?SuperiorTrade-Off-+CostsTrade-Offinferior-
18 Cost-effectiveness Common measure of costs & health effectiveness. Components of CEACost-effectivenessCommon measure of costs & health effectiveness.Measure can be expressed asCostCase of disease preventedLives savedYears of life savedQuality adjusted life year
19 Perspective A range of decision-makers confront these decisions. Components of CEAPerspectiveA range of decision-makers confront these decisions.Societal perspectivePatientProviderOrganizational
20 Different Types of Cost Components of CEADifferent Types of CostTotal Resource Use includes different types of costHealth care resourceNonhealth care resource
21 Cost Calculation Laying out the cost Components of CEACost CalculationLaying out the costCategorize the cost in term health vs. non-health costOrganize the sequence of eventInitial costInduced costAdverted costConsider short or long-run resource cost
22 Probabilities Probability is the chance of the event. Components of CEAProbabilitiesProbability is the chance of the event.Range in 0 to 1.00 = event is impossible1 = event is certain0.5 = the event is equally as likely to occur as not to occur
23 Components of CEAPreferencesPreference-based measures reflect the values an individual has for a particular health states or the relative desirability of health outcome.
24 Effectiveness Health benefits in CEA can be expressed as Components of CEAEffectivenessHealth benefits in CEA can be expressed asSingle measure of health outcomeNumber of Cases PreventedNumber of Cases of Cancer DetectedNumber of Hospital Days ReducedCombined measuresQuality Adjusted Life Years (QALYs)
25 Using cost-effectiveness analysis Components of CEAUsing cost-effectiveness analysisCost-effectiveness using decision-analytic modelingsummarize large amount of information.clarify the decision-making process.compare the different scenarios in complex system.
26 Incremental Cost-effectiveness ratio (ICER) Components of CEAIncremental Cost-effectiveness ratio (ICER)Incremental cost-effectiveness ratio (ICER)costs to benefits and is expressed as $ per life saved or the cost per QALY saved.-Cost intervention ACost intervention BEffectiveness intervention AEffectiveness intervention B
27 Decision Analysis Tree Components of CEADecision Analysis TreeChance nodelive$400K/10 life years0.9Treatment Adie$200K/0 life years0.1live$100K/8 life years0.8Treatment BDecision nodedie$50K/0 life years0.2No Treatment$0K/0 life yearsTerminal node
28 Incremental Cost-Effectiveness Ratio (ICER) Components of CEAIncremental Cost-Effectiveness Ratio (ICER)Question: Is the extra health benefit worth the extra cost?-$400K intervention A$100K intervention B10 life years intervention A8 life years intervention BICER =$300 K per 2 life years = $150K / life yearAnswer: If intervention A is chosen, the additional investment of $150K results in one additional life year, relative to Intervention B.
29 Components of CEAHandling UncertaintyParameter and Model structure uncertainty addressed using sensitivity analyses.One-WayTwo-WayMulti-wayProbabilistic
31 Cost-effectiveness Studies Registry Compare Research StudiesCost-effectiveness Studies Registryhttps://research.tufts-nemc.org/cear4/
32 Limitations Availability of Data Modeling vs. Real-time Experiment Limitations & StrengthsLimitationsAvailability of DataModeling vs. Real-time ExperimentAssumptionUncertainty
33 Strengths Illustrate a Visual Aid. Formulate Objective. Limitations & StrengthsStrengthsIllustrate a Visual Aid.Formulate Objective.Evaluate Complex System.Inform Policy and Guidelines.Guide Research.
34 References and Resources Cost-effectiveness in Health and Medicine, Gold, Siegel, Russell, and Weinstein, eds. (1996), New York: Oxford Univ. Press.Decision Making in Health and Medicine, Hunink, and Glasziou (2001), Cambridge University.Decision Modelling for Health Economic Evaluation, Briggs, Claxton, and Sculpher (2007), Oxford Univ. Press.Designing and Conducting Cost-Effectiveness Analyses in Medicine and Health Care, 2nd Ed., Muennig. (2007), New York: Oxford Univ. Press.Software: TreeAge
37 Summary Use “PROACTIVE” modeling in your design. Construct a decision analysis tree.Use cost-effectiveness analysis.Compare research studies.Understand the limitations and strengths.Find resources and references.
38 Contact InformationIf you have any questions or would like to collaborate, please contact me:Kee Chan, PhDAssistant ProfessorDepartment of Health SciencesBoston UniversityTel: