Economics of Implementation: Moving beyond Traditional CEA Mark Smith Paul Barnett VA Health Economics Resource Center

Health Economics Resource Center2 Outline 1.Background 2.Cost-effectiveness analysis (CEA) 3.Business case analysis (BCA) 4.QUERI economics research

Health Economics Resource Center3 Policy Needs Need to improve evidence base for quality improvement Need to improve evidence base for quality improvement Need to find most cost-effective combinations of Need to find most cost-effective combinations of  Best practices  Methods to implement them in actual practice  Implementation research

Health Economics Resource Center4 Stages of Implementation 1. Define best practice –Randomized controlled trials (RCTs) –Literature reviews –Expert panels 2. 2.Disseminate best practice –Journal articles, books –Conferences –Presentations to clinicians –Presentations to managers

Health Economics Resource Center5 Stages of Implementation 3. Implementation intervention –Goal: to implement the best practice in a new setting –Common methods:  Electronic clinical reminders  Education: passive, active  Audit and feedback

Health Economics Resource Center6 Poll Questions Are you affiliated with a QUERI center? Have you studied the cost of implementing a best practice, or will you soon?

Health Economics Resource Center7 VA QUERI Program Goal: To locate clinical best practices and to implement them throughout the VA system Structure: 10 research centers focused on diseases or conditions (e.g.: mental health; CHF)

Health Economics Resource Center8 VA QUERI Program Oversight: Review board of VA policymakers, clinicians, researchers, and a VSO representative. - promotes policy relevant research - promotes spread of findings to policymakers in VA headquarters in VA headquarters Status: At several centers, research has reached the stage of regional or national roll-out

Health Economics Resource Center9 Policy Question Do the benefits justify the expense of the implementation project, including both the clinical best practice and the strategy to implement it?

Health Economics Resource Center10 Two Types of Analysis Reference case CEA Reference case CEA –shows cost-effectiveness from societal perspective Business case analysis (BCA) Business case analysis (BCA) –shows cash flow, total program cost from provider’s perspective

Health Economics Resource Center11 Outline 1.Background 2.Cost-effectiveness analysis (CEA) 3.Business case analysis (BCA) 4.QUERI economics research

Health Economics Resource Center12 Reference Case CEA Standard method for performing cost-effectiveness analysis in health Standard method for performing cost-effectiveness analysis in health Promulgated by US Public Health Service task force in 1996 Promulgated by US Public Health Service task force in 1996 Used to develop formularies and set practice guidelines Used to develop formularies and set practice guidelines Some properties: Some properties: –Societal perspective  all costs counted –Outcome in QALYs  lifetime horizon

Health Economics Resource Center13 CEA of Implementation Projects 1.Measure cost of clinical effort (traditional CEA) 2.Measure cost of implementation effort 3.Distinguish cost of implementation from net cost of best practice

Health Economics Resource Center14 Implementation Cost Elements Clinical best practice Clinical best practice –Inpatient, outpatient, Rx care –Patient-incurred costs: time spent obtaining care, home health care –Exclude development costs –Exclude research costs

Health Economics Resource Center15 Implementation Cost Elements Dissemination Dissemination –Staff time for creating and presenting results –Travel to meetings –Supplies QUERI definition of dissemination: “An active, versus passive, effort to communicate tailored information to target audiences with the goal of engagement and information use.” - Excludes journal articles, conference presentations

Health Economics Resource Center16 Implementation Cost Elements Implementation intervention Implementation intervention –IT costs (electronic clinical reminders) –Staff time (training; audit/feedback)  Consider start-up vs. maintenance costs

Health Economics Resource Center17 Issues in Implementation CEA Adaptation over time due to Adaptation over time due to - Formative evaluation - Competing priorities Adaptation across locations due to Adaptation across locations due to - Formative evalution - Differences in technology, staffing

Health Economics Resource Center18 Implications of Adding Implementation 1. The combination of implementation and best- practice may not be cost-effective. 1. The combination of implementation and best- practice may not be cost-effective. Hypothetical example: case management for heart disease prevention - In RCT, $35,000 / QALY - When implemented with provider education component, $75,000 / QALY $75,000 / QALY

Health Economics Resource Center19 Implications of Adding Implementation 2. If the combination isn’t cost-effective, consider whether the implementation intervention can be changed: –Reduce the cost per provider/patient  Less expensive staff ?  Less travel ?  Simpler IT ? –Limit it to a subset of providers/patients

Health Economics Resource Center20 Implications of Adding Implementation 3. For the combination to be cost-effective, the best-practice intervention alone must be highly cost-effective  If an RCT reveals moderate or high ICER, it is very unlikely to be cost-effective when an implementation intervention is added to it.

Health Economics Resource Center21 Outline 1.Background 2.Cost-effectiveness analysis (CEA) 3.Business case analysis (BCA) 4.QUERI economics research

Health Economics Resource Center22 Business Case Analysis: Overview Definition: Analysis of provider’s expenditures for a program over a short period (often 1-3 years), including the effect of any offsetting savings. Definition: Analysis of provider’s expenditures for a program over a short period (often 1-3 years), including the effect of any offsetting savings. QUERI context: QUERI context: –Perspective of VA –Counts the clinical intervention and the implementation intervention

Health Economics Resource Center23 Business Case Analysis: Perspective Reference case CEA: societal perspective Business case: provider/payer’s perspective Example Reference case counts patient-incurred costs; business case does not except to the extent that reputation, plan enrollment, or recruitment/retention are affect. Practical Effect Interventions will be less expensive in a business case analysis.

Health Economics Resource Center24 Business Case Analysis vs. CEA Reference case CEA: lifetime horizon Business case: shorter horizon (e.g., 1 year) Example Reference case values NPV (=PDV) of all future costs and benefits; business case focuses on short-run costs only (typically 1-3 years). Practical Effect Reductions in health costs in far future do not offset initial costs.

Health Economics Resource Center25 Business Case Analysis vs. CEA  Utility -Typically ignored: BCA uses monetary outcomes

Health Economics Resource Center26 Business Case Analysis: Drawbacks - Some benefits cannot easily be monetized - Probably cannot be published - Costs can vary from site to site - Consider creating a model that allows local prices to be input local prices to be input  Complement of CEA, not substitute

Health Economics Resource Center27 Why Both CEA and BCA? CEA addresses societal perspective CEA addresses societal perspective  implementation won’t occur without proof that “best practice” is cost-effective  implementation won’t occur without proof that “best practice” is cost-effective BCA addresses provider perspective BCA addresses provider perspective  more influential in implementation  more influential in implementation decisions decisions

Health Economics Resource Center28 QUERI Economics Overview Cost analyses in > 50 projects across all QUERI centers -Randomized controlled trials (RCTs) -Decision models -Other

Health Economics Resource Center29 Outline 1.Background 2.Cost-effectiveness analysis (CEA) 3.Business case analysis (BCA) 4.QUERI economics research

Health Economics Resource Center30 QUERI Economics Studies 1. Development of best practice Sanders G, et al. Cost-effectiveness of screening for HIV in the era of highly active antiretroviral therapy. NEJM RCT of new intervention Pyne J, et al. Cost-effectiveness of a primary care depression intervention. JGIM 2003.

Health Economics Resource Center31 QUERI Economics Studies 3. Review of cost studies Krumholz H, et al. Preventive cardiology: How can we do better? Task Force #2 – The cost of prevention: Can we afford it? Can we afford not to do it? J Am Coll Cardiology Informatics Yu W, et al. Using GIS to profile health-care costs of VA Quality Enhancement Research Initiative diseases. J Medical Systems 2004

Health Economics Resource Center32 QUERI Economics Studies 5. Cost of implementation Liu CF, et al. “What does it take to implement an evidence-based depression treatment in primary care?” Presentation at HSR&D National Meeting. March, 2005.

Health Economics Resource Center33 Looking Ahead Studies on newer topics: Studies on newer topics: –Formative evaluation & cost –Cost of dissemination & implementation –Business case analysis International collaboration: International collaboration: –Implementation Science journal (free, open access) Emphasis on complex issues, comorbid conditions Emphasis on complex issues, comorbid conditions