1. 1 Cost-effectiveness of improving medical services in low-resource settings Edward Broughton, PhD, MPH, PT University Research Co. May 21, 2014 ebroughton@urc-chs.com

2. USAID Applying Science to Strengthen and Improve Systems Your decision…. 2

3. USAID Applying Science to Strengthen and Improve Systems What would you pay? An error while splinting wrist fractures can cause pain in the 5 th digit for ~ 10 hours An effective improvement intervention can avert error What is it worth to you to avoid the error? What is your willingness to pay?

4. USAID Applying Science to Strengthen and Improve Systems What would you pay? Your choice: this pain for 10 hours or pay $ to not have pain How much are you willing to pay? 10 cents?...... $ 100,000? $ 1? …….. $ 10,000 $ 10?……. $ 1,000? etc. Please write down your answer This is your willingness to pay (WTP)

5. USAID Applying Science to Strengthen and Improve Systems What is economic analysis? Comparative analysis of two or more courses of action in terms of the costs and consequences of an intervention Different types of analyses: –Cost-minimization –Cost-effectiveness –Cost-utility –Cost-benefit

6. USAID Applying Science to Strengthen and Improve Systems What is cost-effectiveness analysis? A way to measure efficiency of an intervention in which costs are related to a single common effect Cost-effectiveness = costs ÷ effects Cost-effectiveness ANALYSIS is the cost-effectiveness of one intervention relative to a baseline / comparison

7. USAID Applying Science to Strengthen and Improve Systems But we need to know: Whose perspective? What time-frame? What units of effectiveness? 7

8. USAID Applying Science to Strengthen and Improve Systems Our improvement intervention example Training / coaching program that prevents errors that lead to adverse event (pain) Before intervention, 50% risk of pain. After intervention, 10% risk of pain Cost of improvement intervention = $ 100 / patient Cost of treating pain = $ 8 / patient (average) but ineffective Is intervention cost-effective? 8

9. USAID Applying Science to Strengthen and Improve Systems Important details: Whose perspective? = Health system What time-frame? = 1 year What units of effectiveness? = adverse event averted or hour of pain avoided or DALY averted or QALY gained 9

10. USAID Applying Science to Strengthen and Improve Systems Cost of improvement intervention What are the costs above what would happen without the improvement intervention? Staff time costs should be included even if staff were not paid more Any other costs we should consider? Assume a cost of $ 100 per patient (divided among all patients who benefit) 10

11. USAID Applying Science to Strengthen and Improve Systems Decision tree 11

12. USAID Applying Science to Strengthen and Improve Systems Calculations 12 Incremental cost effectiveness ratio = difference in costs difference in effects ICER = [(0.1 x 100) + (0.9 x 100)] – [(0.5 x 8) + ( 0.5 x 0)]. [( 0.1 x 0 ) + ( 0.9 x 10 )] – [( 0.5 x 0 ) + ( 0.5 x 10 )] ICER = $ 24.00 / hr of pain relief

13. USAID Applying Science to Strengthen and Improve Systems Table of results StrategyCostIncremental cost EffectIncremental effect Inc. cost- effectiveness ratio Improve- ment 100969 hours of pain avoided 4 hours of pain avoided $ 24 / hour of pain avoided Business- as-usual 45 hours of pain avoided All data are per recipient of strategy

14. USAID Applying Science to Strengthen and Improve Systems Cost effectiveness plane 14 Higher cost Lower cost More effective Less effective Willingness-to-pay threshold $ 24 1 hr pain relief

15. USAID Applying Science to Strengthen and Improve Systems Cost effectiveness plane 15 Higher cost Lower cost More effective Less effective Willingness-to-pay threshold $ 24 Hr of pain relief

16. USAID Applying Science to Strengthen and Improve Systems If we include the economic consequences of the improvement intervention ….. Taking the societal perspective: Can people work with pain caused by error? Assuming no work, calculate lost income / productivity Assume income / productivity = $ 50 / hour Assume no difference in the cost of treatment ( $ 8 ) Now redo calculations

17. USAID Applying Science to Strengthen and Improve Systems CEA calculation 17 Incremental cost effectiveness ratio = difference in costs difference in effects ICER = [(0.1 x 100) + (0.9 x(-500))] – [(0.5 x 8) + ( 0.5 x(-500)]. [( 0.1 x 0 ) + ( 0.9 x 10 )] – [( 0.5 x 0 ) + ( 0.5 x 10 )] ICER = – $ 48.50 / hr of pain relief

18. USAID Applying Science to Strengthen and Improve Systems Table of results StrategyCostIncremental cost EffectIncremental effect Inc. cost- effectiveness ratio Improve- ment – 440–1949 hours of pain avoided 4 hours of pain avoided – $ 48.5 / hour of pain avoided Business- as-usual – 2465 hours of pain avoided All data are per recipient of strategy

19. USAID Applying Science to Strengthen and Improve Systems Cost effectiveness plane 19 Higher cost Lower cost More effective Less effective Willingness-to-pay threshold $ 24 - $ 48.5

20. USAID Applying Science to Strengthen and Improve Systems Cost effectiveness plane 20 Higher cost Lower cost More effective Less effective Willingness-to-pay threshold $ 24 - $ 48.5

21. USAID Applying Science to Strengthen and Improve Systems Why CEAs of improvements difficult in LMICs? Often “effectiveness” is process indicator, not clinical outcome (eg: compliance with standard of care) Difficult to transform into a clinical outcome Often improvement has many different effects Need modeling to convert to DALYs, QALYs etc. Need to guess how long improvement will last Data often dubious No control groups to determine attributability

22. USAID Applying Science to Strengthen and Improve Systems Clarifying the question What are you comparing your intervention to? –Doing nothing –Another intervention –Several other interventions What point of view / perspective are you taking? –Recipient of the intervention –One or several of the funders –Everyone (societal) Why are you doing the CEA? –Who is your audience? –What is the information going to be used for?

23. USAID Applying Science to Strengthen and Improve Systems Calculating DALYs and WTP Global burden of disease: 2004 Update http://www.who.int/healthinfo/global_burden_diseas e/GBD2004_DisabilityWeights.pdf?ua=1http://www.who.int/healthinfo/global_burden_diseas e/GBD2004_DisabilityWeights.pdf?ua=1 DALYs for AE = 10/(365 x 24) x 0.132 = 0.001142 WHO: > 3 x GDPPC / DALY, WB = 1 x GDPPC / DALY For US, $ 178 (WHO) or $ 59 (WB) 23

24. USAID Applying Science to Strengthen and Improve Systems Questions? 24