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HEA PTP: M207 Health Economics1 Measurement & Valuation of Health What is health? Why do we need to measure it? How can it be measured? Why do we need.

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Presentation on theme: "HEA PTP: M207 Health Economics1 Measurement & Valuation of Health What is health? Why do we need to measure it? How can it be measured? Why do we need."— Presentation transcript:

1 HEA PTP: M207 Health Economics1 Measurement & Valuation of Health What is health? Why do we need to measure it? How can it be measured? Why do we need to value it? How can it be valued?

2 HEA PTP: M207 Health Economics2 What is health? Good health is…not bad health Absence of disease Good health is…a positive thing Total physical and mental well-being Good health is…two-dimensional A long life and a happy life Good health is…multidimensional A long life plus an ability to do all the things that one wants to do Good health is a …subjective concept What makes me happy is not the same thing that makes you happy What made me happy yesterday is not the same thing that makes me happy today

3 HEA PTP: M207 Health Economics3 Why measure health? Health is the product of health care not ops performed, no patients treated etc Clinical reasons - effectiveness Economic reasons - efficiency

4 HEA PTP: M207 Health Economics4 Length of life Mortality (numbers, rates, SMRs) Life expectancy Life years lost Quality of life Numerous QoL measures (generic and specific) SF-36, Nottingham Health Profile, Guttman Scale, Rotterdam Symptom Checklist, Hospital anxiety and depression scale etc….

5 HEA PTP: M207 Health Economics5 Limitations of measurements/need for valuation Confines response to questions posed - may not incorporate all relevant aspects of health Multitude of instruments - compatibility? Ambiguity in assessing overall improvement of detriment in health Efficiency - value of benefits > value (opp) cost

6 HEA PTP: M207 Health Economics6 Valuation versus Measurement Value is determined by benefits sacrificed elsewhere Valuation requires wade-off benefits measurement does not

7 HEA PTP: M207 Health Economics7 Methods of valuing health Utility or prefoeuce assessment eg QALYS Monetary terms eg WTP

8 HEA PTP: M207 Health Economics8 QUALITY ADJUSTED LIFE YEARS (QALYS) Adjusts data on quantity of life years saved to reflect a valuation of the quality of those years If healthy:QALY = 1 If unhealthy:QALY < 2

9 HEA PTP: M207 Health Economics9 QL Weighting

10 HEA PTP: M207 Health Economics10 QALY PROCEDURE Identify possible health states - cover all important and relevant dimensions of QoL Derive weights for each state Multiply life years (spent in each state) by weight for that state

11 HEA PTP: M207 Health Economics11 UTILITY WEIGHT Utility = satisfaction/well-being - reflects a consumers preferences Utility weights are necessarily subjective - they elicit an individuals preferences for, or value of, one or more health states. Must:1.Have interval properties 2. Be anchored at death and good health

12 HEA PTP: M207 Health Economics12 TECHNIQUES FOR MEASURING UTILITY Variety of techniques available, including: Time Trade off Person Trade Off Standard Gamble Magnitude Estimation Rating Scale

13 HEA PTP: M207 Health Economics13 OBTAINING UTILITY WEIGHTS Two means of obtaining utility weights: 1.Evaluation specific/holistic measures - develop evaluation specific (holistic) description of health state and then derive weight for that specific state directly by population survey 2.Use generic or multi-attribute instruments - use predetermined weights, based on combination of dimensions of health yeilding a finite number of health states/values

14 HEA PTP: M207 Health Economics14 EVALUATION SPECIFIC/HOLISTIC MEASURE Advantages:1.Sensitive 2.Account for wider QoL factors (eg process utility, duration/prognosis) Disadvantages1.Cost and time intensive 2.Lack of comparability

15 HEA PTP: M207 Health Economics15 GENERIC (MAU) INSTRUMENTS Advantage:1.Supply weights off the shelf Disadvantages:1.Insensitive to small changes in health 2.Dimensions may not be sufficiently comprehensive 3.Weights may not be transferable across groups

16 HEA PTP: M207 Health Economics16 SOME OTHER ISSUES Choosing respondents for utility estimation - whose values count What constitutes a correct health state description? What is the appropriate measurement technique? Aggregation of values? Biases - against, life enhancing versus life-saving etc.

17 HEA PTP: M207 Health Economics17 Why Monetary Valuation? Assessment of allocative efficiency ie positive Net Present Value (NPV) Valuation of non-health benefits eg process, information, convenience Valuation of non-use benefits ie externalivies, orphan value

18 HEA PTP: M207 Health Economics18 Methods of Monetary Valuation Court awards (death/injury) Political process/implicit public sector awards Life insurance Human capital - value of production Observed wealth - risk trade-off Direct survey

19 HEA PTP: M207 Health Economics19 Human Capital Approach Benefits=gains in productive output (due to ill health) Valuation Basis=earnings / wage data Issues=discriminatory value based on researcher not value based on economic theory

20 HEA PTP: M207 Health Economics20 Willingness to Pay Approach Benefits=what someone is willing to give up (pay) to have the commodity Valuation basis=money represents a claim on benefits from consumption of other commodities =individual preference

21 HEA PTP: M207 Health Economics21 Means of Estimating WTP

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