Health Technology Assessment & Economic Evaluation Techniques

Covid has put immense pressure on the healthcare budgets of governments. This has led to increased pressure on authorities to scrutinize any new health intervention they are planning to launch in terms of effectiveness, safety, and costs.?It is in this context that Health Technology Assessment (HTA) has become increasingly important. HTA act as a bridge between research evidence and health policy. HTA helps provide policymakers with evidence to inform their decision-making and help them formulate guidance on reimbursement and administration of new health technologies throughout the larger national healthcare system of a country. It is a multidisciplinary process that covers diverse aspects such as economical, medical, organizational, social, and ethical considerations. As to the term ‘Health Technology’ , it is considered in the broader sense of any product or activity that is used to promote health in any way, by either preventing or treating a disease, long-term care, and improving rehabilitation. ?

The national health system of a country has limited funds to be allocated to different nationwide initiatives. Health technology assessment with the aid of various economic evaluation techniques can help governments to allocate limited funds to different health technologies or interventions. Policymakers are faced with many different old and new healthcare technologies and insufficient resources to fund all of these. This is where the concept of economics called ‘opportunity cost’ comes in. The opportunity cost of spending on a healthcare intervention is the health benefits that could have been achieved had the money been spent on the next best alternative healthcare intervention that was available. HTA at its heart has economic evaluation techniques that compare various healthcare interventions in terms of their cost, clinical effectiveness, side effects, impact on organizations, etc.

?When a public health intervention needs to be implemented, and resources need to be allocated for this intervention, having an understanding of the relationship between resources used and health outcomes achieved by the intervention helps in efficient decision making. The economic evaluation considers both of these things simultaneously. Using this analysis, the policymakers can identify the health technologies or interventions that are best to fund and go ahead with their implementation. ?

Economic Evaluation Techniques:

Economic evaluation is the systematic identification, measure, and valuation of one or more policies or programs in terms of costs and outcomes. It aids in the identification of the best possible course of action based on the evidence available. After an economic evaluation study is conducted for an intervention, we can get an answer to questions such as how much will it cost to implement an intervention, how many cases of those diseases can be prevented or cured, and how many premature deaths can be averted, what value of money in medical costs or productivity losses can be saved, etc.

Let’s take an example of a committee that was tasked to do an economic evaluation of a childhood vaccination intervention that the government was planning to launch. The committee after studying concluded that this intervention will cost $7.5 billion to implement but will avert or prevent 20 million cases of the disease. This intervention will also save $76.4 billion in medical costs and productivity losses along with averting 42 thousand premature deaths. It is evident from these points that implementing this intervention has more benefits for the larger population than the costs incurred. Thus, the government went ahead with this intervention.

To come out with an analysis such as the above, policymakers use various economic evaluation techniques. There are many tools of economic evaluation which answers different questions for which policymakers are seeking answers. Questions that different economic evaluation techniques try to answer are:

·??????What is the cost of implementing an intervention?

·??????What is the economic burden of an illness is on the patient or society as a whole?

·??????How does the cost of implementing an intervention compares with the public health outcomes it will achieve?

The image below shows different economic evaluation techniques and the questions they are trying to answer. Will explain these economic evaluation techniques in depth further in the article.?

Key Concepts for Economic Evaluation

Before diving into trying to understand these economic evaluation techniques, it is important that we understand some of the core concepts that come in handy when we try to do an economic evaluation. Again, this is just an overview, many other factors come into play when these studies are conducted, which can not be covered in the scope of a single article.

1.??????Stakeholder Landscape: To understand and use the results of an economic evaluation, you need to know:

a.??????Who bears the cost and who enjoys the benefits? Cost may be incurred by payers, government agencies, and other players such as insurance providers. Benefits are enjoyed by the patients, pharmacies, etc. Having an in-depth understanding of these things is important to conducting a successful study.

b.??????Duration for which the costs and outcomes are measured. Some interventions are just implemented once over the lifetime of a patient but may have an impact throughout their life. The childhood vaccination schedule goes for the first few years of a child’s life but has an impact throughout their life. ?

c.???????What costs and outcomes are included in the study. There are different costs like direct costs, economic costs, productivity losses, intangible costs, etc. Having an understanding of different costs and outcomes aids in better analysis.

These are the key concepts that influence the results of analysis through their impact on cost and incomes.

2.??????Study Perspective: Economic evaluation studies can be conducted from multiple perspectives based on which you are conducting this analysis. Perspective is the viewpoint from which the analysis is conducted and effects which costs and benefits are included in the evaluation. Possible perspectives from whose view an analysis may be conducted are:

a.??????Societal

b.??????Government

c.???????Healthcare Payer

d.??????Healthcare Provider

e.??????Employer

f.????????Individual

Different costs and outcomes are considered for studies focusing on a different perspective. The table below tries to summarize costs that are considered from different perspectives:

3.???Analytic Horizon: Economic evaluations needs to consider when an intervention is implemented and when the effects of the intervention occur which helps determine:

a.??????Program Time Frame: Period during which intervention is delivered.

b.??????Analytic Horizon: Length of time for which outcomes of an intervention are measured. This is important for preventive medicines because the cost is up-front, but the outcomes may continue to occur for many years after the program.

?The graph below will help you understand the difference between the program time frame and the analytic horizon is:

4.??????Financial and Economic Costs:

a.??????Financial costs are monetary expenditures for resources such as staff salaries, facility rent, and medical supplies

b.??????Economic costs include financial costs plus the value of the resources that are not paid for but must be monetized like volunteer time, caregiver time, etc.

Now that we have a grasp on the main concepts used in economic evaluations, we can now dive into different economic evaluation techniques that are used to conduct Health Technology Assessments.

?1.??????Program Cost Analysis:

This economic evaluation method determines the cost of implementing an intervention. It aids in program planning and performance monitoring. It includes the monetary value of all the resources such as people, places, and things that are used by the program or intervention.?

Program cost analysis categorizes the cost of resources used by the program into the following three categories:?

2.??????Cost of Illness Analysis: It is a way of measuring medical and other costs due to a specific disease or condition. This helps us understand the:

a.??????Magnitude of the impact of a disease or condition

b.??????Assess the economic burden relative to other diseases and condition?

?3. Cost Effectiveness Analysis: This economic evaluation method provides a way to measure both, the cost and health outcomes of a health intervention.?It compares the net cost spent to changes in the health outcomes (effectiveness) that resulted from an intervention.?This technique also allows us to compare different interventions that have the same health outcomes. The outcomes are expressed in a measure called health units, e.g, cases of hypertension prevented, years of life saved, etc.?

It compares the net cost of an intervention to the changes in health outcomes:

Net Cost = Cost of Intervention – Costs Averted

Changes in Health Outcomes = Outcomes with Intervention – Outcomes without Intervention

If the net costs are negative (i.e. saves money), results are reported as cost savings

If the net costs are positive(i.e. costs money). Results are presented as a ratio:

Examples of Cost-Effectiveness ratios are:

1.???Cost per case of disease prevented

2.???Cost per life saved

3.???Cost per death averted

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4. Cost-Utility Analysis: It was observed that a condition may lead to multiple health outcomes in a cost-effectiveness analysis, generating multiple cost-effectiveness ratios. The cost-utility analysis allows you to use a single measure to capture the full impact of an intervention. Cost-utility analysis is a type of cost-effectiveness analysis in which the health outcome is a standardized measure of both length and quality of life, referred to as a quality-adjusted health outcome. Thus, you can capture the full outcome of an intervention using a single standardized measure.

QALY – Quality-adjusted life year – This frequently used quality-adjusted health outcome combines length and quality of life into a single measure. QALY is a life year adjusted for loss in quality of life due to an illness or condition, It basically means that a person with a severe disease who was supposed to live for certain years, could live QALY number of more years due to the healthcare intervention.

?The below graph depicts QALY visually:

Cost-Utility Ratio:

If the net costs are negative (i.e saves money),?results are reported as cost-saving

If the net costs are positive (i.e. costs money),?then the results are also presented as a ratio which is called the cost-utility ratio:

5. Cost-Benefit Analysis: While cost-effectiveness analysis (CEA) focuses on health outcomes, cost-benefit analysis (CBA) can consider impacts on both health and non-health outcomes. In this analysis, costs and benefits from an intervention are compared where both are expressed in monetary units (e.g. US Dollars). It is a tool to compare the cost and effects of alternative interventions. Since it measures both the cost and benefits of an intervention in monetary terms, it requires placing an economic value on health benefits.

Since all benefits are converted into monetary values, it can consider both the health and non-health benefits of intervention together. It considers non-health benefits such as:

·??????Cost savings (financial benefits)

·??????Productivity Gains (Indirect benefits)

·??????Wellbeing and convenience (intangible benefits)

How do you value health outcomes monetarily? How can a health outcome, such as a reduction in risk of disease or death be valued in dollars?

To achieve this there is a measure called Willingness To Pay (WTP). It is used as a measure of the value of reduced health risks to society. WTP measures are based on choices people make regarding tradeoffs between money and small changes in risk, for example, the amount of money people are willing to pay for extra safety features on a new car.

Outcomes of a Cost-Benefit Analysis:

·??????Monetary Valuation: Once an intervention's costs and outcomes (i.e. benefits) are expressed in monetary units, they can be compared.

·??????Calculation of net benefits: The result of a cost-benefit analysis is expressed as net benefits. An intervention's net benefits may be negative if costs exceed the benefits

Net Benefits = Benefits - Costs

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I hope this article was successful in imparting to you a basic understanding of various economic evaluation tools that are used by policymakers in their Health Technology assessment studies. I would recommend that you go through various resources available on the net like YouTube videos explaining these techniques in depth. I have tried to mention all the sources I have used to study these things below in the appendix. I hope you liked this article. Please leave your feedback and comments below.

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Appendix:

1.??????https://www3.paho.org/hq/index.php?option=com_content&view=article&id=9229:2013-tecnologias-sanitarias&Itemid=41687&lang=en#:~:text=Health%20Technology%20Assessment%20(HTA)%20is,making%20in%20the%20health%20area.

2.??????https://rmdopen.bmj.com/content/6/3/e001289

3.??????https://www.youtube.com/watch?v=ehc6f91h7NE

4.??????https://www.youtube.com/watch?v=cUgkWYeRsJk&t=14s

5.??????https://www.train.org/cdctrain/course/1079247/ - This course is an amazing resource to get an overview of various health economic evaluation techniques. This meat of information in the above article is from this course. This is an open-source course that allows using its content as required. I highly recommend you go over this course. I have tried to cover the majority of the content of this course in the article above.

6.??????https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1115911/

7.??????https://www.cdc.gov/policy/polaris/economics/program-cost/index.html#:~:text=A%20program%20cost%20analysis%20includes,rent%2C%20supplies%2C%20and%20medications.

8.??????https://www.acf.hhs.gov/sites/default/files/documents/cb/cost_analysis_guide.pdf

9.??????https://www.gov.uk/guidance/cost-benefit-analysis-health-economic-studies#:~:text=Cost%20benefit%20analysis%20(%20CBA%20)%20is,monetary%20value%20on%20health%20benefits.