Cost effectiveness analysis in health care planning
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Nayyar Raza KazmiMBBS, DHPM, MPH, M.Sc
Cost Effectiveness Analysis in Health Care Planning
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Cost Effectiveness MethodologyDefine ObjectivesStructure AlternativesCalculate EffectivenessEstimate CostsChoose a Criterion
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The Crucial IssueConstruct Alternatives that hold something
constantHold Cost Constant and Maximize
Effectivenesso Or
Hold Effectiveness Constant and minimize costs
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ApplicationsTo buy a 1.5 tesla MRI Scanner or buy 3 Ct
ScannersTo increase no of TB Diagnostic Centres or
Fund Free TB DrugsConstruct a new tertiary care hospital or
upgrade one DHQH and 3 THQH
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CostingCosting estimates are done by historical
estimates or by current market surveyStepwise the costing process involves
Charting the activities of a planCalculating Unit costs based on current
market ratesCalculating carrying costs, costs of
operations, fixtures, personnel, again in unit terms
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Costing- ContdIn other wordsAcquisition (non-recurring)
– Development– Procurement
• Land• Facilities• Equipment (depends on number of
systems)– Salvage
• Operations and Support (recurring)– Operations and Maintenance– Personnel
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Adding to original costs, we can calculate costs in terms of Fixed, Variable and Marginal Costs, as in practice costs are fluctuating at different levels of outputs
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CCalculate Effectiveness
Usually measured in QALY’s, DALY’s, No of deaths averted, No of Lives saved, No of children immunized.
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Calculate Cost to effectiveness ratio
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Consider two strategies intended to lengthen life in patients with heart disease. One is simple and cheap (e.g., aspirin and -blockers); the other is more complex, more expensive, and more effective (e.g., medication plus cardiac catheterization, angioplasty, stents, and bypass). For simplicity, we will assume that doing nothing has no cost and no effectiveness.
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Because CEA involves marginal cost and benefits, the choice of which strategies to compare can drive the calculation and the conclusion of a CEA. Consider the effect of repeating the above analysis without the simple strategy
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