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PubMed2002

Allowing for differential timing in cost analyses: discounting and annualization.

There are differences in timing related to when costs of certain inputs are incurred and when they are used over the lifetime of a programme. This paper looks at the issues related to the comparison of cost data over time focusing on discounting and annualization adjustments, which are used by economists to calculate financial and economic costs. The process of discounting is used to deal with the notion of time preference. Time preference implies that future costs are worth less, and hence discounted more, to reflect individual and societal preferences to have resources and money now rather than in the future. While discounting is appropriate in many situations, it is also useful to compute an annual equivalent cost when recurrent costs of an intervention are incurred, or are expected to be incurred, in subsequent years. This approach has the added benefit of illustrating how capital items are actually used during the lifetime of an intervention. This paper presents methods to both discount and annualize costs, and discusses rules-of-thumb to decide when to make these adjustments.

Accounting↗
PubMed2002

The impact of price changes on demand for family planning and reproductive health services in Ecuador.

Donor funding for family planning and reproductive health (FP/RH) has declined in Latin America over the past decade, obliging providers to consider other financing mechanisms, including cost recovery through user fees. Pricing decisions are often difficult for providers, who fear that increased fees will cripple demand and create barriers to access for poor clients. Providers need information on how changes in price can affect utilization of services, and how to resolve trade-offs between generating income and serving poor clients. This paper reports on an experiment that measured the impact of higher client fees on utilization, revenue and client socioeconomic characteristics at 15 clinics operated by CEMOPLAF, an Ecuadoran not-for-profit FP/RH agency. The study improves on previous research by comparing effects of different price levels on demand for services. We conclude that demand was inelastic for three of CEMOPLAF's four main FP/RH services, and we found no evidence that the price increases had a disproportionate impact on utilization by poorer clients. The study therefore provided CEMOPLAF managers with knowledge that price increases at the levels tested would help to achieve sustainability goals (by increasing locally generated income) without undermining CEMOPLAF's social mission.

Adult↗
PubMed2002

Public health infrastructure and equity in the utilization of outpatient health care services in Peru.

This article analyzes the magnitude and nature of socioeconomic differences in the utilization of outpatient health care services in Peru. In particular, it explores the potential equity-enhancing effect of the expansion and improvements in the network of health centres during the 1990s. The Peruvian health reform made relatively little progress in terms of the reform agenda promoted internationally during the 1990s. Nevertheless, the expansion of the public network of health centres and the improvements in their equipment has been noteworthy during the same period. Using the 1997 survey of the Peruvian Living Standards Measurement Study (PLSMS), we find large differences in the utilization of outpatient health care services. The richest to poorest quintile ratio is 1.9, and even larger in rural areas. Estimating a probit model with random effects at the district level to control for the systematic geographic bias associated with the optimal public allocation of such infrastructure, we find the income effect to be very large, even after controlling for other socioeconomic characteristics. Finally, we also find that the expansion of the public network of health centres has indeed an equity-enhancing effect, but this is rather small. These results indicate that although the expansion of the public network of health facilities may be necessary, it is not sufficient to promote equity in the utilization of health care services by Peruvian adults, especially in rural areas. It is important to look deeper into the costs of consultations and drugs as economic barriers to the utilization of health services by the poor. In particular, the expansion of health insurance mechanisms for the poor should be carefully monitored and evaluated.

Ambulatory Care↗
PubMed1992

Welfare gains from user charges for government health services.

The World Bank's Financing health services in developing countries emphasizes demand-side issues--highlighting user fees, insurance, and the private sector as tools for strengthening the health sector. That approach is a major departure from the focus on the supply side--public sector spending, costs, management, and efficiency--that has dominated the international health finance agenda for many years. An important set of empirical papers by Paul Gertler and his co-authors coincided with the release of the policy paper. Gertler's work has questioned a policy of greater dependence on user fees by emphasizing the potential welfare costs to consumers of higher fees for medical services. Many health professionals have adopted the jargon of this new approach without understanding the underlying analysis. This article attempts to demystify the debate that has ensued by illustrating economists' idiosyncratic approach to welfare, explaining how the policy paper and Gertler differ, and suggesting alternative approaches to testing the feasibility of the policy paper's prescriptions.

Fees, Medical↗
PubMed2004

The effects of mandatory health insurance on equity in access to outpatient care in Indonesia.

This paper examines the effects of mandatory health insurance on access and equity in access to public and private outpatient care in Indonesia. Data from the second round of the 1997 Indonesian Family Life Survey were used. We adopted the concentration index as a measure of equity, and this was calculated from actual data and from predicted probability of outpatient-care use saved from a multinomial logit regression. The study found that a mandatory insurance scheme for civil servants (Askes) had a strongly positive impact on access to public outpatient care, while a mandatory insurance scheme for private employees (Jamsostek) had a positive impact on access to both public and private outpatient care. The greatest effects of Jamsostek were observed amongst poor beneficiaries. A substantial increase in access will be gained by expanding insurance to the whole population. However, neither Askes nor Jamsostek had a positive impact on equity. Policy implications are discussed.

Adolescent↗
PubMed2005

The cost-effectiveness of introducing hepatitis B vaccine into infant immunization services in Mozambique.

OBJECTIVE: To estimate the cost-effectiveness of introducing hepatitis B vaccine into routine infant immunization services in Mozambique, which took place in the year 2001. METHODS: A decision analytic model was used to estimate the impact of hepatitis B vaccination. This model was developed for the WHO to estimate the global burden of disease from hepatitis B. Cost data of vaccine delivery and medical treatment related to hepatitis B infection were collected for the analysis. FINDINGS: The introduction of hepatitis B vaccine has increased the annual budget for immunization services by approximately 56%. It is predicted that more than 4000 future deaths are averted annually by the intervention. In the base case scenario, the incremental costs per undiscounted deaths averted amount to US$436, and the costs per undiscounted DALY averted amount to US$36. Since the major impact of hepatitis B vaccination will not start to be evident for at least another 40 years (deaths from hepatitis B mainly occur between 40-60 years of age), the cost per DALY averted rises to US$47, when using a discount rate of 3% on health effects. We found that the monovalent hepatitis B vaccine was considerably more cost-effective than the hepatitis B vaccine in combination with DTP. INTERPRETATION: If policy makers value future health benefits equal to current benefits, the cost-effectiveness of infant hepatitis B vaccination is in the range of other primary health care interventions for which similar analysis has been undertaken.

Carrier State↗
PubMed2004

Cost-effectiveness of Chlamydia antibody tests in subfertile women.

BACKGROUND: For the evaluation of tubal function, Chlamydia antibody testing (CAT) has been introduced as a screening test. We compared six CAT screening strategies (five CAT tests and one combination of tests), with respect to their cost-effectiveness, by using IVF pregnancy rate as outcome measure. METHODS: A decision analytic model was developed based on a source population of 1715 subfertile women. The model incorporates hysterosalpingography (HSG), laparoscopy and IVF. To calculate IVF pregnancy rates, costs, effects, cost-effectiveness and incremental costs per effect of the six different CAT screening strategies were determined. RESULTS: pELISA Medac turned out to be the most cost-effective CAT screening strategy (15 075 per IVF pregnancy), followed by MIF Anilabsystems (15 108). A combination of tests (pELISA Medac and MIF Anilabsystems; 15 127) did not improve the cost-effectiveness of the single strategies. Sensitivity analyses showed that the results are robust for changes in the baseline values of the model parameters. CONCLUSIONS: Only small differences were found between the screening strategies regarding the cost-effectiveness, although pELISA Medac was the most cost-effective strategy. Before introducing a particular CAT test into clinical practice, one should consider the effects and consequences of the entire screening strategy, instead of only the diagnostic accuracy of the test used.

Antibodies, Bacterial↗
PubMed2001

Economic evaluation of universal BCG vaccination of Japanese infants.

BACKGROUND: The international controversy surrounding the use and effectiveness of the Bacillus Calmette-Guérin (BCG) vaccine and the low incidence of tuberculosis (TB) among Japanese children prompted this study. METHODS: We compared 'universal BCG vaccination' with 'no vaccination at all' using a cost-effectiveness analysis. The study population was a hypothetical cohort comprising a total of 1.2 million infants born in 1996 at locations all over Japan. A model was developed to calculate the number of TB cases prevented by the vaccination programme. Assuming 40-80% overall vaccine efficacy (64-86% for TB-meningitis) and 10 years of protection, we calculated the cost and number of immunizations required to prevent one child from developing TB, the total number of TB cases averted by vaccination and total costs required for the programme. RESULTS: Based on an assumption of flexible vaccine efficacy (40-80%), we estimated that 111-542 TB cases including 10-27 of TB-meningitis would be prevented during the 10 years after BCG vaccination among the cohort of infants born in 1996. About US$35 950-175 862 or 2125-10 399 immunizations would be required to prevent one child from developing TB. Sensitivity analyses covering a wide duration of protection, incidence of TB, vaccine coverage and discount rate, revealed that other than vaccine efficacy, the cost of preventing a single case of TB is highly sensitive to the duration of BCG protection and TB incidence. CONCLUSION: The cost per case of TB prevented is heavily dependent on vaccine efficacy and the duration of protection, and is high compared with the cost of treating one child who has developed TB.

BCG Vaccine↗
PubMed2001

Modelling strategies for reducing pharmaceutical costs in hospital.

OBJECTIVE: To describe drug utilization and cost in a large hospital and to compare the impact of different strategies on cost associated with drug prescribing. DESIGN: Retrospective data on drug utilization and cost, linked to patient clinical data and prescriber data from November 1998 were analyzed and modelled. MAIN OUTCOME MEASURES: Impact of different strategies for cost control. SETTING: A large hospital in Sydney, Australia. RESULTS: The mean cost of drugs per episode of care was 28 Australian dollars. Of all drug costs, 79% was incurred by medical units and 14% by surgical units. Oncology accounted for 42% and inpatients for 91% of drug costs. Although section-100 (S-100) drugs incurred a high cost (640 dollars) per episode of care, there were only 41 episodes where S-100 drugs (expensive, restricted drugs) were used, and the total cost of S-100 drugs was only 3.7% of the total cost to the hospital. Antibiotics were the most commonly prescribed drug category, prescribed in 14% of all hospital episodes, and accounting for 14% of total drug costs. Anti-ulcer drugs were the next most costly group, accounting for 7% of total drug costs. A 20% reduction in use of antibiotics would save four times that (233,832 dollars pa) of a 20% reduction in use of S-100 drugs (61,392 dollars pa). DISCUSSION: Our study suggests that reducing inappropriate use of high volume drugs such as antibiotics could be more effective in optimising health facility drug budgets than attempts concentrating solely on reducing use of high cost drugs alone. Moreover our study suggests that systematic measurement of drug utilisation patterns is a key element of drug cost control strategies.

Cost Allocation↗
PubMed1999

Estimating economic thresholds for pest control: an alternative procedure.

An alternative methodology to determine profit maximizing economic thresholds is developed and illustrated. An optimization problem based on the main biological and economic relations involved in determining a profit maximizing economic threshold is first advanced. From it, a more manageable model of 2 nonsimultaneous reduced-from equations is derived, which represents a simpler but conceptually and statistically sound alternative. The model recognizes that yields and pest control costs are a function of the economic threshold used. Higher (less strict) economic thresholds can result in lower yields and, therefore, a lower gross income from the sale of the product, but could also be less costly to maintain. The highest possible profits will be obtained by using the economic threshold that results in a maximum difference between gross income and pest control cost functions.

Animals↗
PubMed2003

Preventing HIV in injection drug users: choosing the best mix of interventions for the population.

Injection drug users (IDUs) transmit the human immunodeficiency virus (HIV) via both needle sharing and sex. This analysis explores the effects of population risk behaviors, intervention effectiveness, intervention costs, and budget and capacity constraints when allocating funds between two prevention programs to maximize effectiveness. The two interventions, methadone maintenance and street outreach, address different types of risk behavior. We developed a model of the spread of HIV and divided IDUs into susceptible (uninfected) persons and infective persons and separately portrayed sex and injection risk. We simulated the epidemic in San Francisco, California, and New York City for periods from the mid-1980s to the mid-1990s and incorporated the behavioral effects of the two interventions. We used the simulation to find the allocation of a fixed budget to the two interventions that averted the greatest number of infections in the IDUs and their noninjecting sex partners. We assumed that interventions have increasing marginal costs. In the epidemic scenarios, our analysis found that the best allocation nearly always involves spending as much as possible on street outreach. This result is largely insensitive to variations in epidemic scenario, intervention efficacy, and cost. However, the absolute and relative benefits of the best allocation varied. In mid-1990s San Francisco, maximizing spending on outreach averted 3.5% of total HIV infections expected and 10 times the 0.3% from maximizing spending on treatment. In late 1980s New York City, the difference is five-fold (2.6% vs. 0.44%, respectively). Our analyses suggest that, even though prevention works better in higher risk scenarios, the choice of intervention mix is more important in the lower risk scenarios. Models and analyses such as those presented here may help decision makers adapt individual prevention programs to their own communities and to reallocate resources among programs to reflect the evolution of their own epidemics.

Female↗
PubMed1992

HRT: an analysis of benefits, risks and costs.

A cost-effectiveness analysis of hormone replacement therapy (HRT) was undertaken to assess the relative benefits of different treatment strategies, and to identify which factors most influence cost-effectiveness. The current lack of conclusive evidence on the effects of HRT, especially in relation to combined therapy and cardiovascular disease, necessitated the use of a large number of assumptions in our model. In terms of net health benefits, the potential reduction in cardiovascular disease would have greatest impact, and would overshadow any small increase in breast cancer risk possibly associated with long-term use. Net expenditure by the NHS will depend critically on the direct costs of treatment, rather than on any indirect costs incurred or averted as a result of side-effects. In terms of cost-effectiveness, long-term prophylactic treatment of hysterectomised women and treatment of symptomatic women with a uterus compare favourably with other accepted health care interventions.

Breast Neoplasms↗
PubMed2000

The effects of neonatal screening for sickle cell disorders on lifetime treatment costs and early deaths avoided: a modelling approach.

BACKGROUND: The aim of the study was to calculate the cost to the UK National Health Service of providing treatment services for patients with sickle cell disorders. The rates of differential morbidity and mortality, in the first 10 years of life, between screen-detected early diagnosed and clinically presenting late diagnosed cohorts of sickle cell disorder patients are also estimated. METHOD: A cost model was developed, based on predictions of survival and the incidence of sickle cell disorder-related events. Direct data from the NHS are lacking, so data were incorporated from disparate sources. Patients with sickle cell disorders were divided into two categories: those with sickle cell anaemia and those with sickle HbC disease. RESULTS: Differentiating between sickle cell anaemia and sickle HbC disorder patients, the results show that the undiscounted (discounted at 6 per cent) lifetime treatment costs range from pound sterling 92323 (pound sterling 24917) to pound sterling 185614 (pound sterling 53861). The number of early deaths avoided per 100 births, as a result of early diagnosis through screening, ranges from 0.57 to 1.25. CONCLUSIONS: The resulting estimates may act as a guide to those involved in the planning of health care provision with regard to the resources required to treat sickle cell disorder patients. Such information may also be incorporated into the evaluation of both antenatal and neonatal screening programmes for sickle cell disorders.

Adolescent↗
PubMed2001

The efficiency of the delivery of neonatal care in the UK.

BACKGROUND: A recent paper in Journal of Public Health Medicine (O'Neill et al., 2000; 22(1): 108-115) used regression modelling to determine the average costs of neonatal care services for a sample of 49 units in the United Kingdom in 1990-1991, and concluded that economies of scale were present in the sample as a whole. Although this form of modelling is useful, analysis of the efficiency of production for individual units is also important. METHODS: Data envelopment analysis (DEA) was used to analyse the data set published by O'Neil et al., to determine technical efficiency of neonatal units, measuring efficiency compared with a benchmark efficient frontier, and estimating economies of scale for each unit. Potential cost savings if units were to operate efficiently are estimated. RESULTS: There is evidence of substantial levels of technical inefficiency. Economies of scale varied between units, with increasing returns in the 36 inefficient units, and mainly constant returns in the 13 efficient units. This suggests that the presence of technical inefficiency was as important as scale inefficiencies. Total cost savings, if all units were operating efficiently, are estimated at ł10.4 million, equivalent to 10 extra units producing 57,000 additional days of care. CONCLUSIONS: DEA is a technique of great potential value in analysing the efficiency of health care production. As well as inefficiencies in the production of neonatal care in the United Kingdom due to differences in the scale of production, there appears to have been considerable technical inefficiency, which was not due to differences in case mix. The potential cost savings from efficiency gains are large.

Data Interpretation, Statistical↗
PubMed1997

Modelling and costing the consequences of using an ACE inhibitor to slow the progression of renal failure in type I diabetic patients.

Antihypertensive drugs slow the progressive decline in renal function seen in patients with insulin-dependent diabetes and nephropathy. In a recent study, the ACE inhibitor captopril protected against this deterioration in renal function. We developed an economic model to analyse the cost impact of ACE inhibitor treatment on progression to endstage renal failure (ESRF) in diabetic patients over 4 years. Two scenarios were compared: one describing the progression of a cohort of 1000 patients receiving 25 mg captopril three times daily, and the other for an equivalent cohort without such prophylactic treatment. Previously published data were used to estimate the transition rates for each stage from the onset of renal failure until death. All direct costs were discounted by an annual rate of 6%, and were subjected to sensitivity analysis. The discounted cost saving of ACE inhibitor treatment for a cohort of 1000 patients was estimated as 0.95 million pounds over 4 years. Under sensitivity analysis, these results were very robust to variations in the costs of ESRF treatment. Prophylactic treatment with ACE inhibitors was predicted to provide substantial increases in life expectancy and reduction in the incidence of ESRF, while also providing significant economic savings.

Adolescent↗
PubMed2002

The cost utility of bisphosphonate treatment in established osteoporosis.

BACKGROUND: Hip fracture is an important and costly problem. Bisphosphonate therapy prevents hip and other fractures among women with established osteoporosis, but there are few published economic evaluations of this treatment. AIM: To assess the cost-effectiveness of risedronate, a recently launched bisphosphonate for the prevention of fractures among women with established osteoporosis. METHODS: A state transition Markov model of established post-menopausal osteoporosis based upon randomized clinical trial data was developed. Uncertainty underlying model parameters and outcomes was dealt with using traditional sensitivity analysis and stochastic sensitivity analysis to produce quasi-95%CIs. We focussed on patients aged approximately 75 years, since this population most closely matches the randomized controlled trial, and is typical of osteoporosis patients in the UK. RESULTS: The baseline model of treating a cohort of 1000 75-year-old women for 3 years with risedronate and then modelling the costs and benefits over their expected lifetimes, produced net savings of pound sterling 786 000 for the treatment group per 1000 treated women, (95%CI pound sterling 1.55m savings to pound sterling 47000 extra costs). Restricting the horizon of the analysis to only three years led to a small net cost of pound sterling 138 000 per 1000 treated women (95%CI pound sterling 196 000 savings to pound sterling 477 000 extra costs) with a net increment in Quality Adjusted Life years (QALYs) of 16 per 1000 treated women. This resulted in a cost per QALY of pound sterling 8625 per treated woman. CONCLUSIONS: In this example, the use of risedronate therapy in 75-year-old women at high risk of hip fracture leads to an improvement in quality of life with possible cost savings. Restricting the analysis to a time horizon of only three years leads to a QALY gain at a modest net cost.

Aged↗