WHY WE NEED COSTEFFECTIVENESS ANALYSIS Dr Gary Ginsberg

WHY WE NEED COSTEFFECTIVENESS ANALYSIS Dr. Gary Ginsberg

MAKE DECISIONS n n n Day Care Prevention Surgery Topical FL Infectious Disceases n n n n Cancer Hospitalisation Treatment Medication Public FL Non-Connuncable Diseases CVD

NETWORKING n. Pressure Groups n. Politics n. Disease Clubs

FALSE COMPARATIVE NEED n CERVICAL CANCER SCREENING GIVEN in ISRAEL DESPITE LOW INCIDENCE…. . lobbists

PRESSURE GROUPS n BETASERON (MS) n BREAST CANCER n CHILD CANCER (emotive)

Fig 4: CBA LIFELONG BETASERON PERSON (BY DELAY IN REACHING WHEELCHAIR REQUIRING WHEELCHAIR)

BETASERON FOR MS WEAKENS RELAPSES…scans better n 3 days less hospitalization ($1, 200) for cost of $20, 000 annually n IN COURT: WHEELCHAIRED MS SUFFERER vs MINISTRY BUREAUCRAT who can’t explain opportunity costs n FDA looking at TEVA’s COPAXONE n

RILUZOLE (ALS) & PULMOZINE (CF) n GIVEN BECAUSE OF LOW DEMAND n " THE IMPORTANCE OF BEING UNIMPORTANT"

AIDS n n Huge Global Problem ARV cost $800 per year (of less than optimal quality life…

Country X in Africa n $8, 000 from international foundation n Keep 10, 000 people with AIDS alive for ONE year

S. Pneumonia Vaccine n $10 per life year saved n Save 800, 000 life years n 10, 000 children alive for 80 years n By focussing on AIDS the country may lose 790, 000 life years!

AIDS – wider problems should be incorporated in CEA n Orphan problem………. . n Demise of Economies n Demise of Communities………………… n AIDS PREVENTION MAY BE BETTER STRATGY?

PLANNING relies on BUREAUCRACIES, HEALTH MINISTRIES, REGIONAL HEALTH CENTERS, HINDERED BY PRESSSURE GROUPSetc. n INEFFICIENT, suffers from NEPOTISM, POLITICAL INFLUENCES, OVERSTAFFING etc. n

USE FREE MARKET n n No Bureaucracy Consumers can choose to buy services Providers will provide required services THE INVISIBLE HAND (Adam Smith, Wealth of Nations).

BUT BUYING HEALTH CARE IS NOT THE SAME AS BUYING FRUITS AND VEGETABLES!

UNATTAINABLE UTOPIAS Just as perfect COMMUNISM, based on CENTRALISED PLANNING, does not work for various reasons…. n So, perfect CAPITALISM based on the FREE MARKET does not work in health…. because of MARKET FAILURES n

Small problems with Market n People with no INCOME n n Children Mentally Ill Unconsious n n n INCOME MAINTENANCE PROGRAMES Adults decide Profession decides Next of Kin

MONOPOLYS/OLIGOPOLYS Ideal market is based on MANY providers, perfect competition drives down prices. n HEALTH is full of MONOPOLYS or OLIGOPOLY (even market stall cartels) so suppliers can price FIX. n HOSPITAL IN RURAL AREA n HIGH-TECH, PET, LITHTRIPTOR etc n

MONOPOLYS/OLIGOPOLYS: n ADAM SMITH “THE WEALTH OF NATIONS” IN THE 18 th Century. n “MEN OF THE SAME PROFESSION SELDOM GET TOGETHER, EXCEPT TO CONSPIRE TO RAISE PRICES”

MARKET FAILURES # 1 AGENCY RELATIONSHIP IN THE FRUIT MARKET, the consumer has KNOWLEDGE (about the marginal utility or happiness points s/he will get from buying apples). IF s/he has money! Will calculate if Expected Marginal Utility > Marginal Disutility of money (or Price)

MARKET FAILURES # 1 AGENCY RELATIONSHIP Will purchase 1, 2 or 10 kilos of apples up to where MB=MC. Stall owner will run and serve him, even with peaches and bananas. CONSUMER SOVEREIGNTY “THE CONSUMER IS KING”

MARKET FAILURES # 1 AGENCY RELATIONSHIP IN HEALTH, the patient LACKS KNOWLEDGE, the MD has studied for 5 -12 years. MD ACTS AS AGENT FOR PATIENT BOTH SUPPLING & DEMANDING SERVICES

MARKET FAILURES # 1 AGENCY RELATIONSHIP This gives MD tremendous POWER, which can be abused There is NO MARKET of consumer demanding and PRODUCER supplying MD has income maintainance/maximising incentive Leads to EXCESS PROVISION OF UNNECESSARY SERVICES

PUBLIC + SALARIES PRE-PAID INSURANCE+SALARIES FFS + PART INSURANCE MORTALY ALSO HIGHER FFS + FULL INSURANCE

BUNKER’s LAW If there is an excess of physicians AND they are paid FEE-FOR-SERVICE then……………………. n ”There will NOT be ONE FALLOPIAN TUBE, APPENDIX or WOMB left in the population” n

C-SECTIONS n n MULTI-CAUSAL Defensive medicine Doctor’s convenience (before 4 pm) Previous Section Income PROBABILITY = 1% x $INCOME/$1000 8%-12% necessary

? SALARIED FEE-FOR-SERVICE

MARKET FAILURES #2 EXTERNALITIES FREE MARKET CONSUMER WEIGHS UP His/Her MB and MC, unless they are “righteous/saintly” they ignore BENEFITS TO OTHER members of society. Vaccine COSTS=$100 BENEFITS=$80 so DOES NOT PURCHASE vaccination

MARKET FAILURES #2 EXTERNALITIES BUT VACCINE COULD GIVE 100 other persons benefit of $1 each SOCIETY: B=80+100>Costs=$100 SO vaccination should be done!

MAJOR MARKET FAILURES AGENCY RELATIONSHIP CAUSES AN OVERSUPPLY OF UNESSENTIAL SERVICES EXTERNATITIES CAUSE AN UNDERSUPPLY OF ESSENTIAL SERVICES

HAVE TO USE PLANNING IN HEALTH As we cannot rely on market to make decisions, we have to use PLANNING tools such as: COST EFFECTIVENESS ANALYSIS COST-UTILITY ANALYSIS COST-BENEFIT ANALYSIS

GOALS OF HEALTH SYSTEM Health systems have multiple goals, but they fundamentally exist to improve health n Health systems with similar per capita expenditures show wide variations in population health outcomes, partly due to non-health system factors like education…. n

POTENTIAL FOR IMPROVEMENT IN HEALTH STATUS: HSI 100 Medical Intervention for Broken Leg LIMP Natural Healing 50 0 CULYER: (relates needs to output) AGE

POTENTIAL FOR AVOIDANCE OF REDUCTIONS IN HEALTH STATUS: Healthy Profile HSI 100 Epidemic Victim 50 0 INNOCULATION CULYER: (relates needs to output) AGE

WHY DIFFERENCES? n Partly explained by some systems devoting resources to expensive interventions with small effects on population health, while low cost interventions with potentially greater benefits are not fully implemented.

WHY WE NEED CEA…. . n CEA (including CUA) can be used to improve the performance of a health system. Indicates which interventions provide the highest "value for money", helping policymakers choose interventions which maximise health within the available resource constraint.

CEA requires information on…. n The extent to which current and potential interventions improve population health, i. e. effectiveness. n The resources required to implement the interventions, i. e. costs.