9.2 Economic evaluation methodology

The methodology of economic evaluations in healthcare is multifaceted, incorporating several key components that ensure the accuracy and relevance of the analysis (Sharma et al., 2021; Turner et al., 2021). Understanding these components is crucial for interpreting the results of an evaluation and for designing studies that accurately assess the value of healthcare interventions.

Perspective of analysis

The perspective of analysis in economic evaluations of healthcare interventions is a fundamental concept that dictates whose costs and benefits are considered within the analysis. It sets the boundary for which types of costs (direct, indirect, intangible) and benefits are included, based on the viewpoint of the analysis. This choice significantly impacts the results and conclusions drawn from the economic evaluation. The perspective should align with the objectives of the evaluation and the decision-makers’ needs. Below are detailed explanations of the main perspectives commonly adopted in economic evaluations.

Societal perspective

The societal perspective is the broadest viewpoint, encompassing all possible costs and benefits of a healthcare intervention, regardless of who incurs them (Turner et al., 2021). This perspective includes:

• Direct medical costs: costs related to the provision of healthcare services, including hospital stays, physician visits, medication and any other healthcare services
• Direct non-medical costs: costs that fall outside healthcare service provision but are directly related to the intervention, such as transportation to healthcare facilities, home modifications, caregiver expenses and costs related to social services (e.g. child protection, family services, justice system)
• Indirect costs: costs related to lost productivity due to illness, disability or premature death; these costs reflect the economic impact of health conditions on work and productivity
• Intangible costs: although not always quantified due to their subjective nature, intangible costs include pain, suffering and decreased quality of life

Many health economists recommend the societal perspective because it provides a comprehensive analysis of the total impact of an intervention, facilitating policy decisions aimed at societal welfare.

Healthcare system perspective

This perspective focuses on the costs and benefits directly related to the healthcare system. It is narrower than the societal perspective and includes:

• Direct medical costs: similar to the societal perspective but restricted to costs borne by the healthcare system, such as treatment, medication and hospitalisation

This perspective is particularly relevant for healthcare providers, insurance companies and government healthcare bodies, as it aligns with their financial responsibilities and interests (Turner et al., 2021).

Patient perspective

The patient perspective concentrates on the costs and benefits that directly affect the patient, including:

• Out-of-pocket expenses: costs paid directly by the patient, such as co-payments for medications and services, and non-reimbursed medical expenses
• Health outcomes: the direct health benefits experienced by the patient, including improvements in symptoms, quality of life and disease prognosis

This perspective is crucial for understanding the financial impact of healthcare interventions on patients and can inform policies aimed at reducing the economic burden on individuals (Turner et al., 2021).

Payer perspective

In some analyses, especially in countries with multiple healthcare payers (e.g. private insurance companies, government programs), the payer perspective may be adopted. This perspective focuses on the costs and benefits accruing to the payer, which could include direct medical costs and any indirect costs they are responsible for covering (Sharma et al., 2021).

Choosing the perspective

The choice of perspective has significant implications for the outcomes and recommendations of an evaluation. A broader perspective, like the societal view, may capture benefits that are overlooked by narrower perspectives, but it also requires more comprehensive data collection and analysis. The selection should be driven by the study’s goals, the intended audience of the results and the context within which decisions will be made.

In practice, the choice of perspective can profoundly influence policy recommendations, resource allocation and ultimately patient care and health outcomes. For instance, an intervention that appears cost-effective from a healthcare system perspective might not be deemed so from a societal perspective if significant indirect costs or societal benefits are ignored (Turner et al., 2021). This discrepancy can lead to divergent policy recommendations and resource allocation decisions, impacting patient care and health outcomes.

It is therefore paramount for evaluators to not only carefully choose their analysis perspective based on the evaluation aims and the decision-making context but also to transparently report this choice (Sharma et al., 2021; Špacírová et al., 2020). Understanding the perspective implications allows stakeholders to interpret the results within the appropriate context, ensuring that decisions based on the evaluation are aligned with broader health policy goals and societal values. This careful consideration and transparency in reporting are essential for the credibility and utility of economic evaluations in healthcare decision-making, guiding interventions that are not only cost-effective but also aligned with societal priorities and ethical standards.

Uncertainty and sensitivity analysis

Uncertainty analysis aims to quantify the uncertainty in the outcomes of a model or analysis due to the uncertainty in its input parameters. This type of analysis is important because it provides a range of possible outcomes rather than a single deterministic outcome. It acknowledges that the exact values of all inputs into a cost–benefit or cost-effectiveness model may not be known with certainty, due to limitations in data quality, variability in the data or inherent unpredictability of future events. For example, in a healthcare cost-effectiveness analysis of a new treatment, the exact future costs of producing the treatment or its exact effectiveness in the population might not be known. Uncertainty analysis might involve running the analysis multiple times using a range of values for these uncertain parameters to see how the outcomes vary.

Sensitivity analysis, on the other hand, systematically varies the inputs to a model to understand how changes in those inputs affect the outcomes of the model. This helps identify which inputs are most influential on the model’s outcomes, indicating where efforts to improve the accuracy of the analysis should be focused. For instance, if a sensitivity analysis of a health intervention’s cost–benefit analysis shows that the model’s outcomes are highly sensitive to the choice of discount rate (the rate used to put a present value on costs and benefits that will occur later), then ensuring the accuracy of the discount rate (e.g. using the real inflation rate over time) used in the analysis becomes crucial.