9.4 Conclusion
In summarising the critical examination of economic evaluations in healthcare, it is clear that these analyses are essential to identifying low-value care, guiding the efficient allocation of resources and enhancing patient outcomes. Through a variety of methodologies, including cost–benefit, cost-effectiveness, cost-utility and cost-minimisation analyses, economic evaluations provide a structured approach to comparing the costs and outcomes of healthcare interventions. Despite some ethical considerations and methodological limitations, these evaluations offer invaluable insights that help in steering healthcare practices towards more beneficial and cost-effective care.
Looking ahead, the integration of technology and data analytics into economic evaluations holds promise for refining the identification and elimination of low-value care, ensuring resources are directed towards interventions that truly improve patient health. As healthcare systems grapple with rising costs and increasing demand, the role of evaluation in promoting a value-conscious culture in healthcare becomes ever more critical. Continuously focusing on these evaluations will not only aid in optimising healthcare delivery but also help to secure the sustainability of healthcare systems, making the pursuit of high-value care an attainable goal for the benefit of patients, communities and healthcare systems.
ACTIVITY
This activity defines BCR and ICER and provides a scenario for the economic evaluation of two cancer treatment methods.
- Benefit-cost ratio: a ratio that compares the benefits of an intervention to its costs. A BCR greater than 1 indicates that the benefits outweigh the costs.
BCR = Total Benefits / Total Costs - Incremental cost-effectiveness ratio: a metric used to compare the relative costs and outcomes (effects) of two or more interventions. It is calculated as the difference in costs between two interventions divided by the difference in their effects.
ICER = (Cost B – Cost A) / (Effect B – Effect A)
Scenario
Two clinical treatments (A and B) are implemented to treat a cancer disease. Outcomes are measured as change in health-related quality of life – measured as QALY; the quality of life usually represented on a scale from 0 (death) to 1 (perfect health) – in the three years after the treatments. Treatment A provides a health benefit for three years with the annual increase in QALY at 0.6 and Treatment B for four three years, with the annual QALY gain of 0.7 for both interventions at 0.8. Assume that one QALY equals $60,000, which is the Australian GDP per capita.
| Treatment | Cost ($) | Benefit (QALY gain)($) | Benefit (QALY gain)($) | Benefit (QALY gain)($) | Total Eeffects (QALYs) |
|---|---|---|---|---|---|
| Year 1 | Year 2 | Year 3 | |||
| A | 50,000 | 0.650,000 | 50,0000.6 | 50,0000.6 | 1.82.4 |
| B | 70,000 | 40,0000.7 | 0.740,000 | 40,0000.7 | 2.13.2 |
- Calculate the BCR for each treatment intervention.
- Calculate the ICER for each treatment intervention.
- Discuss the implications of the BCR values.
- Discuss the implications of the ICER value.
- Outline the practical implications of BCR and ICER in health policy and decision-making.
- Discuss scenarios where an intervention with a lower BCR might be chosen based on other factors such as equity or ethical considerations.
Worked Answer
-
Compute the BCR for each treatment intervention.
- Treatment A:
- Total benefits: Sum of benefits over 3 years = 1.8 * $60,000 = $108,000
- Total costs: Sum of costs = $50,000
- BCR for A: Total benefits / Total costs = $108,000 / $50,000 = 2.16
- Treatment B:
- Total benefits: Sum of benefits over 3 years = 2.1 * $60,000 = $126,000
- Total costs: Sum of costs = $70,000
- BCR for B: Total benefits / Total costs = $126,000 / $70,000 = 1.80
-
Compute the ICER for each treatment intervention.
- Cost A = $50,000
- Cost B = $70,000
- Effect A = 1.8 QALYs
- Effect B = 2.1 QALYs
-
Discuss the implications of the BCR values.
- Treatment A: BCR of 2.16 indicates that for every dollar spent, the benefit is $2.16, suggesting it is a highly cost-effective intervention.
- Treatment B: BCR of 1.80 indicates that for every dollar spent, the benefit is $1.80, which also suggests cost-effectiveness, but to a lesser extent compared to Treatment A. Although the new integrated Treatment B could generate a greater effect (2.16 QALYs vs 1.80 QALYs) on cancer patients via the treatment, it is less cost-effective than the standard Treatment A.
-
Discuss the implications of the ICER value
- The ICER of $66,667/QALY for Treatment B compared to Treatment A means that it costs an additional $66,667 to gain one more QALY with Treatment B. Decision-makers often use a threshold (such as $50,000–$60,000 / QALY) to determine if the ICER is acceptable. If the ICER is below the threshold, the more expensive treatment (Treatment B) may be considered cost-effective. In this case, Treatment B is not considered cost-effective compared with Treatment A.
-
Outline the practical implications of BCR and ICER in health policy and decision-making.
- BCR: helps determine if an intervention’s benefits justify its costs. A BCR greater than 1 indicates a favourable return on investment, aiding in prioritising interventions.
- ICER: helps to compare the cost-effectiveness of multiple interventions. It is crucial for deciding how to allocate limited resources to maximise health benefits.
-
Discuss scenarios where an intervention with a lower BCR might be chosen based on other factors such as equity or ethical considerations.
- Equity: if an intervention targets underserved populations or reduces health disparities, it might be preferred even if the BCR is lower
- Ethical considerations: interventions that address severe health conditions or provide essential services may be prioritised due to ethical obligations
- Long-term benefits: some interventions may have lower short-term BCR but result in significant long-term health improvements and cost savings
