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  • Tough Choices: Values, Costs & Efficient Allocation to Improve Quality

  • Welcome

  • Value and efficiency in health care: defining what we mean

    Stirling Bryan, PhD

    Director, Centre for Clinical Epidemiology & Evaluation, VCHRI

    Professor, School of Population and Public Health, UBC

    www.c2e2.ca

  • 4

    Overview

    • Introduction to economics – Or ‘How dismal is the dismal social science?’

    • What do we mean by ‘value’?

    • Efficiency in health care – ‘Technical’ versus ‘Allocative’ – Marginal analysis

  • 5

    Background

    • Central problem addressed by the discipline of economics: – Resource scarcity

    • Central concept is ‘opportunity cost’: – The value of the benefits forgone by choosing to

    deploy resources in one way rather than in their best alternative use

  • 6

    ‘Value’ in health care

  • 7

    ‘Value’ in health care

    ‘In health care, the overarching goal for providers, as well as every other stakeholder, must be improving value for patients, where value is defined as the health outcomes achieved that matter to patients relative to the cost of achieving those outcomes.’

    Porter & Lee (2013)

  • 8

    And, in our continuing effort to minimize surgical costs, I’ll be hitting you over the head

    and tearing you open with my bare hands.

  • 9

    Efficiency definitions

    • Technical efficiency – Are we doing it right?

    • Allocative efficiency – Are we doing the right things?

    • Marginal analysis – Are we doing too much (or too little)?

  • 10

    Technical Efficiency: producing the maximum possible output from the inputs used

    This is ‘efficiency in production’ - largest possible outputs from given inputs - or, smallest possible inputs for given outputs

    http://www.google.ca/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=5gahtNZCaOL4EM&tbnid=QQXrMNd3UH4sPM:&ved=0CAUQjRw&url=http://www.theatlantic.com/health/archive/2012/05/trimming-the-fat-from-americas-wasteful-health-care-system/256953/&ei=YQoMU9zuBcjfoASOoYCoAQ&bvm=bv.61725948,d.cGU&psig=AFQjCNFjOjjaAsVr0X0p3RXHxkmKMdafOg&ust=1393384372494152

  • 11

    Technical Efficiency

    Programs to treat 100 people with depression

    Program Hours of

    CBT Drug therapy

    doses

    A 2500 200

    B 1500 250

    C 1500 300

    D 500 600

    • Which program(s) can be ruled out because of technical inefficiency?

  • 12

    Technical Efficiency

    Programs to treat 100 people with depression

    Program Hours of

    CBT Drug therapy

    doses Total program

    cost

    A 2500 200 $304,000

    B 1500 250 $185,000

    C 1500 300 $186,000

    D 500 600 $72,000

    CBT = $120/hour Drugs = $20/dose

  • 13

    Cost-effectiveness plane Cost Difference

    Output Difference A

    B C

    D

  • 14

    Evaluating the Cost-Effectiveness of Fall Prevention Programs that Reduce Fall-Related Hip Fractures in Older Adults

    Journal of the American Geriatrics Society Volume 58, Issue 1, pages 136-141, 4 JAN 2010 DOI: 10.1111/j.1532-5415.2009.02575.x http://onlinelibrary.wiley.com/doi/10.1111/j.1532-5415.2009.02575.x/full#f1

    http://onlinelibrary.wiley.com/doi/10.1111/jgs.2010.58.issue-1/issuetoc http://onlinelibrary.wiley.com/doi/10.1111/j.1532-5415.2009.02575.x/full

  • 15

    Allocative efficiency

    http://www.google.ca/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=wwmRg-nPd9jNnM&tbnid=agjAdQihFv-1IM:&ved=0CAUQjRw&url=http://energeticcity.ca/article/news/2013/04/08/lobbying-for-better-helicopter-ambulance-service-for-northern-b-c&ei=eiMMU7uYLIrdoATM8YLoDQ&bvm=bv.61725948,d.cGU&psig=AFQjCNGFrVAJ_L9b045CITqksH1Yh6FPLA&ust=1393390767624792 http://www.google.ca/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=zRAFXfdU_FXCTM&tbnid=Ia7mNkO9UWvUTM:&ved=0CAUQjRw&url=http://www.dailymail.co.uk/health/article-2477338/NHS-banned-using-toxic-metal-hip-replacements-failure-rate-soars-10-cases.html&ei=lyQMU5-UBonfoAS4h4LIAQ&bvm=bv.61725948,d.cGU&psig=AFQjCNGdQNgwZeU_2mZmJ2HgsggEoIyMwg&ust=1393390881410806 http://www.google.ca/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=E4nIRlm3E-qQkM&tbnid=3CcdFILHDPlODM:&ved=0CAUQjRw&url=http://intermountainhealthcare.org/hospitals/imed/services/heart-institute/heart-health-a-z/Pages/treatment-cabg-bypass-surgery.aspx&ei=ICUMU_PXLcX6oAST9ILoAQ&bvm=bv.61725948,d.cGU&psig=AFQjCNFm1eMroO-kZYhAsOh8twJ8PEVnqg&ust=1393391209600732

  • 16

    Opportunity cost when it matters

    • Competing claims on health care resources: – Helicopter ambulance – Heart surgery – Hip replacement

    • What is the opportunity cost of purchasing a new helicopter ambulance?

  • 17

    Cost-effectiveness plane

    Drummond, et al. 2005. Methods for the economic evaluation of health care programmes: Oxford University Press

  • 18

    Cost Difference

    Effect Difference

    http://www.google.ca/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=wwmRg-nPd9jNnM&tbnid=agjAdQihFv-1IM:&ved=0CAUQjRw&url=http://energeticcity.ca/article/news/2013/04/08/lobbying-for-better-helicopter-ambulance-service-for-northern-b-c&ei=eiMMU7uYLIrdoATM8YLoDQ&bvm=bv.61725948,d.cGU&psig=AFQjCNGFrVAJ_L9b045CITqksH1Yh6FPLA&ust=1393390767624792 http://www.google.ca/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=E4nIRlm3E-qQkM&tbnid=3CcdFILHDPlODM:&ved=0CAUQjRw&url=http://intermountainhealthcare.org/hospitals/imed/services/heart-institute/heart-health-a-z/Pages/treatment-cabg-bypass-surgery.aspx&ei=ICUMU_PXLcX6oAST9ILoAQ&bvm=bv.61725948,d.cGU&psig=AFQjCNFm1eMroO-kZYhAsOh8twJ8PEVnqg&ust=1393391209600732 http://www.google.ca/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=zRAFXfdU_FXCTM&tbnid=Ia7mNkO9UWvUTM:&ved=0CAUQjRw&url=http://www.dailymail.co.uk/health/article-2477338/NHS-banned-using-toxic-metal-hip-replacements-failure-rate-soars-10-cases.html&ei=lyQMU5-UBonfoAS4h4LIAQ&bvm=bv.61725948,d.cGU&psig=AFQjCNGdQNgwZeU_2mZmJ2HgsggEoIyMwg&ust=1393390881410806 http://www.google.ca/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=xdRWcyZb_SlJ1M&tbnid=ZL9KNWEps-D9QM:&ved=0CAUQjRw&url=http://blog.medicalcenterarlington.com/2013/09/30/fall-prevention-improving-balance-and-staying-safe/&ei=Cy4MU4DcG478oASFqYJw&bvm=bv.61725948,d.cGU&psig=AFQjCNE7q6p-IjagKnULEfD_cD_cLsxruA&ust=1393393488613422

  • 19

    The Time Investment Model

    Ovretveit, J. 2000. “The economics of quality--a practical approach.” Int J Health Care Qual Assur Inc Leadersh Health Serv 13(4-5): 200-7

  • 20

    Marginal analysis

    How much safety do we really want in health

    care?

  • 21

    Cost of safeguards and errors

    Warburton RN (2005) Patient safety — how much is enough? Health Policy 71(2):223–232

  • 22

    Summary • Value

    – Health outcomes that matter to patients relative to the cost of achieving those outcomes

    • Technical efficiency – Are we doing it right? Can we avoid throwing dollars down

    the toilet?

    • Allocative efficiency – Are we doing the right things? Hips, hearts, helicopters, falls

    prevention?

    • Marginal analysis – Are we doing too much (or too little)? How much safety do we

    really want?

  • 23

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    Allocative efficiency Technical efficiency

    Q4: Biggest savings to be had

    Pre-forum survey

  • 24

    Welcome & Opening Remarks

  • BC Health Technology Review: Capturing Value from Health Technologies in Lean Times

    Marc Pelletier, Fraser Health Kevin Samra, Ministry of Health

    http://www.health.gov.bc.ca/htr/

  • Purpose Today:

    1. Outline the rationale for more aggressive, formal, objective HTA;

    2. Outline our approach thus far in BC; 3. Speculate on the future.

  • Health Technology Review  Not new, but rising in prominence in most

    health systems;  Reflective of the relative success of

    managing pharmaceuticals through a more objective process;  Reflective of financial context.  Reflective of the critical need to more

    aggressively pursue value:  Effectiveness, Utility --- at both an individual and

    societal level.

  • Why focus on Non-drug Technologies?

     38% of the change in healthcare spending in

    Canada over th