Hrm 789: Health Economics for Healthcare Managers

EPID 807 Fall 2005

Course Outline: Health Economics

Schedule

Thursdays 1:30 – 4:30 pm.

Location: Abramsky Seminar Room 222.

Instructor

General Description

This is an introductory course that examines the application of economic principles to policy-relevant questions in the arena of health and health care. Although little or no prior knowledge of economics is required, the course has been specifically designed for M.Sc. in Epidemiology. The course is structured into two parts: Part I (sessions 1-8) introduces basic concepts of economics and health economics, economic evaluation of health care programs, such as cost-effectiveness analysis and cost-benefit analysis, discussing how these evaluative principles are used to assess “value for money” in health care. Part II (sessions 9-12) introduces concepts regarding the economics of prevention and public health, screening, diagnosis, and the economics of the pharmaceutical industry.

Objectives

Students will be able to: (a) identify different types of economic evaluations and when to employ particular types of economic evaluation; (b) critically appraise economic evaluations; and (c) list components necessary to conduct an economic evaluation.

Format

The course will consist of one 3-hour session each week in the fall term. The course format will be a combination of lecture and discussion revolving around a topical policy issue or other question. Students are expected to have completed all readings and addressed the questions in advance of each class.

Evaluation

Students will be evaluated on the basis of the following:

- series of six small exercises (10%);

- first take-home written assignment (40%);

- second take-home written assignment (40%); and

- class presentation (10%).

The series of six small exercises (10%) will be issued during sessions 1-7. The first written assignment (40%) will be due on session 8. The second take-home assignment (40%) will be due on sessions 11 and 12 at which point students will also present their work (10%) based on the second assignment.

Course Texts

Main Text Book

Drummond MF, O’Brien B, Stoddart GL, Torrance GW. Methods for Economic Evaluation of Health Care Programmes. Second Edition. Oxford: Oxford University Press, 1997.

Additional Text Books

Gold MR, Siegel JE, Russell LB, Weinstein MC, eds. Cost-Effectiveness in Health and Medicine. New York, NY: Oxford University Press, 1996.

Haddix AC, Teutsch SM, Shaffer PA, Dunet DO, eds. Prevention effectiveness: A Guide to Decision Analysis and Economic Evaluation. Oxford University Press, New York, 1996.

Drummond M, McGuire, eds. Economic Evaluation in Health Care: Merging Theory with Practice. Oxford: Oxford University Press, 2001.

Outline of Topics to be Covered

Part I. The Basics of Health Economics

1. What is Health Economics? (September 15) (Ana Johnson-Masotti)

Economics stems from the inevitable conflict between ever-expanding needs and wants and finite resources to satisfy these: hence the necessity of choice. Under certain conditions, markets are a good way of allocating goods and services in society. The incidence of illness is generally uncertain and once illness hits, the prospects for getting better are also uncertain. In this session, I will investigate how economic principles can be applied to the problems of ever-expanding needs and wants. I will also review the mechanics of the market, investigate the conditions under which markets work well, show why these markets work well under these conditions, and assess the degree to which these conditions apply to the commodity health care. Finally, I discuss why individuals, in the light of the uncertainty with regards to incidence of illness, might prefer to purchase insurance; how insurance markets operate; what they can insure against, and the problems with private market provision of health insurance.

2. Health Economics and Epidemiology (September 22) (Harriet Richardson)

The delineation between epidemiology and health economics is not definite. Rarely can health outcomes research or health care policy decisions occur without the use, or at least the consideration of, epidemiologic data. Therefore, in this session I will explore the link between epidemiology and health economics. Basic epidemiologic concepts, such as measures of disease frequency and burden of disease will be presented, basic epidemiologic study designs discussed, and each concept will be linked to its application to health outcomes research and health policy making scenarios.

3. Costs and Costing (September 29) (Ana Johnson-Masotti; Paul Masotti)

Costing is the foundation for all types of economic evaluations. Topics covered during this session will include: why costing is important, alternative definitions of cost, costing perspectives, the three stages of costing, difficult measurement and valuation issues, productivity costs, and discounting. The session will conclude with a review of alternative data sources for unit costs for use in economic evaluations and lessons from the field.

4. Effectiveness (October 6) (Ana Johnson-Masotti)

I will introduce the logic of health care programme evaluation in general, and the specific goals of economic evaluation. The most widely-used technique of economic evaluation in health care is cost-effectiveness analysis. I will examine the conceptual rationale behind the measurement of effectiveness and give practical examples of how such studies are executed. We will also explore the problems of multiple outcomes and the need for preference-weighted composite outcomes in the context of cost-utility analysis (CUA). Methods of utility measurement will be examined, including the quality-adjusted life years (QALYs) and healthy year equivalents (HYEs) methods.

5. Utility Example (October 13) (Patti Groome)

Three methods for measuring utilities will be presented in the context of treatment choice for end-stage renal disease: standard gamble, visual analogue and time. The study methodology will be discussed and a lively discussion will be encouraged.

6. Benefit (October 20) (Ana Johnson-Masotti)

Cost-Benefit Analysis is the oldest form of economic evaluation and is grounded in welfare economic theory. But the requirement that health outcomes be expressed in monetary units has meant its use in health care has been limited. I trace the history of cost-benefit analysis in health care and show how new studies exploring methods of willingness-to-pay in health care hold promise for future applications of this type of analysis.

7. Cost-Effectiveness, Cost-Utility, Cost-Benefit (October 27) (Ana Johnson-Masotti)

In the previous sessions, the focus was on outcome measurement. In this session, I will put together costs and outcomes: cost-effectiveness, cost-utility, and cost-benefit, and discuss issues surrounding combining these.

8. Decision Analytic Modelling in Economic Evaluation (November 3) (Ana Johnson-Masotti)

I will review the basic principles of decision analysis and discuss the basic types and components of decision analytic models. Both decision trees and health state transition models, such as Markov models, will be compared. An illustrative example from a study of Gastroesophageal Reflux Disease (GERD) will be used to demonstrate the stages of model development and analysis.

Part II. Economics of the Pharmaceutical Industry and the Economics of Prevention and Public Health

9. Trial-based Cost-Effectiveness Analysis (November 10) (Ana Johnson-Masotti)

Undertaking economic analysis alongside clinical trials raises a number of practical and methodological challenges. Although there are many advantages of prospectively collecting economic data as part of a clinical trial, in this session, we will also consider the potential shortfalls of clinical trials for the collection of health economic data.

10. Pharmacoeconomics (November 17) (Ana Johnson-Masotti)

In this session, I will review the “real world” issues in the economic appraisal of pharmaceuticals. I will consider the current role of pharmacoeconomics in the pharmaceutical industry, who uses this information, and the underlying reasons that have propelled the dramatic growth of these analyses. Practical aspects of designing and conducting pharmacoeconomic studies will be discussed in the context of the Canadian guidelines for the economic evaluation of pharmaceuticals.

11. Economics of Prevention and Public Health (November 24) (Ana Johnson-Masotti)

Prevention programmes are often promoted as an approach to improve health status and save health care costs. Economic evaluations of prevention programmes suggest that prevention activities are rarely cost-saving, but many are relatively cost-effective compared to treatment interventions. This session will discuss key aspects of economic evaluation methodology that may cause the benefits of prevention to be overstated or understated. Also, I will review the “real world” issues in the economic appraisal issues in public health. I will consider relevant topics, who is affected by this information, who uses this information, and the reasons for growth in interest in such analyses. Practical aspects of designing and conducting studies in public health will be discussed in the context of the Canadian health system.

12. Student Presentations (November 24)

13. Student Presentations (December 1)

Health Economics Resources on the Internet

On line Lecture Notes – the Economics of Health Care:

http://www.oheschools.org/

produced by the UK Office of Health Economics.

World Bank On-line Health Economics Course

A distance education course developed for the World Bank. These notes are available online at:

http://www.worldbank.org/healthreform/class/module1/index.htm.

Strained Mercy – The Economics of Canadian Health Care by Robert G. Evans

Although this is not designed to serve as a textbook on health economics, it represents a useful background reading written by a prominent Canadian health economist:

http://www.chspr.ubc.ca.

Click on “publications”, then, under the heading “chronological listing of reports”, then click on “miscellaneous publications”.

The U.S. National Library of Medicine Search Engine

MEDLINE is the U.S. National Library of Medicine's premier bibliographic database covering the fields of medicine, nursing, dentistry, veterinary medicine, the health care system, and the preclinical sciences. Health Star covers clinical (emphasizes the evaluation of patient outcomes and the effectiveness of procedures, programs, products, services, and processes) and non-clinical (emphasizes health care administration and planning) aspects of health care delivery. Both databases can be searched at:

http://gateway.nlm.nih.gov/gw/Cmd.

National Forum on Health

The National Forum on Health was an initiative of the Government of Canada launched on October 20 1994. The Forum had the mandate to consult with Canadians and advise government on innovative ways to reform the health care system and improve the health of Canadians. Some of the publications of the Forum can be downloaded from:

http://wwwnfh.hc-sc.gc.ca/publicat/list-e.htm.

Health Canada

This Federal Department has a useful web site with links to Canadian health information, and various Departments of Health Canada, among others: http://www.hc-sc.gc.ca/english/.

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