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Economic Analysis in Hand Surgery
Economic Analysis in Hand Surgery John Myers, PhD, Steven McCabe, MD, Stephan Gohmann, PhD From the Department of Epidemiology and Public Health, Yale University School of Medicine, New Haven, CT; the School of Public Health and Information Sciences, and the College of Business and Public Administration, University of Louisville, Louisville, KY.
Economic analysis is a method for allocating resources among competing alternatives. Four techniques commonly used in an economic analysis are cost-minimization analysis, costeffectiveness analysis, cost-benefit analysis, and cost-utility analysis. These analyses provide information to guide medical decisions and to set funding priorities. Understanding the differences between the techniques allows for better decision making. Although economic analysis is used widely in other fields of medicine, its use in studies of disorders of the hand has been sparse. Only recently has economic analysis been included in studies focused on the care of the upper-extremity patient. As such, to interpret the results of these studies better, hand surgeons need to understand the similarities and differences and the strengths and weaknesses of the different techniques. Such an understanding will allow hand surgeons to know when economic analyses are comparable. Furthermore it will aid them in providing their patients not only medically sound care, but also economically efficient care. This article provides a synopsis of the most widely used and accepted techniques for performing an economic analysis. The key concepts of each of the 4 techniques are shown by using the small number of studies that are available in the upper-extremity literature. (J Hand Surg 2006;31A:664 – 668. Copyright © 2006 by the American Society for Surgery of the Hand.) Key words: Economic evaluation, cost-effectiveness analysis, cost-benefit analysis, hand surgery.
growing number of economic analyses of various health care procedures can be found in the literature. Clinicians, mathematicians, or decision scientists usually perform these studies. The studies can be categorized into 4 types: cost-minimization analysis, cost-effectiveness analysis, cost-utility analysis, and cost-benefit analysis. Although many of these studies contain good introductions to the particular economic analysis used in the study,1– 6 they fail to show the differences between the various techniques. This article provides a general description of the similarities and differences between the 4 methodologies.
A
What Is Economic Analysis? In the simplest case, a decision maker has to decide between 2 alternatives. The choice may be choosing between brand name and generic medicines or choosing between endoscopic or open carpal tunnel surgeries. The choice will be influenced strongly by the decision maker’s estimate of the relative value of the 664
The Journal of Hand Surgery
alternatives. The more information that the decision maker has about the various alternatives, the more informed the choice will be and the better the decision maker will be able to determine the relative values of the various alternatives. Economic analysis provides information about the efficient allocation of resources. Resources will be allocated efficiently whenever the additional (marginal) benefit of the action is greater than or equal to the additional (marginal) cost of this action. Thus an economic analysis helps to answer the question: which allocation of resources will maximize the net health benefit to society? Each of the 4 methodologies attempts to answer this question with differing degrees of completeness. Economic analysis of a health care intervention evaluates the costs and the benefits of the intervention to ensure an efficient allocation of scarce resources such as people, time, equipment, knowledge, and money. If the costs and benefits of an intervention are examined separately then the true value of the intervention cannot be estimated because it is the
Myers, McCabe, and Gohmann / Economic Analysis
difference between the costs and the benefits that gives a measure of the value of the intervention. Implementation of a health service or intervention should not occur without knowledge of both the costs and the benefits. Economic analysis is defined as a comparative analysis of alternative courses of action in terms of both costs and consequences.
Basic Techniques for Performing an Economic Analysis The measurement of the costs associated with services in dollar terms will be similar across the various techniques. The difference is seen in the way in which the consequences (effects) are assessed. The most often used techniques for economic evaluation of services are cost-minimization analysis, cost-effectiveness analysis, cost-utility analysis, and costbenefit analysis. To understand the differences between these techniques better we review several reports in the upperextremity literature. Economic analyses can be performed in parallel with other study designs such as cohort studies or randomized trials; however, they usually are performed as decision analyses comparing 2 or more alternatives.
Cost-Minimization Analysis A cost-minimization analysis is used when the alternative treatments result in the same outcome (eg, successful surgery, patient lives). In this case the only consideration in deciding between the 2 alternatives will be the cost, with the least costly alternative supported. In addition, cost-minimization analysis identifies the distribution of costs associated with an intervention (doctor fees, pharmacy charges, loss of work time, and so forth). Bittner et al7 performed a cost-minimization analysis in a study of the cost of care for flexor sheath ganglions. They evaluated 3 management programs: (1) initial surgical excision, (2) a single aspiration followed by surgery for those who failed, and (3) a series of 2 aspirations if needed followed by surgery for those who failed non-surgical treatment. In this analysis the resolution of the ganglion was the only outcome of concern, which was accomplished to the same magnitude across management programs. A cost-minimization study would be the appropriate analysis because cost is the only consideration in deciding the optimal treatment strategy. Aspiration is less costly than surgery. Therefore if some patients can be treated successfully by aspiration then the cost per patient may be reduced. The
665
investigators found that 2 attempts at aspiration followed by surgery for those who failed was the least costly alternative at $265.18 per patient. This was compared with $565.67 if surgery was performed after a single aspiration and $1,842.51 if surgery was the initial treatment performed. This is typical of many upper-extremity problems in which multiple treatment strategies or variations are available. When the outcomes of competing strategies are the same, then the least costly alternative should be supported. The article by Bittner et al7 supported 2 attempts at aspiration followed by surgery for resolution of the ganglion as the optimal strategy.
Cost-Effectiveness Analysis In many instances not only are costs different but also the outcome of interest differs according to the treatment strategy that is followed. When this occurs a cost-effectiveness evaluation is an appropriate technique to use. Costs are measured in monetary terms such as dollars and effectiveness will be measured in a single common effect specific to the medical condition being studied (eg, reducing the Disabilities of the Arm, Shoulder and Hand [DASH] score for upper-extremity procedures). The study would give a comparison of the cost per unit of improvement in the DASH score across the various interventions. Typically a new program is compared with the standard of care, giving a result showing the effect per dollar spent. If one alternative achieves the outcome of interest at the highest rate and consumes the fewest resources, then that alternative clearly would be supported. Generally one alternative is both more effective and consumes more resources. Therefore the cost per unit of effect of each alternative is calculated. One could invert the association and create the ratio in terms of effect per cost (ie, DASH units decreased per dollar spent). Governmental agencies often choose to allocate funds based on the effect per dollar spent. If an alternative is more costly and less effective then it is viewed as a noncontender for the resources. There is a debate whether support should be given to programs that are less costly and less effective.8 This requires a judgment call on the part of the decision maker as to how to allocate resources. The issue is whether the additional effect is worth the additional money. Products are purchased routinely because they are good enough for their price. The debate is
666
The Journal of Hand Surgery / Vol. 31A No. 4 April 2006
whether we could use a similar philosophy in health and medicine. In cost-effectiveness analysis the consequences of competing programs must be assessed in terms of a common effect (comparing mm Hg against mm Hg). Cost-effectiveness analysis cannot compare interventions that lower blood pressure with interventions that potentially give relief of nighttime symptoms in the hands. Saw et al9 evaluated the cost effectiveness of endoscopic versus open carpal tunnel release They evaluated the costs and clinical outcomes associated with both techniques. All costs, with the exception of the endoscopic equipment, were the same for both procedures. Thus endoscopic release was more costly. In addition, endoscopic release resulted in a shorter time to return to work. The cost effectiveness could be considered as the cost per (employee) reduced day off from work.9 The results indicated that patients who had endoscopic carpal tunnel release returned to work an average of 8 days quicker than the open group. The incremental increase in cost per patient was $170 (£98) for the endoscopic release, yielding an incremental cost-effectiveness ratio of $21.20 (£12.25) per reduced day off work. Saw et al9 concluded that endoscopic release is cost effective and should be considered as the optimal strategy. The analysis, however, did not follow recommendations set by the US Panel on Cost-Effectiveness in Health and Medicine.10 –13 Costs associated with time off from work after the intervention are called morbidity costs and it is recommended that they be represented as part of the effectiveness of an intervention. Saw et al9 considered the earlier return to work after endoscopic release as a reduction in cost. Although in this specific instance this may have been a reasonable approach, the reader should be aware that the methods did not follow the recommendations of the US Panel on Cost-Effectiveness in Health and Medicine and that this may influence the comparability of results with other studies. Although common effects often can be measured by using a single measure of effectiveness, several limitations to this method exist. Multiple outcomes often need to be considered simultaneously. Clinical effectiveness and time off from work are outcomes commonly used in upper-extremity surgery. If both are important to the study then cost-effectiveness analysis should not be used. In this case the various outcomes need to be combined into a common effect. One such measure is quality-adjusted life years
(QALYs), a measure of life expectancy weighted by the quality of life. For example, the amount of time a patient has an injury or illness is multiplied by a weight that values the health status. The weight is between 0 (death) and 1 (perfect health). Typically the quality of life is measured using a utility score for the state of health. Utility is a term for the strength of preference for a state of health, attribute, or intervention.
Cost-Utility Analysis The cost-utility analysis was developed to address 3 flaws inherent to cost-effectiveness analysis: (1) costeffectiveness analysis cannot be used to evaluate a broad set of interventions, (2) cost-effectiveness analysis cannot handle more than 1 outcome of interest, and (3) all outcomes are valued the same. Cost-utility analysis provides a method for ranking outcomes. These rankings allow for comparisons of many outcomes of interest, leading to evaluations of a broad set of interventions. For example, cost-utility analysis could be used to compare the value of the transplantation of many organ systems, requiring a variety of outcome measures specific to each organ. Cost-utility analysis values benefits in terms of the preferences individuals or society has for a particular health state. This allows for issues of quality of life and patient satisfaction to be considered in evaluating the effectiveness, yielding a utility score that allows for comparisons of interventions in qualitatively different programs. According to Drummond et al,14 the following situations warrant the use of a cost-utility analysis: first, when health improvement is the outcome measured (eg, when focus is on improving the quality of life). Second, when health improvement is important (eg, when the analyst is concerned not only with the patient not dying, but also the patient’s quality of life on surviving). Third, when the proposed strategies affect more than 1 outcome measure and they are combined into a common unit of outcome. Some interventions cause morbidity that along with their associated risk for mortality, must be considered in analysis. Fourth, when a broad set of outcomes are being evaluated and a common outcome measure is needed for comparison. For example, organizations should decide how to allocate funds to distinct programs and/or populations based on a common outcome measure. Fifth, when comparing strategies with others that were analyzed using cost-utility analysis. Chung et al15 used cost-utility analysis to compare endoscopic and open carpal tunnel release. They
Myers, McCabe, and Gohmann / Economic Analysis
created a decision tree to model the clinical care of the patient with carpal tunnel syndrome. They defined the cost for each treatment alternative and measured the utility of a variety of health states. Chung et al15 measured the cost per QALY gained for open and endoscopic carpal tunnel release and then calculated the marginal cost of endoscopic surgery. They found that endoscopic surgery cost less than $1,000 per QALY gained. Generally health interventions are labeled as attractive if they cost less than $50,000 per QALY gained.15 Therefore the results shown by Chung et al15 provide support for the use of endoscopic surgery. As noted by other researchers,16 however, the quality-of-life measurement by Chung et al15 (a rating scale) tends to underestimate quality of life when it is compared with other methods such as the time trade-off technique and the standard gamble. The low cost per QALY gained in the article by Chung et al15 might be a result of the measurement technique chosen. Although we believe this study is internally valid, it would be difficult to compare these results with analyses using other measurement techniques. The recommendations are to assess quality of life using a random sample from the general population via a reference standard gamble. Chung et al15 asked health professionals to assess quality of life using a rating scale. Because measurement of utilities is an active area of research, cost-utility analysis is a rapidly growing field of study. Utility theory and assessment are receiving greater acceptance in the hand surgery community; however, the paucity of studies in hand surgery makes it an area ripe for further inquiry.
Cost-Benefit Analysis Cost-effectiveness analysis assesses a single common effect and cost-utility analysis can assess multiple common effects, however, sometimes effects that are common to all alternatives cannot be identified. The need for a common denominator, however, still is present to compare alternatives. One functional approach is that cost-benefit analysis applies a dollar value to all outcomes. All the costs and benefits of each alternative are measured in dollar terms. The cost would be calculated in a manner similar to the study designs noted earlier, however, the outcomes need to be transformed into dollar values. It often is difficult to put a dollar value on health benefits. One method is to use results from willingness-to-pay studies. Once costs and benefits are measured in dollar terms, the results can be presented as a ratio of dollar costs to dollar benefits, or more
667
commonly as a simple sum representing net benefit (loss) of each intervention. Because cost-benefit analysis calculates the amount of resources used and the amount of resources created or saved it provides the absolute benefit of a program. Cost-benefit analysis is not a comparison; however, each program can be seen as being compared with doing nothing. In the other 3 types of economic evaluations alternatives are compared with one another for their relative costs and values. Vasen et al17 used a decision-analytic model to compare open versus endoscopic carpal tunnel release using cost-benefit analysis. Costs were calculated for medical procedures and for complications and lost wages. The investigators chose this method to consider the cost of complications and time off from work after surgery. They hypothesized the 2 procedures could have different complication rates and different amounts of time off from work (2 qualitatively different effects).17 Therefore neither cost minimization nor cost effectiveness was an appropriate analysis technique for this study. Although cost-utility analysis could have been an alternative method, the investigators chose to use cost-benefit analysis. For this study design outcomes were given a dollar value. The cost of the open technique was found to be $6,315 and the endoscopic technique was found to be $5,896.17 Similar to Chung et al,15 the endoscopic technique was supported because it was the least costly alternative. Both Vasen et al17 and Chung et al15 used a decision analysis. Although in the study by Vasen et al17 utilities were not measured, outcomes such as infection and nerve injury were translated as a cost in dollars. If effects are measured as utilities then the study design is a cost-utility analysis, however, if effects are transformed into dollar values then the study is a cost-benefit analysis. As stated earlier the differences in the 4 techniques are seen in the way effects are measured. A methodologic difficulty that limits cost-benefit analysis is the difficulty in assigning a value in dollars to some effects. One could argue that cost-utility analysis and cost-benefit analysis are special cases of cost-effectiveness analysis. As noted for cost-effectiveness analysis a common effect must be used for the measurement of effectiveness. Transforming effects into utilities or value in dollars creates a common effect; however, keeping the more specialized nomenclature allows one to quickly know how effects were measured. Recently economic analysis has been introduced
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into the hand surgery literature. We anticipate this type of analysis will increase in its importance in the hand surgery literature as it has in many other fields of medicine. An understanding of the different techniques available for conducting an economic analysis will enable the reader to gain a greater benefit from these reports. No benefits in any form have been received or will be received from a commercial party related directly or indirectly to the subject of this article. Corresponding author: John Myers, PhD, Department of Bioinformatics and Biostatistics, University of Louisville, 555 South Floyd Street, Louisville, KY 40292. Copyright © 2006 by the American Society for Surgery of the Hand 0363-5023/06/31A04-0023$32.00/0 doi:10.1016/j.jhsa.2006.02.012
References 1. Drummond MF. Principles of economic appraisal in health care. Oxford: Oxford University Press, 1980. 2. Weinstein MC. Economic assessment of medical practices and technologies. Med Decis Making 1981;1:309 –330. 3. Warner KE, Luce BR. Cost-effectiveness and cost-benefit in health: principles, practices and potential. Ann Arbor, MI: Health Administration Press, 1982. 4. Luce BR, Elixhauser A. Standards for socioeconomic evaluation of health care products and services. Berlin: SpringerVerlag, 1990. 5. Gerard K. Cost-utility in practice: a policy makers guide to the state of the art. Health Policy 1992;21:249 –279. 6. Kamlet MS. The comparative benefits modeling project: a framework for cost-utility analysis of government health care programs. Washington: US Department of Human and Health Services, Public Health Service, 1992.
7. Bittner GB, Kang R, Stern PJ. Management of flexor tendon sheath ganglions: a cost analysis. J Hand Surg 2002;27A: 586 –590. 8. Kent DM, Fendrick AM, Langa KM. New and disimproved: on the evaluation and use of less effective, less expensive medical interventions. Med Decis Making 2004; 24:281–286. 9. Saw NB, Jones S, Shepstone L, Meyer M, Chapman PG, Logan AM, et al. Early outcome and cost-effectiveness of endoscopic versus open carpal tunnel release: a randomized prospective trial. J Hand Surg 2003;28:444 – 449. 10. Russell LB, Gold MR, Siegel JE, et al. The role of costeffectiveness analysis in health and medicine. JAMA 1996; 276:1172–1177. 11. Weinstein MC, Siegel JE, Gold MR, et al. Recommendations of the panel of cost-effectiveness in health and medicine. JAMA 1996;276:1253–1258. 12. Siegel JE, Weinstein MC, Russell LB, Gold MR. Recommendations for reporting cost-effectiveness analyses. JAMA 1996;276:1339 –1341. 13. Gold MR, Siegel JE, Russell LB, Weinstein MC. Costeffectiveness in health and medicine. New York: Oxford University Press, 1996. 14. Drummond MF, O’Brien B, Stoddart GL, Torrance GW. Methods for the economic evaluation of health care programmes 2nd ed Oxford: Oxford University Press, 1997. 15. Chung KC, Walters MR, Greenfield ML, Chernew ME. Endoscopic versus open carpal tunnel release: a cost-effectiveness analysis. Plast Reconstr Surg 1998;102:1089 –1099. 16. Collins ED, Kerrigan CL. Endoscopic versus open carpal tunnel release: is it a toss-up? Plast Reconstr Surg 1999;104: 1936 –1938. 17. Vasen AP, Kuntz KM, Simmons BP, Katz JN. Open versus endoscopic carpal tunnel release: a decision analysis. J Hand Surg 1999;24A:1109 –1117.
Economic analysis is a method for allocating resources among competing alternatives. Four techniques commonly used in an economic analysis are cost-minimization analysis, costeffectiveness analysis, cost-benefit analysis, and cost-utility analysis. These analyses provide information to guide medical decisions and to set funding priorities. Understanding the differences between the techniques allows for better decision making. Although economic analysis is used widely in other fields of medicine, its use in studies of disorders of the hand has been sparse. Only recently has economic analysis been included in studies focused on the care of the upper-extremity patient. As such, to interpret the results of these studies better, hand surgeons need to understand the similarities and differences and the strengths and weaknesses of the different techniques. Such an understanding will allow hand surgeons to know when economic analyses are comparable. Furthermore it will aid them in providing their patients not only medically sound care, but also economically efficient care. This article provides a synopsis of the most widely used and accepted techniques for performing an economic analysis. The key concepts of each of the 4 techniques are shown by using the small number of studies that are available in the upper-extremity literature. (J Hand Surg 2006;31A:664 – 668. Copyright © 2006 by the American Society for Surgery of the Hand.) Key words: Economic evaluation, cost-effectiveness analysis, cost-benefit analysis, hand surgery.
growing number of economic analyses of various health care procedures can be found in the literature. Clinicians, mathematicians, or decision scientists usually perform these studies. The studies can be categorized into 4 types: cost-minimization analysis, cost-effectiveness analysis, cost-utility analysis, and cost-benefit analysis. Although many of these studies contain good introductions to the particular economic analysis used in the study,1– 6 they fail to show the differences between the various techniques. This article provides a general description of the similarities and differences between the 4 methodologies.
A
What Is Economic Analysis? In the simplest case, a decision maker has to decide between 2 alternatives. The choice may be choosing between brand name and generic medicines or choosing between endoscopic or open carpal tunnel surgeries. The choice will be influenced strongly by the decision maker’s estimate of the relative value of the 664
The Journal of Hand Surgery
alternatives. The more information that the decision maker has about the various alternatives, the more informed the choice will be and the better the decision maker will be able to determine the relative values of the various alternatives. Economic analysis provides information about the efficient allocation of resources. Resources will be allocated efficiently whenever the additional (marginal) benefit of the action is greater than or equal to the additional (marginal) cost of this action. Thus an economic analysis helps to answer the question: which allocation of resources will maximize the net health benefit to society? Each of the 4 methodologies attempts to answer this question with differing degrees of completeness. Economic analysis of a health care intervention evaluates the costs and the benefits of the intervention to ensure an efficient allocation of scarce resources such as people, time, equipment, knowledge, and money. If the costs and benefits of an intervention are examined separately then the true value of the intervention cannot be estimated because it is the
Myers, McCabe, and Gohmann / Economic Analysis
difference between the costs and the benefits that gives a measure of the value of the intervention. Implementation of a health service or intervention should not occur without knowledge of both the costs and the benefits. Economic analysis is defined as a comparative analysis of alternative courses of action in terms of both costs and consequences.
Basic Techniques for Performing an Economic Analysis The measurement of the costs associated with services in dollar terms will be similar across the various techniques. The difference is seen in the way in which the consequences (effects) are assessed. The most often used techniques for economic evaluation of services are cost-minimization analysis, cost-effectiveness analysis, cost-utility analysis, and costbenefit analysis. To understand the differences between these techniques better we review several reports in the upperextremity literature. Economic analyses can be performed in parallel with other study designs such as cohort studies or randomized trials; however, they usually are performed as decision analyses comparing 2 or more alternatives.
Cost-Minimization Analysis A cost-minimization analysis is used when the alternative treatments result in the same outcome (eg, successful surgery, patient lives). In this case the only consideration in deciding between the 2 alternatives will be the cost, with the least costly alternative supported. In addition, cost-minimization analysis identifies the distribution of costs associated with an intervention (doctor fees, pharmacy charges, loss of work time, and so forth). Bittner et al7 performed a cost-minimization analysis in a study of the cost of care for flexor sheath ganglions. They evaluated 3 management programs: (1) initial surgical excision, (2) a single aspiration followed by surgery for those who failed, and (3) a series of 2 aspirations if needed followed by surgery for those who failed non-surgical treatment. In this analysis the resolution of the ganglion was the only outcome of concern, which was accomplished to the same magnitude across management programs. A cost-minimization study would be the appropriate analysis because cost is the only consideration in deciding the optimal treatment strategy. Aspiration is less costly than surgery. Therefore if some patients can be treated successfully by aspiration then the cost per patient may be reduced. The
665
investigators found that 2 attempts at aspiration followed by surgery for those who failed was the least costly alternative at $265.18 per patient. This was compared with $565.67 if surgery was performed after a single aspiration and $1,842.51 if surgery was the initial treatment performed. This is typical of many upper-extremity problems in which multiple treatment strategies or variations are available. When the outcomes of competing strategies are the same, then the least costly alternative should be supported. The article by Bittner et al7 supported 2 attempts at aspiration followed by surgery for resolution of the ganglion as the optimal strategy.
Cost-Effectiveness Analysis In many instances not only are costs different but also the outcome of interest differs according to the treatment strategy that is followed. When this occurs a cost-effectiveness evaluation is an appropriate technique to use. Costs are measured in monetary terms such as dollars and effectiveness will be measured in a single common effect specific to the medical condition being studied (eg, reducing the Disabilities of the Arm, Shoulder and Hand [DASH] score for upper-extremity procedures). The study would give a comparison of the cost per unit of improvement in the DASH score across the various interventions. Typically a new program is compared with the standard of care, giving a result showing the effect per dollar spent. If one alternative achieves the outcome of interest at the highest rate and consumes the fewest resources, then that alternative clearly would be supported. Generally one alternative is both more effective and consumes more resources. Therefore the cost per unit of effect of each alternative is calculated. One could invert the association and create the ratio in terms of effect per cost (ie, DASH units decreased per dollar spent). Governmental agencies often choose to allocate funds based on the effect per dollar spent. If an alternative is more costly and less effective then it is viewed as a noncontender for the resources. There is a debate whether support should be given to programs that are less costly and less effective.8 This requires a judgment call on the part of the decision maker as to how to allocate resources. The issue is whether the additional effect is worth the additional money. Products are purchased routinely because they are good enough for their price. The debate is
666
The Journal of Hand Surgery / Vol. 31A No. 4 April 2006
whether we could use a similar philosophy in health and medicine. In cost-effectiveness analysis the consequences of competing programs must be assessed in terms of a common effect (comparing mm Hg against mm Hg). Cost-effectiveness analysis cannot compare interventions that lower blood pressure with interventions that potentially give relief of nighttime symptoms in the hands. Saw et al9 evaluated the cost effectiveness of endoscopic versus open carpal tunnel release They evaluated the costs and clinical outcomes associated with both techniques. All costs, with the exception of the endoscopic equipment, were the same for both procedures. Thus endoscopic release was more costly. In addition, endoscopic release resulted in a shorter time to return to work. The cost effectiveness could be considered as the cost per (employee) reduced day off from work.9 The results indicated that patients who had endoscopic carpal tunnel release returned to work an average of 8 days quicker than the open group. The incremental increase in cost per patient was $170 (£98) for the endoscopic release, yielding an incremental cost-effectiveness ratio of $21.20 (£12.25) per reduced day off work. Saw et al9 concluded that endoscopic release is cost effective and should be considered as the optimal strategy. The analysis, however, did not follow recommendations set by the US Panel on Cost-Effectiveness in Health and Medicine.10 –13 Costs associated with time off from work after the intervention are called morbidity costs and it is recommended that they be represented as part of the effectiveness of an intervention. Saw et al9 considered the earlier return to work after endoscopic release as a reduction in cost. Although in this specific instance this may have been a reasonable approach, the reader should be aware that the methods did not follow the recommendations of the US Panel on Cost-Effectiveness in Health and Medicine and that this may influence the comparability of results with other studies. Although common effects often can be measured by using a single measure of effectiveness, several limitations to this method exist. Multiple outcomes often need to be considered simultaneously. Clinical effectiveness and time off from work are outcomes commonly used in upper-extremity surgery. If both are important to the study then cost-effectiveness analysis should not be used. In this case the various outcomes need to be combined into a common effect. One such measure is quality-adjusted life years
(QALYs), a measure of life expectancy weighted by the quality of life. For example, the amount of time a patient has an injury or illness is multiplied by a weight that values the health status. The weight is between 0 (death) and 1 (perfect health). Typically the quality of life is measured using a utility score for the state of health. Utility is a term for the strength of preference for a state of health, attribute, or intervention.
Cost-Utility Analysis The cost-utility analysis was developed to address 3 flaws inherent to cost-effectiveness analysis: (1) costeffectiveness analysis cannot be used to evaluate a broad set of interventions, (2) cost-effectiveness analysis cannot handle more than 1 outcome of interest, and (3) all outcomes are valued the same. Cost-utility analysis provides a method for ranking outcomes. These rankings allow for comparisons of many outcomes of interest, leading to evaluations of a broad set of interventions. For example, cost-utility analysis could be used to compare the value of the transplantation of many organ systems, requiring a variety of outcome measures specific to each organ. Cost-utility analysis values benefits in terms of the preferences individuals or society has for a particular health state. This allows for issues of quality of life and patient satisfaction to be considered in evaluating the effectiveness, yielding a utility score that allows for comparisons of interventions in qualitatively different programs. According to Drummond et al,14 the following situations warrant the use of a cost-utility analysis: first, when health improvement is the outcome measured (eg, when focus is on improving the quality of life). Second, when health improvement is important (eg, when the analyst is concerned not only with the patient not dying, but also the patient’s quality of life on surviving). Third, when the proposed strategies affect more than 1 outcome measure and they are combined into a common unit of outcome. Some interventions cause morbidity that along with their associated risk for mortality, must be considered in analysis. Fourth, when a broad set of outcomes are being evaluated and a common outcome measure is needed for comparison. For example, organizations should decide how to allocate funds to distinct programs and/or populations based on a common outcome measure. Fifth, when comparing strategies with others that were analyzed using cost-utility analysis. Chung et al15 used cost-utility analysis to compare endoscopic and open carpal tunnel release. They
Myers, McCabe, and Gohmann / Economic Analysis
created a decision tree to model the clinical care of the patient with carpal tunnel syndrome. They defined the cost for each treatment alternative and measured the utility of a variety of health states. Chung et al15 measured the cost per QALY gained for open and endoscopic carpal tunnel release and then calculated the marginal cost of endoscopic surgery. They found that endoscopic surgery cost less than $1,000 per QALY gained. Generally health interventions are labeled as attractive if they cost less than $50,000 per QALY gained.15 Therefore the results shown by Chung et al15 provide support for the use of endoscopic surgery. As noted by other researchers,16 however, the quality-of-life measurement by Chung et al15 (a rating scale) tends to underestimate quality of life when it is compared with other methods such as the time trade-off technique and the standard gamble. The low cost per QALY gained in the article by Chung et al15 might be a result of the measurement technique chosen. Although we believe this study is internally valid, it would be difficult to compare these results with analyses using other measurement techniques. The recommendations are to assess quality of life using a random sample from the general population via a reference standard gamble. Chung et al15 asked health professionals to assess quality of life using a rating scale. Because measurement of utilities is an active area of research, cost-utility analysis is a rapidly growing field of study. Utility theory and assessment are receiving greater acceptance in the hand surgery community; however, the paucity of studies in hand surgery makes it an area ripe for further inquiry.
Cost-Benefit Analysis Cost-effectiveness analysis assesses a single common effect and cost-utility analysis can assess multiple common effects, however, sometimes effects that are common to all alternatives cannot be identified. The need for a common denominator, however, still is present to compare alternatives. One functional approach is that cost-benefit analysis applies a dollar value to all outcomes. All the costs and benefits of each alternative are measured in dollar terms. The cost would be calculated in a manner similar to the study designs noted earlier, however, the outcomes need to be transformed into dollar values. It often is difficult to put a dollar value on health benefits. One method is to use results from willingness-to-pay studies. Once costs and benefits are measured in dollar terms, the results can be presented as a ratio of dollar costs to dollar benefits, or more
667
commonly as a simple sum representing net benefit (loss) of each intervention. Because cost-benefit analysis calculates the amount of resources used and the amount of resources created or saved it provides the absolute benefit of a program. Cost-benefit analysis is not a comparison; however, each program can be seen as being compared with doing nothing. In the other 3 types of economic evaluations alternatives are compared with one another for their relative costs and values. Vasen et al17 used a decision-analytic model to compare open versus endoscopic carpal tunnel release using cost-benefit analysis. Costs were calculated for medical procedures and for complications and lost wages. The investigators chose this method to consider the cost of complications and time off from work after surgery. They hypothesized the 2 procedures could have different complication rates and different amounts of time off from work (2 qualitatively different effects).17 Therefore neither cost minimization nor cost effectiveness was an appropriate analysis technique for this study. Although cost-utility analysis could have been an alternative method, the investigators chose to use cost-benefit analysis. For this study design outcomes were given a dollar value. The cost of the open technique was found to be $6,315 and the endoscopic technique was found to be $5,896.17 Similar to Chung et al,15 the endoscopic technique was supported because it was the least costly alternative. Both Vasen et al17 and Chung et al15 used a decision analysis. Although in the study by Vasen et al17 utilities were not measured, outcomes such as infection and nerve injury were translated as a cost in dollars. If effects are measured as utilities then the study design is a cost-utility analysis, however, if effects are transformed into dollar values then the study is a cost-benefit analysis. As stated earlier the differences in the 4 techniques are seen in the way effects are measured. A methodologic difficulty that limits cost-benefit analysis is the difficulty in assigning a value in dollars to some effects. One could argue that cost-utility analysis and cost-benefit analysis are special cases of cost-effectiveness analysis. As noted for cost-effectiveness analysis a common effect must be used for the measurement of effectiveness. Transforming effects into utilities or value in dollars creates a common effect; however, keeping the more specialized nomenclature allows one to quickly know how effects were measured. Recently economic analysis has been introduced
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The Journal of Hand Surgery / Vol. 31A No. 4 April 2006
into the hand surgery literature. We anticipate this type of analysis will increase in its importance in the hand surgery literature as it has in many other fields of medicine. An understanding of the different techniques available for conducting an economic analysis will enable the reader to gain a greater benefit from these reports. No benefits in any form have been received or will be received from a commercial party related directly or indirectly to the subject of this article. Corresponding author: John Myers, PhD, Department of Bioinformatics and Biostatistics, University of Louisville, 555 South Floyd Street, Louisville, KY 40292. Copyright © 2006 by the American Society for Surgery of the Hand 0363-5023/06/31A04-0023$32.00/0 doi:10.1016/j.jhsa.2006.02.012
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