Overview of Health Economics Approaches Towards Prioritization based on the developments from the NIHR School of Public Health Research project led by Professor David Hunter.

1. Prioritization in Public Health:
Overview of Health Economics
Approaches
Olena Nizalova
Centre for Health Services Studies
University of Kent
Follow on Twitter: @olniz @chss
Kyiv, 30 June 2016

2. School for Public Health Research (SPHR)
The Team
• David Hunter (PI), Linda Marks, Jean Brown, Durham
University
• Luke Vale, Sara McCafferty, Newcastle University
• Jo Gray, Northumbria University
• Sarah Salway, Nick Payne, Praveen Thokala, Sheffield
University
• Stephen Peckham, Olena Nizalova, University of Kent

3. School for Public Health Research (SPHR)
Introduction
• Scarcity
• Management of scarcity
• Approaches
• Adoption

4. School for Public Health Research (SPHR)
Economic concepts
• Opportunity cost
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Choice 1 Choice 2 Choice 3 Choice 4

5. School for Public Health Research (SPHR)
Economic concepts
• Margin
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Choice 1 Choice 2 Choice 3 Choice 4
Column1

6. School for Public Health Research (SPHR)
“Ideal” priority setting
• Ability to consider questions of efficiency and equity
• Process should be open and explicit
• Evidence from research should play (some) part in the process
• National priorities should be incorporated
• Should be based on an ethical framework
Demanding, challenging and complex.

7. School for Public Health Research (SPHR)
Priority Setting:
Ad hoc or Rational?
* Priority setting of health interventions: the need for multi-criteria decision analysis, Rob Baltussen, Louis Niessen, Cost effectiveness and resource allocation (2006)

8. School for Public Health Research (SPHR)
PRIORITY SETTING
PROCESS

9. School for Public Health Research (SPHR)
Information, Data and
Analytical Methods
Stakeholder & expert views and National/Local
Directives
• Identify key local stakeholders – e.g.
o Health & Wellbeing Board
o Cabinet and “Ruling Party”
o Local people and communities
• Identify key national stakeholders – e.g.
o Policy
o Legislation
o (UK) National Institute for Health and Care Excellence (NICE) –
especially Public Health guidance
Data
• Epidemiology – who, where and when
• Current provision and Costs
• Effectiveness information - from trials and evaluations
• Inequalities - in both poor health and service provision

10. School for Public Health Research (SPHR)
• Historical allocation
• Changes in funding over
time
• Patterns of funding
between locations
• Predicted changes in
key determinants of
expenditure
• Identify inequalities in
expenditure
• Can be similar/same as
programme budgeting
Information, Data and
Analytical Methods
Current patterns of expenditure

11. School for Public Health Research (SPHR)
PRIORITY SETTING
PROCESS

12. School for Public Health Research (SPHR)
Pre-investment Costs – Post-investment costs
=
Return on Investment in monetary units (of benefit).
Note that the Scope for cost and savings depends on
perspective:
• NHS/Local Authority
• Public Sector
• Wider Societal
Information, Data and
Analytical Methods
Return on Investment

13. School for Public Health Research (SPHR)
Economic Analytical
Techniques
Full economic evaluation consists of finding both the costs and the benefits of
comparable public health services.
This may be more familiar to Local Authorities as a “Value for Money” assessment.
What is economic evaluation?
Total costs valued in
monetary terms (£)
Intangible
Costs
Indirect
Costs
Direct
Costs
• Natural units, e.g. deaths,
numbers of accidents, numbers
of people quitting smoking, etc.
→ Cost-
effective
analysis
• Utility values, e.g. Quality
Adjusted Life Years - QALYs
→ Cost-utility
analysis
• Monetary value (£)
→ Cost-benefit
analysis

14. School for Public Health Research (SPHR)
PRIORITY SETTING
PROCESS

15. School for Public Health Research (SPHR)
Steps involved in
Prioritisation
1) Agree public health objectives
2) Identify options for reaching objectives
3) Identify resources
4) Identify measureable criteria for comparing options and
assess costs and benefits of options.
5) Decide on preferences
6) Make choices
7) Evaluate impact

16. School for Public Health Research (SPHR)
Priority setting using multi criteria
decision analysis (MCDA)
• MCDA supports decision makers faced with
evaluating alternatives taking multiple, and often
conflicting, criteria into account.
• Not new, already used:
- Portsmouth Scorecard
- Option Appraisal
- STAR – Socio-Technical Approach
- Health England Leading Prioritisation
- Programme Budgeting and Marginal Analysis
(PBMA)

17. School for Public Health Research (SPHR)
Priority Setting Approaches
Factor Very low Mid-scale Very high Score Out of
Magnitude of
benefit
(Health gain)
Under 3 points
Limited
improvement
20 points
Moderate
improvement
40 points
Large
improvement
40
Addresses
health inequality
Under 3 points
Not addressed
20 points
Partially
addressed
40 points
Fully
addressed
40
Strength of
evidence of
effectiveness
Under 5 points
Limited or no
evidence
(Case series)
10 points
Modest evidence
(Cohort studies)
20 points
Good
evidence
(RCTs)
20
Cost utility
Under 3 points
> £20,000 per QALY
20 points
£10-20,000 per
QALY
40 points
<£10,000 per
QALY
40
Total 140
Prioritisation Matrices - Portsmouth Scorecard
*Austin, D., Edmundson-Jones, P. and Sidhu, K. (2007) Priority setting and the Portsmouth scorecard: prioritising public health services: threats and opportunities.

18. School for Public Health Research (SPHR)
Priority Setting Approaches
Option Appraisal – Local Authority PH Programme Investments
Criteria
Raw Scores (total out of 60) Weighted Scores
Weights
(100)
Alcohol Sexual
Health
Physical
activity
Alcohol Sexual
Health
Physical
activity
Health Benefit
25 7.2 6.8 3.5 180 170 150
Political
Mandate
15 6.3 7.2 9 94.5 108 135
Health
inequality
20 7.5 6.9 8 150 138 160
Strength of
evidence
10 6.8 7.3 2 68 73 35
Cost
effectiveness
20 7.2 5.6 4 144 112 80
Practicability
&Timeliness
10 5.6 7.5 10 56 75 100
Total 100 40.6 41.3 40.5 692.5 676 660
Rank 2 1 3 1 2 3

19. School for Public Health Research (SPHR)
Use of Economic Analytical
Techniques: Visual Representation –
used in STAR Approach
• Costs and benefits
estimated separately
• Lower cost to benefit to
ratio preferred
• Can take into account
scarcity of resourcesA
B
C
D
Benefits
Budget Constraint

20. School for Public Health Research (SPHR)
Priority Setting Approaches
DCE for prioritisation – HE.LP Project
• Long term, resource intensive Health England project for prioritisation
• Weights are estimated using indirect methods (large survey of general population)
• Value scores are derived from systematic reviewing, evidence synthesis and
modelling
• Complex data analysis and modelling used to arrive at final priority scores
Ranking of prevantative health interventions
Problem
targeted
Priority
ranking
Priority
score Reach
Inequality
score
Cost
effectiveness Affordability
Certainty (EB:
evidence base)
Intervention
(% decision
makers
rank as top
priority)
(%
population
affected)
(% dis-
advantaged
affected / %
all affected)
(cost per
QALY gained)
(***<£100;
**£100-
£1bn;
*<£1bn)
(***high quality EB;
**good quality EB;
*low quality EB)
Increase tax by 5% Alcohol 1 11.2 18.40% 1.78 -£5,267 *** **
Screening and treatment to
reduce Chlamydia STI 9 7.3 11.30% 1 £370 *** **
Screening to prevent
depression in retirees
Mental
health 14 0.1 1.50% 1.08 £70,120 *** ***
* http://help.matrixknowledge.com

21. School for Public Health Research (SPHR)
Priority Setting Approaches
PBMA (Programme budgeting and marginal analysis)
* http://www.cihr-irsc.gc.ca/e/43533.html

22. School for Public Health Research (SPHR)
Priority Setting Methods
and Evidence
22
Scorecard
~ few hours
DCEs
~ few months
Subjective
Judgement
~ few hours
Evidence
Portsmouth
Scorecard
PBMA
HE.LP
Socio-technical
approaches ~ few
weeks
STAR
Option Appraisal
Evidence
Synthesis/
Modelling
~ months
Prioritisation
methods
Some local authority
prioritisation decisions are on a
long planning cycle – others
need to be made quickly.

23. School for Public Health Research (SPHR)
Advantages and Disadvantages
of Different Prioritisation Methods
Method Advantages Disadvantages
Portsmouth scorecard Quick, intuitive and easy
to use
Only uses subjective
evidence
Option
Appraisal
Already used in Local
Authorities
Can tailor complexity
Can be manipulated
Typical MCDA Combines objective and
subjective data
Time and resource
intensive
MCDA with DCEs (e.g.
HE.LP)
Robust, evidence based
approach
Time and resource
intensive
PBMA Considers both
investment and
disinvestment
Users tend to focus on
PB aspect only

24. School for Public Health Research (SPHR)
Summary
• A range of approaches exist to manage priority
setting decisions
– These are not mutually exclusive
• Different approaches can differ in complexity, time
and cost to complete
– Ranging from ‘rough and ready’ to very
sophisticated
– Consideration of Informational, Data and
Related Requirements needs to be proportional.