Health Economics

Smith, Richard

doi: 10.1002/hec.1335pmid: 18088075

Bishai, David; Mirchandani, Gita; Pariyo, George; Burnham, Gilbert; Black, Robert

doi: 10.1002/hec.1231pmid: 17387710

The goal of this paper is to measure the marginal change in facility‐level costs of medical care for children under five due to an increase in service quality achieved through the integrated management of childhood illness (IMCI) strategy. Since the beneficial effects of IMCI training on child health outcomes are due to IMCI's effects on service quality, costs of IMCI are regressed against measures of service quality in this paper. Our model shows that quality, as measured by a WHO‐index of integrated child assessment is 44% higher in facilities with at least one health worker trained in IMCI as compared to facilities with no health workers trained in IMCI, adjusting for facility utilization as well as type of facility ownership. Our marginal analysis that tied IMCI training to quality and quality to costs shows that on the margin, investing in IMCI training at a primary facility level can yield a significant 44.3% improvement in service quality for a modest 13.5% increase in annual facility costs. Copyright © 2007 John Wiley & Sons, Ltd.

Waters, Hugh R.; Hatt, Laurel E.; Black, Robert E.

doi: 10.1002/hec.1239pmid: 17407175

Diarrhoeal disease, a leading cause of child mortality, disproportionately affects children in low‐income countries – where private and non‐governmental providers are often an important source of health care. We use 10 Living Standards Measurement Surveys from Latin America to model the choice of care for child diarrhoea in the private sector compared to the public sector. A total of 36.8% of children in the combined data set saw a private provider rather than a public one when taken for treatment. Each additional quintile of household economic status is associated with an increase of 6.5 percentage points in the probability that a child with diarrhoea is taken to a private provider (p<0.001). However, treatments provided in the private sector are manifestly of worse quality than in the public sector. A total of 33.0% of children visiting a public provider received Oral Rehydration Solution, compared to 13.7% of those visiting a private provider. Conversely, children treated by a private provider are more likely to receive drugs, most commonly unnecessary antibiotics. Ironically, when it comes to treatment for child diarrhoea, wealthier and better educated households in Latin America are paying for treatment in the private sector that is ineffective in comparison with treatments that are commonly and inexpensively available. Copyright © 2007 John Wiley & Sons, Ltd.

van Osch, Sylvie M. C.; Stiggelbout, Anne M.

doi: 10.1002/hec.1235pmid: 17410521

Health effects for cost‐effectiveness analysis are best measured in life years, with quality of life in each life year expressed in terms of utilities. The standard gamble (SG) has been the gold standard for utility measurement. However, the biases of probability weighting, loss aversion, and scale compatibility have an inconclusive effect on SG utilities. We determined their effect on SG utilities using qualitative data to assess the reference point and the focus of attention. While thinking aloud, 45 healthy respondents provided SG utilities for six rheumatoid arthritis health states. Reference points, goals, and focuses of attention were coded. To assess the effect of scale compatibility, correlations were assessed between focus of attention and mean utility. The certain outcome served most frequently as reference point, the SG was perceived as a mixed gamble. Goals were mostly mentioned with respect to this outcome. Scale compatibility led to a significant upward bias in utilities; attention lay relatively more on the low outcome and this was positively correlated with mean utility. SG utilities should be corrected for loss aversion and probability weighting with the mixed correction formula proposed by prospect theory. Scale compatibility will likely still bias SG utilities, calling for research on a correction. Copyright © 2007 John Wiley & Sons, Ltd.

Terza, Joseph V.; Kenkel, Donald S.; Lin, Tsui‐Fang; Sakata, Shinichi

doi: 10.1002/hec.1232pmid: 17397093

We conduct an empirical investigation of the impact of prenatal care‐giver advice on alcohol consumption by pregnant women. In the design of the model and estimator, we pay particular attention to three aspects of the data. First, a large proportion of pregnant women do not drink at all. To accommodate this aspect of the sample we base the essential formulation of the model on the modified version of the two‐part approach of Duan et al. (Journal of Business and Economic Statistics 1983; 1: 115–126.) suggested by Mullahy (Journal of Health Economics 1998; 17: 247–281.). Second, in the survey that we analyze (the 1988 National Maternal and Infant Health Survey – NMIHS), respondents were only required to report their consumption up to a specified range of values (e.g. 1–2 drinks per week, 2–5 drinks per week, and so on). For this reason, the model is cast in the grouped regression framework of Stewart (Review of Economic Studies 1983; 50: 141–149.). Third, the binary physician advice variable is likely to be endogenous and the econometric specification explicitly accounts for this possibility. To summarize the results, we find that failing to account for endogeneity leads to the counterintuitive conclusion that advice has a positive and statistically significant influence on drinking during pregnancy. When the model is extended to allow for potential endogeneity, we find that advice has a negative and statistically significant impact. Copyright © 2007 John Wiley & Sons, Ltd.

Gyrd‐Hansen, Dorte; Halvorsen, Peder Andreas; Kristiansen, Ivar Sønbø

doi: 10.1002/hec.1236pmid: 17405185

A contingent valuation was performed based on cross‐sectional web‐based interviews of individuals aged 16–82 years of age presenting a scenario of influenza pandemic. The mean WTP for a course of Tamiflu was NOK 1034 (median NOK 250). Anxious individuals perceived the pandemic mortality risk to be higher than others, but also perceived the benefit of Tamiflu as greater. They also expressed a higher WTP for Tamiflu, but the implied VOSL was less than for other respondents. The results suggest that fear and anxiety distort decision making under uncertainty and decrease focus on the perceived risk reduction. Copyright © 2007 John Wiley & Sons, Ltd.

Lambert, Paul C.; Billingham, Lucinda J.; Cooper, Nicola J.; Sutton, Alex J.; Abrams, Keith R.

doi: 10.1002/hec.1243pmid: 17533622

There is an increasing need to establish whether health‐care interventions are cost effective as well as clinically effective. It is becoming increasingly common for cost studies to be incorporated into clinical trials, either on all patients or more usually on a subset of patients. Establishing the total cost per patient is complex, as it requires information on resource use, which may come from a variety of different sources. This complexity may lead to considerable missing data, and can result in some patients only having partial cost information. In this paper we consider a clinical trial consisting of 351 patients with advanced non‐small cell lung cancer comparing chemotherapy with standard palliative care. A subset of 115 patients was selected for the cost sub‐study. Total cost was split into four components, for which resource use was collected. Complete resource data were available on 82 patients. For the remaining patients at least one of the cost components was missing. The objective of this paper is to develop a Bayesian approach which simultaneously models both the clinical effectiveness data and the cost data, by modelling the individual components. This also provides estimates of the cost‐effectiveness in terms of the Incremental Net Monetary Benefit (INMB) and Cost‐Effectiveness Acceptability Curves (CEAC). We compare a number of different models of increasing complexity. The models estimate the interrelationships between the four cost components and survival, and thus enable a predictive distribution for each missing cost item to be obtained. Copyright © 2007 John Wiley & Sons, Ltd.

Thiebaud, Patrick; Patel, Bimal V.; Nichol, Michael B.

doi: 10.1002/hec.1245pmid: 17585395

Increasing drug costs in the US have prompted employers and insurers alike to turn to higher drug copays for cost containment. The effect of rising copays on compliance with statins (HMG‐CoA reductase inhibitors) treatment has received surprisingly little attention in the applied literature. This paper uses pharmacy claims data from a commercially insured adult population to determine the effect of copay change on compliance at the individual level. Fixed effect logit and Poisson regressions estimate the effect of copays on monthly likelihood of high compliance and average monthly days of supply respectively. Higher copays reduce compliance among statin users, with less compliant patients responding more strongly to copay change than compliant patients. These results suggest that specific financial incentives given to less compliant patients could improve compliance with statin treatment at a relatively low cost. Copyright © 2007 John Wiley & Sons, Ltd.

Gafni, A.; Walter, S. D.; Birch, S.; Sendi, P.

doi: 10.1002/hec.1244pmid: 17497751

The inclusion of economic evaluations as part of clinical trials has led to concerns about the adequacy of trial sample size to support such analysis. The analytical tool of cost‐effectiveness analysis is the incremental cost‐effectiveness ratio (ICER), which is compared with a threshold value (λ) as a method to determine the efficiency of a health‐care intervention. Accordingly, many of the methods suggested to calculating the sample size requirements for the economic component of clinical trials are based on the properties of the ICER. However, use of the ICER and a threshold value as a basis for determining efficiency has been shown to be inconsistent with the economic concept of opportunity cost. As a result, the validity of the ICER‐based approaches to sample size calculations can be challenged. Alternative methods for determining improvements in efficiency have been presented in the literature that does not depend upon ICER values. In this paper, we develop an opportunity cost approach to calculating sample size for economic evaluations alongside clinical trials, and illustrate the approach using a numerical example. We compare the sample size requirement of the opportunity cost method with the ICER threshold method. In general, either method may yield the larger required sample size. However, the opportunity cost approach, although simple to use, has additional data requirements. We believe that the additional data requirements represent a small price to pay for being able to perform an analysis consistent with both concept of opportunity cost and the problem faced by decision makers. Copyright © 2007 John Wiley & Sons, Ltd.

Tianviwat, Sukanya; Chongsuvivatwong, Virasakdi; Birch, Stephen

doi: 10.1002/hec.1237pmid: 17415722

In this paper we consider the use of mobile dental clinics as a means of improving access to dental care among primary school children in Southern Thailand by reducing the opportunity cost of service use to parents. Parents' willingness to pay (WTP) is measured for three different services provided in a community hospital dental clinic and a school‐based mobile clinic. Although the service setting does not affect significantly the WTP for treatment directly, the estimated positive association between WTP and income is modified by setting. The results indicate that the potential for mobile clinics to increase utilization of services among primary school children is associated with parents' income, with the difference in valuation of dental services between the two settings being less among lower income parents than higher income parents. However, even among lower income parents our results indicate that the potential for increasing service utilization among children depends on the improvements in access associated with the mobile clinic not being achieved at the opportunity cost of lower levels of effectiveness. Copyright © 2007 John Wiley & Sons, Ltd.