There is an increasing realization across the globe that the resources available in
society for the provision of medical care are finite. As such, in addition to establishing
the efficacy and effectiveness of spinal procedures, it is becoming increasingly important
to also describe their economic impact. In general, the most compelling analyses are
those which compare the costs and efficacy of two competing options for care in a
formal, full economic analysis.
In this article we describe: (1) some terms you may encounter when reading economic
studies, (2) the most often-used types of economic studies, and (3) some considerations
for economic evaluations of spinal procedures.
Terminology
Before describing the types of economic analysis, it is important to have a sense
of the terminology often used in these types of studies. An understanding of the terms
and concepts below is crucial for assessing the usefulness and quality of economic
evaluations.
Use of alternatives: Appropriately structured economic studies will clearly state the intervention under
study and the intervention it is being compared to—the comparator.
Clinically appropriate intervention/comparator: Economic evaluations should state clearly the components of both intervention and
comparator. Since cost-effectiveness ratios are derived using alternatives, it is
crucial that both intervention and comparator be realistic, appropriate reflections
of actual clinical use. For example, comparing procedure B conducted in people older
than 70 years may or may not be a clinically appropriate comparison group for procedure
A conducted in people younger than 30 years. Components should include the surgical
procedure, any details of how it was conducted, characteristics of the patient population,
and time of follow-up. For each procedure, outcomes related to efficacy or effectiveness
as well as rates of complications, sequelae, and additional procedures that may occur
along the clinical course also need to be articulated.
Perspective: The perspective of an economic evaluation has direct bearing on the types of costs
and outcomes included in the evaluation. A patient perspective would consider only
costs and outcomes relevant to patients such as out-of-pocket costs; a payer perspective
would entail primarily assessing the charges relevant to health insurance payers,
such as procedures, visits, and rehabilitation and hospital services. A provider perspective
would highlight direct costs to provider groups, clinics, or hospitals such as equipment
and facilities costs and staff time. A health system perspective would entail all
costs and outcomes associated with providing care, regardless of where costs are incurred.
A societal perspective is the most comprehensive and arguably most closely approximates
the perspective of policymakers who would use the results of these studies. Such studies
strive to include all outcomes and costs to health systems and patients, both long-term
outcomes and adverse events, and both direct costs of intervention and costs to patients,
including lost productive time, caregiver and travel time, and recovery or recurrence/relapse.
Time horizon: Economic evaluations often use modeling techniques to estimate the costs and outcomes
of alternative interventions over time. Therefore, an appropriate time horizon is
necessary, consistent with the perspective of the study and the natural history of
the illness in question. Normally, a long-term time horizon of at least 10 years is
preferable, one that can capture all relevant sequelae and relapse, reoperation, or
recurrence; although in some cases a shorter time horizon can also provide valuable
information. For longer time horizons, human tendencies to prefer immediate benefits
over future ones should be described in the study assumptions and modeled appropriately,
commonly using discounting of costs and benefits beyond 1 year of around 3–6% annually.
Data sources: Economic evaluations most often compile data on the effectiveness of the interventions,
their costs, and the impact on patients (utility) from a variety of sources. High-quality
economic evaluations use the best available data, usually patient level, clinical
and cost data collected alongside a randomized controlled trial. If these data are
not available or if randomized trial data is incomplete or includes only short-term
outcomes, then data from high-quality observational studies (eg, methodologically
rigorous prospective cohort studies that minimize bias) can provide useful information
for modeling. Existing databases of reasonable completeness can provide cost estimates
as well. Expert opinion—providers’ own estimates of clinical or cost estimates—is
often biased and therefore considered the least reliable source of data.
Utility: Health economists use utility to estimate the health impact of a condition before
and after an intervention. It is expressed as a number between 0 and 1, where 1 indicates
perfect health and 0 indicates death. In a hypothetical example of an intervention
for back pain, the utility before intervention might be 0.5, and improve to 0.8 after
intervention. Utilities are ideally calculated from surveys of people who have direct
experience with the condition (patient reported), but are sometimes estimated by clinicians
or extrapolated from other studies. Utilities are calculated ideally using various
patient-reported outcomes, such as a Visual Analog Scale for pain or validated assessments
of health-related quality of life. Conditions associated with pain are often considered
to have low utility.
Sensitivity analysis: Since economic evaluations use diverse data sources and assumptions, authors should
report sensitivity analyses to assess uncertainty around the results. One-way sensitivity
analyses vary individual variables (such as reoperation rate, pain reduction, or procedure
cost) across a range to see how the end results change. Probabilistic sensitivity
analyses use bootstrapping or other statistical techniques to arrive at a sense of
which variables are driving the model results. This can be useful to decision-makers
who need to understand the most important components of the cost and how they impact
the cost-effectiveness.
Incremental cost-effectiveness ratio (ICER): An ICER describes the results of an economic evaluation. When the intervention of
interest is more effective and more costly than the comparison intervention ([Fig 1]), the cost-effectiveness ratio provides an estimate of the cost per unit of improvement—for
example, $80,000 per quality-adjusted life year.
Types of economic studies
Studies that report only costs or cost of illness are considered “cost-only” studies.
These studies can serve as important sources of data to inform economic evaluation
but are not themselves considered economic evaluations.
Full economic evaluations identify and compare appropriate alternatives, their incremental
impact on health outcomes, and their incremental costs. They compare two well-defined
clinical alternatives in the form of an ICER, broadly defined as the cost per unit
of clinical improvement—derived by dividing the differences in effectiveness by the
difference in costs:
Difference in cost/difference in effectiveness
Fig 1
Cost-effectiveness plane.
There are several types of full economic evaluations ([Table 1]).
-
Cost-minimization studies consider the cost differences between alternatives of assumed
or established equal effectiveness.
-
Cost-benefit studies consider both costs and benefits in monetary terms.
-
Cost-effectiveness studies consider differences in costs and differences in effectiveness,
but effectiveness is measured variably between studies (eg, can be survival or a condition-specific
outcome, such as symptom-free days).
-
Cost-utility studies consider differences in costs and outcomes for quality-adjusted
survival, most often using the quality-adjusted life year (QALY). Cost-utility studies
have the advantage of providing an ICER expressed as “cost per quality-adjusted life
year” (cost per QALY) that eases comparison across multiple studies ([Table 1]). Cost-utility studies are usually considered the gold standard for economic evaluation
but are not common in spine treatment literature overall.
Table 1
Summary of study types.
|
Effectiveness measure
|
Outcome
|
Notes
|
|
Cost studies
|
|
Cost
|
None
|
Cost of procedural, treatment, or other charges
|
Inform full economic evaluations
|
|
Cost of illness or economic burden
|
None
|
Includes indirect, patient, society costs
|
Inform economic evaluations
|
|
Full economic evaluations
|
|
Cost minimization
|
Assumes equal effectiveness between alternatives
|
Difference in cost
|
Alternatives are rarely truly equal in effectiveness
|
|
Cost benefit
|
Costs of effects (benefits), costs of intervention
|
Net benefits; cost-benefit ratio; willingness to pay
|
Controversial to express benefits in monetary terms
|
|
Cost- effectiveness
|
Natural or condition-appropriate measure (eg, survival; pain reduction; time to recurrence)
|
Cost per improved outcome
|
Most useful for within-health state comparisons; less so for comparing studies of
different health states
|
|
Cost utility
|
Quality-adjusted survival (QALY; DALY)
|
Cost per QALY (or cost per DALY)
|
Easiest to compare across studies; reflects more assumptions about utility
|
Interpreting results of economic studies: When reading an economic evaluation, many people just want to know the bottom line:
“Is the intervention cost-effective or not?” However, there is rarely a simple answer.
Economic evaluations are designed to provide information on various interventions
that should be interpreted by policymakers using the values and assumptions that reflect
the constituents they represent. These assumptions include the perspective, time horizon,
and patient centeredness. Decisions may also reflect a “threshold” at which an intervention
is considered cost-effective. For example, a country or regional government may have
a number—such as $50,000 per QALY—that falls below the perceived cost-effectiveness
of an intervention. Or, decision-makers may assess cost-effectiveness considering
the prevalence or severity of the condition in question.
The grid in [Fig 1] shows a visual way to interpret the results of an economic study that is often used
in teaching health economics. Relative to the comparator intervention, a new intervention
can either be more effective and less costly (“dominates” the comparator—quadrant
A) or less effective and more costly (is “dominated”—quadrant D). If the intervention
is less effective and less costly, policy discussions may ensue about resource allocation
(quadrant C). If the intervention is more effective and more costly (quadrant B),
an ICER is generated that can be compared with other interventions. Only interventions
that are both more effective and more costly are represented with an ICER. In [Fig 1], a hypothetical example of a new surgical procedure is plotted in the upper-right
quadrant with a cost-effectiveness ratio. Some single-payer systems have an implied
“threshold” of cost-effectiveness under which interventions are considered “cost effective”
(eg, $50,000 per QALY), but this is controversial. The emphasis that policymakers
may place on cost-effectiveness and thresholds of this type may vary across policy-making
bodies and countries, and include consideration of competing priorities for resources
and the quality of the economic study. Ideally, full economic analyses are only one
data component of the policy decision-making process.
Economic evaluations in spine surgery
Economic evaluations of interventions that involve spine surgery face unique challenges.
The goal of surgery is often pain reduction or improved function rather than survival,
so measures of quality-adjusted survival may be less sensitive in this setting. Similarly,
early pain reduction relative to a comparison intervention (eg, pain relief after
2 weeks with procedure A compared with 6 weeks with procedure B) may be extremely
relevant to an individual patient but over a long-term time horizon may no longer
be detectable as a benefit. Therefore, patient perspectives on the benefits of intervention
(patient-centeredness) are crucial.
Summary
Economic analyses have become an increasingly important consideration in formulating
health policy in most countries around the world. Thus, it has become increasingly
important for clinicians to enhance their understanding of such analyses. In general,
cost studies provide limited information for policy development, and full economic
evaluations should be presented. When well done, economic analyses provide insight
into how scarce health-care resources might be best used in a specific setting but
should not be used in isolation. As with any study type, they have their limitations
and it is important to be able to put the results within the context of study quality.
Many concepts described in this article (eg, use of appropriate comparator, performing
sensitivity analysis) are an important part of the critical appraisal of such studies.
The next part of this series deals with the assessment of the quality of economic
analyses.
