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Measurement & Valuation of Health. What is ‘health’? Why do we need to measure it? How can it be measured? Why do we need to value it? How can it be valued?. What is health?. Good health is… not bad health ‘ Absence of disease’ Good health is… a positive thing

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measurement valuation of health
Measurement & Valuation of Health
  • What is ‘health’?
  • Why do we need to measure it?
  • How can it be measured?
  • Why do we need to value it?
  • How can it be valued?

HEA PTP: M207 Health Economics 1

what is health
What is health?
  • Good health is…not bad health
    • ‘Absence of disease’
  • Good health is…a positive thing
    • ‘Total physical and mental well-being’
  • Good health is…two-dimensional
    • ‘A long life and a happy life’
  • Good health is…multidimensional
    • ‘A long life plus an ability to do all the things that one wants to do’
  • Good health is a …subjective concept
    • ‘What makes me happy is not the same thing that makes you happy’
    • ‘What made me happy yesterday is not the same thing that makes me happy today

HEA PTP: M207 Health Economics 2

why measure health
Why measure health?
  • ‘Health’ is the ‘product’ of health care
    • not ops performed, no patients treated etc
  • Clinical reasons - effectiveness
  • Economic reasons - efficiency

HEA PTP: M207 Health Economics 3

slide4
Length of life
    • Mortality (numbers, rates, SMRs)
    • Life expectancy
    • Life years lost
  • Quality of life
    • Numerous QoL measures (generic and specific)
    • SF-36, Nottingham Health Profile, Guttman Scale, Rotterdam Symptom Checklist, Hospital anxiety and depression scale etc….

HEA PTP: M207 Health Economics 4

limitations of measurements need for valuation
Limitations of measurements/need for valuation
  • Confines response to questions posed - may not incorporate all relevant aspects of health
  • Multitude of instruments - compatibility?
  • Ambiguity in assessing overall improvement of detriment in health
  • Efficiency - value of benefits > value (opp) cost

HEA PTP: M207 Health Economics 5

valuation versus measurement
Valuation versus Measurement
  • Value is determined by benefits sacrificed elsewhere
  • Valuation requires wade-off benefits
    • measurement does not

HEA PTP: M207 Health Economics 6

methods of valuing health
Methods of valuing health
  • ‘Utility or prefoeuce assessment eg QALYS
  • Monetary terms eg WTP

HEA PTP: M207 Health Economics 7

quality adjusted life years qalys
QUALITY ADJUSTED LIFE YEARS(QALYS)

Adjusts data on quantity of life years saved to reflect a valuation of the quality of those years

If healthy: QALY = 1

If unhealthy: QALY < 2

HEA PTP: M207 Health Economics 8

ql weighting
QL Weighting

HEA PTP: M207 Health Economics 9

qaly procedure
QALY PROCEDURE
  • Identify possible health states - cover all important and relevant dimensions of QoL
  • Derive ‘weights’ for each state
  • Multiply life years (spent in each state) by ‘weight’ for that state

HEA PTP: M207 Health Economics 10

utility weight
“UTILITY” WEIGHT

Utility = satisfaction/well-being - reflects a consumers preferences

Utility weights are necessarily subjective - they elicit an individual’s preferences for, or value of, one or more health states.

Must: 1. Have interval properties

2. Be ‘anchored’ at death and

‘good health’

HEA PTP: M207 Health Economics 11

techniques for measuring utility
TECHNIQUES FOR MEASURING “UTILITY”

Variety of techniques available, including:

  • Time Trade off
  • Person Trade Off
  • Standard Gamble
  • Magnitude Estimation
  • Rating Scale

HEA PTP: M207 Health Economics 12

obtaining utility weights
OBTAINING “UTILITY” WEIGHTS

Two means of obtaining “utility” weights:

1. Evaluation specific/’holistic’ measures - develop evaluation specific (‘holistic’) description of health state and then derive weight for that specific state directly by population survey

2. Use ‘generic’ or ‘multi-attribute’ instruments - use predetermined weights, based on combination of dimensions of health yeilding a finite number of health states/values

HEA PTP: M207 Health Economics 13

evaluation specific holistic measure
EVALUATION SPECIFIC/’HOLISTIC’ MEASURE

Advantages: 1. Sensitive

2. Account for wider QoL factors

(eg process utility, duration/prognosis)

Disadvantages 1. Cost and time intensive

2. Lack of comparability

HEA PTP: M207 Health Economics 14

generic mau instruments
GENERIC (MAU) INSTRUMENTS

Advantage: 1. Supply weights “off the shelf”

Disadvantages: 1. Insensitive to small changes in health

2. Dimensions may not be

sufficiently comprehensive

3. Weights may not be

transferable across groups

HEA PTP: M207 Health Economics 15

some other issues
SOME OTHER ISSUES
  • Choosing respondents for utility estimation - whose values count
  • What constitutes a ‘correct’ health state description?
  • What is the appropriate ‘measurement’ technique?
  • Aggregation of values?
  • Biases - against, life enhancing versus life-saving etc.

HEA PTP: M207 Health Economics 16

why monetary valuation
Why Monetary Valuation?
  • Assessment of allocative efficiency ie positive Net Present Value (NPV)
  • Valuation of non-health benefits eg process, information, convenience
  • Valuation of non-use benefits ie externalivies, orphan value

HEA PTP: M207 Health Economics 17

methods of monetary valuation
Methods of Monetary Valuation
  • Court awards (death/injury)
  • Political process/implicit public sector awards
  • Life insurance
  • ‘Human capital - value of production
  • Observed wealth - risk trade-off
  • Direct survey

HEA PTP: M207 Health Economics 18

human capital approach
Human Capital Approach

Benefits = gains in productive output

(due to ill health)

Valuation Basis = earnings / wage data

Issues = discriminatory

value based on researcher

not value based on economic

theory

HEA PTP: M207 Health Economics 19

willingness to pay approach
‘Willingness to Pay’ Approach

Benefits = what someone is willing to give up (pay) to have the commodity

Valuation basis = money represents a claim

on benefits from consumption

of other commodities

= individual preference

HEA PTP: M207 Health Economics 20

means of estimating wtp
Means of Estimating WTP

HEA PTP: M207 Health Economics 21