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The costs of care: economic evaluation of treatments

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VOL: 96, ISSUE: 44, PAGE NO: 44

Gerald Richardson is a research fellow in health economics, University of York

Peter Griffiths is a lecturer, Florence Nightingale School of Nursing and Midwifery, King's College, London

Economic evaluation considers and compares the costs and consequences of one treatment or intervention against the costs and consequences of at least one other. The most effective interventions and treatments are not always available, as NHS resources are scarce. For this reason, choices between competing options must be made according to cost.

Economic evaluation considers and compares the costs and consequences of one treatment or intervention against the costs and consequences of at least one other. The most effective interventions and treatments are not always available, as NHS resources are scarce. For this reason, choices between competing options must be made according to cost.

There has recently been an increase in the popularity of nurse-led services such as telephone triage, specific patient services such as for asthma and diabetes, and intermediate care units (Griffiths and Wilson-Barnett, 1998). To achieve cost-effectiveness, these services should be subject to full economic evaluation.

It would appear logical that nurses who carry out tasks as efficiently as doctors would be the most cost-effective option for a specific task, but this is not necessarily the case. For example, nurses may actually take longer to perform a task, consequently increasing the cost per task. Also some senior nurse roles, with their related income, may mean that in some instances it is as cost-effective to use junior doctors.

Types of economic evaluation
There are four types of economic evaluation:

Cost minimisation

The outcome or consequence of two (or more) alternative interventions are equivalent. The best intervention is simply the least expensive. For example, if a nurse and a doctor perform a task such as endoscopy with equal efficiency, the solution would be the least costly option.

Cost-effectiveness

When calculating cost-effectiveness it is important to consider:

- Reduced mortality;

- Increased longevity;

- Reduced complications.

Using the example of endoscopy again, if this task is performed by a nurse over a longer period of time per episode than it would take a doctor to perform, although there is clearly an increase in cost relating to time, this would be compared with the overall outcome involving, say, fewer complications. This would demonstrate whether or not the service does provide value for money.

Cost benefit and cost utility

Cost benefit analysis attempts to place a monetary figure on the benefits of a programme or intervention. Cost utility analysis attempts to place a value on specific health states. This enables costs and benefits to be compared in the same units, such as pounds sterling, and allows more than one effect to be measured. For example, if comparing two programmes, one that looks at the effectiveness of district nurse visits in reducing complications after discharge, the other at a practice nurse carrying out injections to immunise against influenza, the outcomes of interest are different and cannot be summarised using one measure. For this reason a straightforward cost-effectiveness comparison is inappropriate and cost benefit or cost utility analysis would be necessary.

Thinking about costing
Two types of cost assessment, top-down costing and bottom-up costing, can be brought into play.

Top-down costing:

- Starts with a set budget which is then divided among specific areas such as medical specialties;

- Calculates the average amount of resources used and the average cost of an inpatient per day;

- Is not always the most accurate method used for evaluation as costs of expensive treatments may be averaged across wards and provide an inaccurate estimate of funds used or needed.

Because of this, bottom-up or micro-costing may be a more appropriate method in these instances.

Bottom-up costing or micro costing:

- Considers cost using activity data;

- Uses activity data to identify more accurately the costs associated with individual procedures.

Types of cost
Costs measured in an economic evaluation can usefully be split into three sectors (Drummond et al, 1997):

Health care sector

Costs in this sector would typically include:

- The costs of inpatient episodes reflecting the length of stay and the cost per day;

- Outpatient appointments;

- GP visits;

- Medication;

- Contact with other health care professionals in the primary care environment.

Inpatient nursing costs are usually calculated as part of the daily cost of the hospital stay, while community nursing can be given a cost for each visit or patient contact.

Patients and carers

This category includes out-of-pocket spending by patients such as over-the-counter medicine and travel expenditure. It also includes allowances for the cost of patients' and carers' time. Within this category it is necessary to consider employees' salaries, overheads incurred and facilities used.

Patients' and carers' time can be costly, and should be incorporated into an economic evaluation in order for it to be proven significant.

Other provisions

Cost savings in the health service can often lead to cost increases in other services. Services provided by other government agencies, such as social services, can be expensive especially when these facilities are acting as a substitute for inpatient care. Services include:

- Accommodation in nursing and residential homes;

- Home help services;

- Social workers.

These resources should be included in an economic evaluation.

Conclusion
Where nurses make decisions about the use of resources, they may be the consumers of economic evaluations in order to assist in decision making. As nurses continue to perform tasks traditionally performed by other health professionals, it should be demonstrated that these changes are not only effective but also cost-effective. Economic evaluation is not just about deciding which approach to care is cheaper. Cost-effectiveness does not necessarily result from lower costs.

Fuller economic evaluations are needed to ensure that resources are deployed to the best possible effect.

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