JCPSLP Vol 21 No 2 2019 DIGITAL Edition

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Economic evaluation of health services A critical differentiator Joshua Byrnes

A common misconception of economic evaluations of health care is that they are focused only on costs and are a thinly veiled attempt to justify cost-cutting. This well might be because the most common economic evaluation techniques all begin with the word “cost”. There are: cost-consequence; cost-minimisation; cost- effectiveness, and its special case, cost-utility; along with cost–benefit analyses. However, at the heart of economic evaluation is a focus on efficiency for the purposes of maximising health outcomes. While health systems have multiple goals, the fundamental reason they exist is to improve health. The focus of economic evaluations is to achieve the maximum health possible given known resource constraints. Health systems with very similar levels of health expenditure per capita show wide variations in population health outcomes (Papanicolas, Woskie, & Jha, 2018). While part of the difference can be explained by variations in non-health system factors, the undeniable truth is that some systems are simply more economically efficient than others. For example, the United States was ranked 166 for health expenditure – the highest among the 166 countries included in the analysis; whereas, in terms of health outcomes, they were ranked only at 134 (Shah, 2016). For the same health spending, the US should be able to achieve greater health outcomes. This realisation is not new. It is well known that as knowledge, ability and technology have proliferated within the health care sector, life expectancy, prevalence of chronic disease and complex health needs have risen. Consequently, health care costs in Australia and globally have grown to unprecedented levels (Australian Institute of Health and Welfare, 2018; Dieleman et al., 2016), and the potential cost of inefficiency along with it (Productivity Commission, 2015). This has heightened in recent years with the call to deliver value in the health care sector (Porter, 2010). In a world of limited resources, the systematic economic assessment of the impact of health policies, actions on health outcomes and the cost of achieving these health outcomes has become and will continue to be an essential component in the analysis and evaluation of health care. Over the last 25 years, the use of economic evaluation in the appraisal of health technology – any new product or process including pharmaceuticals, procedures, devices, services, policies and systems – has flourished. The evidence base has greatly expanded, methodological

rigour has increased and become more standardised, and decision-makers have begun to formally use these methods en masse as capacity in health economic evaluations has grown. However, the economic evaluation of health services, relative to other technologies, remains an area for much greater development. First, this is partly due to changes or innovations to the delivery of health services not being subjected to the same assessment of cost-effectiveness mandated by re-imbursement or funding agencies as for other health care technologies (for example in the UK and in Australia). Second, changes or innovations to services are typically not protected by enforceable patents, and as such, diminishes the profit incentive for investing in the economic evaluation of health services research (e.g., in comparison to pharmaceuticals). Third, the cost per person per service is low despite the expenditure on health services being significant overall. This ultimately means that the value of undertaking an economic evaluation, which is conducted on a per service basis, is low. Finally, the cumulative effect of these contributing factors disincentivises higher-cost, higher-quality research, which, in turn, reduces the desirability and ease of conducting an economic evaluation. Despite acknowledgement of these broader institutional and environmental settings, the need for rigorous evaluation of the impact of service interventions is imperative to delivering value-based health care. Differing levels of scientific rigour, evidence and scrutiny of economic impacts is likely to result in biases in terms of innovation, development and implementation within and across areas of health. This is likely to lead to an over allocation in certain areas of health spending, thus limiting our ability to achieve the primary objective of maximising health outcomes. All technologies are competing for the same and limited capacity to affect implementation. The systematic provision of an economic assessment within speech pathology evaluations can provide a critical differentiator to ensuring the appropriate allocation of resources to high-value speech pathology service innovation. Failing to provide an economic assessment provides too great an excuse for decision-makers to pass over funding advances in speech pathology. Just as the general principles of randomised control trials (RCTs) are applicable to health services research, so too are the general principles of economic evaluation. Albeit that health service interventions, including those specific to speech pathology, possess several common characteristics

Joshua Byrnes

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JCPSLP Volume 21, Number 2 2019

www.speechpathologyaustralia.org.au