Understanding Health Economics in Clinical Practice
Health economics is used in health care to help determine the value of systems, health-affecting behaviors, and medications. It serves as an aid in the decision-making process and can be incorporated into daily clinical practice to improve patient care.
In his presentation at Consultant360’s Cardiometabolic Risk Summit 2019, Seth Baum, MD, discussed how health economics is being used to ration care and why clinicians need to understand health economics.
Dr Baum started by explaining utilization management, prior authorization, step therapy, and non-medical switching, as defined by payers.
With finite budgets and decisions to be made, costs are increasingly being considered by payers and discussed in clinical guidelines. Thus, it is important for health care providers to understand how the costs are determined.
With this in mind, Dr Baum then discussed the 3 types of economic evaluations: cost minimization analysis, cost effectiveness analysis, and cost utility analysis.
Cost minimization analyses are less-commonly performed and are typically only interesting to payers, only consider costs, and inform availability of one strategy compared with another.
Cost effectiveness analyses consider costs and clinical benefits, inform value, and use easy-to-understand units of benefits, such as years gained or myocardial infarctions avoided.
Finally, cost utility analyses consider costs and clinical benefits, which are measured in quality-adjusted life years.
“Economic evaluations such as cost-effectiveness analyses can provide insights into the value of therapies compared with alternatives,” Dr Baum said.
Once these evaluations are made, it is important to understand how to interpret the results, which are reported as incremental cost effectiveness ratio (ICER). The results are then interpreted as the amount needed to be spent on the more expensive intervention to gain an additional unit of benefit.
Although efforts by large organizations have improved patients’ access to medications and care, Dr Baum said the process is still imperfect, citing 6 complicating factors: patient population, real-world vs randomized controlled trials data, time horizon, use of surrogate endpoints, drug pricing, and cost perspective.
Dr Baum ended by detailing a case study of PCSK9 inhibitors.
“Given these are the realities, it is incumbent on us to gain an understanding of how economic evaluations are performed—and how their results can be manipulated—in order to best care for our patients,” Dr Baum concluded.
Baum SJ, Broder MS, Ortendahl JD. Health economics 101: a must for the modern clinician. Talk presented at: Consultant360’s Cardiometabolic Risk Summit 2019; October 24-26, 2019; Orlando, FL.