Health Economics

Health Economics

What is health economics?

Economics is the study of the decisions people make about resources.  A major role of health economics is to provide this information to decision makers. This process is called information economic evaluation.  The information is often collected during a trial or evaluation of an intervention (i.e. therapy or treatment). This provides decision makers with the best evidence possible on which to base their decisions.

Why include health economic support?

  • some funders expect that an economic evaluation is conducted as an integral part of the research into healthcare interventions
  • health economics support is often used to provide information which decision makers can use to consider if it is worthwhile to invest scarce resources on a particular intervention
  • health economists have tools for investigating, quantifying and valuing the strength of preferences of patients, health and social care professionals and the general population for different intervention outcomes (e.g. outcomes related to health, reassurance, convenience, etc)

What expertise can a health economist advisor offer?

  • the most common form of economic evaluation is a cost-effectiveness analysis. Cost-effectiveness analyses report the financial costs associated with an intervention and a single primary, often clinical, outcome measure. Based on trial design principles an intervention is often compared to existing practices; the cost-effectiveness analyses provides the additional financial costs to achieve an additional unit of the primary outcome measure of the trial. If researchers believe decision makers are interested in the most efficient way of achieving a particular goal or how much extra of the primary outcome measure would result from additional expenditure, they would include this type analysis.
  • more information can be provided by a cost-utility analysis where the outcomes of an intervention are described in generic health related quality of life terms, typically Quality Adjusted Life Years. These analyses allow decision makers to make comparisons between interventions that have completely different outcomes. They also typically report in incremental terms; the additional cost for an additional Quality Adjusted Life Year (QALY).
  • a health economist can also bring different areas of expertise to a research project. Health economists can:
    • devise QoL instruments for specific patient groups. This would usually involve working directly with patients to identify the aspects of their conditions that are important to them and then attaching values to the variations in these aspects
    • advise decision-makers on how an intervention addresses some of their other decision-making criteria (such as equity: of access, of gender, of age e; and political policy.
    • offer modelling expertise (a set of techniques to synthesise and extrapolate the costs and consequences of an intervention beyond the timeframe of the trial) to provide more information to decision makers.

What to think about before meeting a health economics advisor

  • the context in which decision makers will view your research. Is it, for example a cheaper way of achieving particular outcomes, or is it likely that there are extra costs and extra benefits associated with the intervention?
  • If you are planning a trial:
    • is the control treatment a relevant comparator from the point of view of a decision maker e.g. the NHS?
    • is the primary outcome going to capture all the benefits (and harms) of the intervention compared with the relevant comparator?
    • will generic health status measures (e.g the SF-36, EQ-5D) be sufficiently sensitive to capture the outcomes of your intervention?
    • where do the costs of the intervention fall and where and when will any resulting costs (or savings) be realised?
    • will the impacts of the intervention extend beyond your research time frame?
    • are there significant impacts of the intervention beyond health and social care, for example on informal carers?

RDS NE Health Economics Team Lead: Luke Vale

Useful Resources

A Shiell, C Donaldson, C Mitton, G Currie. Health economic evaluation. Journal of Epidemiology and Community Health. 2002; 56:85–88

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