Download Health Economics - Faculty of Medicine

Department of Epidemiology, Biostatistics and Occupational Health
EBOSS Student seminars
Eric Latimer – HEALTH ECONOMICS
September 2009
1. Introductory note on Eric Latimer’s research interests
a) Focus on mental health services research and economic evaluation of mental health interventions
b) Highlight large study that has just begun: The At Home / Chez soi research and demonstration
project on mental illness and homelessness, funded by the Mental Health Commission of Canada.
Five-city, $110 million project. (Eric Latimer is lead investigator for Montreal site.)
a. Funding for M.Sc., Ph.D. and post-doc students is available. Many topics can be constructed
out of this project.
c) Note: Eric Latimer is based at the Douglas Institute and primarily affiliated with the Department of
Psychiatry; he is also associate member of the Departments of Epidemiology, Biostatistics and
Occupational Health and also Economics.
2.
Daily applications
a) Health economics can be viewed as consisting of economic evaluation of health programs, and
everything else within health economics.
b) The “everything else” includes studies of issues such as:
o Effects of paying physicians fee-for-service vs capitated basis vs salary vs other methods (on
volume and cost of services, on quality indicators)
o Effects of introducing user fees (RAND health insurance experiment is a landmark study
here; some of Robyn Tamblyn’s work may be mentioned as well: effects of introducing or
increasing cost-sharing for medications for welfare recipients and seniors in Québec in
1996.)
o Effects of allowing parallel private insurance schemes (Amélie Quesnel-Vallée is interested
in this area as well)
o Effects of income inequality on health (yes, economists have also engaged in some aspects
of social epidemiology)
o The above is far from an exhaustive list. At a deeper level, health economists in this group
are interested in identifying causal relationships using non-experimental methods applied to
secondary data (instrumental variables, interrupted time series, and the like).
o Erin Strumpf (joint appointment between EBOH and Economics) would be the main faculty
member to consult concerning these kinds of issues.
c) Economic evaluation of health programs:
o There are virtually unlimited needs or desires for health care interventions, but health care
budgets are finite. The media repeatedly present us with cases of apparently very beneficial
health care that was not provided for cost reasons (even in the US which spends 16% of its
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Gross Domestic Product on health care, far more than any other country). Economic
evaluation of health programs is mainly concerned with determining which health care
interventions or programs one should fund, and under what circumstances. (Estimating the
economic burden of an illness is an additional kind of study that economists who specialize
in economic evaluation are equipped to carry out. Such studies are useful as indicators of
the potential benefit to be realized by investing in treatment or research in a disease or
disease cluster, although of course progress can be more or less difficult to achieve in an
area depending on factors such as how far we are from finding new effective treatments,
etc.)
It used to be that the goal of such research was, usually, to produce incremental costeffectiveness ratios ($ per life saved, $ per quality-adjusted life year, etc). In recent years
something called the net health benefit framework has been introduced which helps us to
characterize the cost-effectiveness of an intervention as a function of what the decisionmaker is prepared to pay for a life saved, a QALY, or whatever.
This kind of research presents many methodological challenges. Among these, the most
difficult is probably how to value the benefits of different health care interventions in a
comparable way. How can we compare the benefits of a hip replacement with the benefits
of slowing the progress of Alzheimer’s with increasing, to a small degree, the odds of
surviving cancer by a few months? Economists have developed complex methods to do this
that mostly end up as building blocks to the calculation of Quality Adjusted Life Years. Most
– but not all – of these methods involve eliciting peoples’ valuations of heath states in
various ways. The issues in fact go beyond simply technical ones to ethical ones.
In many jurisdictions, pharmaceutical companies are required to carry out economic
evaluations of the drugs they propose to sell to satisfy government authorities that the cost
of the medication is commensurate with its anticipated benefits.
In addition, many governments support health technology assessment activities. This is
particularly the case in the U.K., where the National Institute for Health and Clinical
Excellence (NICE) has been very influential. It has also been the case in Québec, where the
Agence d’Évaluation des Technologies et Modes d’Intervention en Santé appears on the way
to merging with the Conseil du Médicament to form the Institut National d’Excellence en
Santé et Services sociaux (INESSS) . All these organizations need to evaluate not only the
efficacy and effectiveness of interventions (ranging from health care delivery mechanisms to
medications to medical procedures and devices) but also their cost-effectiveness – by
patient group, etc.
3. What does the research entail?
a) Some economic evaluation involves primary data collection alongside randomized trials. It is
necessary to design a data collection strategy, obtain unit costs, and carry out various statistical
analyses on the data. Service use and cost data from administrative data bases (e.g.,
hospitalizations) may also be incorporated into such analyses. Over time the analyses have
required more knowledge of statistics as more attention is being paid to describing the
uncertainty of estimates.
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b) Many economic evaluations now involve modeling. Parameters come from the literature or
experts. Sophisticated statistical methods are applied. We can address a variety of questions
such as comparing the cost-effectiveness of different patient flows through surgery, different
vaccination strategies, etc., without collecting primary data. By drawing on all existing relevant
data, we can carry out an analysis that, except for uncertainty about the proper method to use,
can have a more definitive character than an analysis based on a single data set.
c) Economists usually work on multidisciplinary teams. Often they are asked to add an economic
component to a study, much as a statistician may be asked to contribute their expertise. In the
UK they are often asked by the government to address policy-relevant questions. However,
economists may also initiate studies.
4. Funding
a) There are many possible sources of funding for economic evaluation research, including from
CIHR and drug companies.
b) There are few health economists, including health economists who do economic evaluation,
relative to the demand. This is especially true in Québec. It is not difficult to get a wellconstructed project funded. However, projects submitted to health granting agencies need to
emphasize their clinical/population health relevance – studies that appear too methodological
in character may not be viewed favorably.
5. Career opportunities
a) As suggested by the above, there are many career opportunities for health economists: in
industry (most importantly, drug companies, where one may be asked to help prepare a
submission to a government for approval of a drug), in government (many agencies, especially
agencies concerned with health technology assessment) and academia. There is a widespread
perception among government observers in Québec that the province faces a dearth of health
economists, including those able and willing to carry out economic evaluations.
b) It is entirely possible to obtain a job doing economic evaluation, including as a member of a
faculty of medicine, WITHOUT having a PhD in economics. (This is much less true of the rest of
health economics, which makes extensive use of advanced econometrics and micro-economics.)
One or two courses in micro-economics joined with one or two courses in economic evaluation,
probably some accounting, and doing a thesis in the area, plus reading and going to
conferences, are sufficient.i
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Much of the standard coursework in an economics PhD program (macroeconomics, general equilibrium theory,
microeconomic theory developed using algebraic topology, etc.), is simply not relevant at all to someone working in
economic evaluation of health programs.
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