Prof Devlin

Measuring and publishing hospital data on achieved health outcomes is becoming routine in many health care systems.  League tables of hospital quality – based on post-surgical survival rates, for example – are used to highlight variation in performance across providers. These measures, however, reveal little about the health of the vast majority of patients and may fail to detect important variations in quality. More comprehensive measures of patients’ health outcomes are needed as the basis for a better assessment of hospital performance and identification of best practice.

In this paper, OHE’s Nancy Devlin collaborated with colleagues from the Centre of Health Economics at the University of York to measure variation in hospital quality using a new, routinely collected dataset on patient‐reported outcome measures (PROMs). Since April 2009, all providers of publicly‐funded inpatient care in the English NHS have been required to collect such measures for four elective procedures: unilateral hip and knee replacements, varicose vein surgery, and groin hernia repairs. Patients undergoing these procedures are asked to complete the EQ-5D, which produces generic measures of health, as well as a condition-specific questionnaire both before and several months after surgery

The use of PROMs in the context of routine performance assessment on a national scale is new; it requires an appropriate methodology that takes into account both the characteristics of the data and their intended use as measures of relative quality of hospital treatment. The NHS Information Centre (IC) has developed a preliminary risk-adjustment methodology that currently is applied to the PROMs data. In this study, the authors build on these efforts and propose the following two refinements.

First, the authors argue that the data should be analysed at the level of PROM-item responses instead of summarizing them as a single score. Collapsing EQ‐5D health profile data into a single value by means of weighting loses some information on the underlying nature of the patient’s health and can bias statistical inference. It also raises questions about whose views the scores should reflect – those of the general public (as is generally the case when EQ-5D data are used in economic evaluation) or those of patients.

Second, the authors note that patients’ health outcomes are likely to be influenced by both observed factors (e.g., age and gender) and unobserved factors (e.g., differences in the way patients report their health, unobserved medical conditions) that are outside the hospitals’ control. These factors need to be taken into account to allow for a fair comparison of hospital quality. The authors argue that the risk‐adjustment methodology should distinguish random variation and differences across patients from systematic variation in quality among providers. Because PROMs data are available both at the patient level and at the provider level, multi-level models are a good way of exploring this.

This study focuses on hip replacement patients and studies hospital variation in changes in self-reported health on the five dimensions of the EQ-5D: mobility, self-care, usual activities, pain & discomfort, and anxiety & depression. The results suggest that patients undergoing hip replacement surgery report, on average, improvements in health along each of the five dimensions six months after surgery. However, hospitals vary in their systematic impact on post-treatment health. This is especially pronounced on dimensions related to functioning (i.e., mobility, usual activities) where several performance outliers can be identified. In contrast, pain relief, one of the primary goals of hip replacement surgery, is achieved by all hospitals to a similar extent. Given that the EQ-5D utility index attaches high weights to the pain dimension, but relatively low weights to mobility and usual activities, the authors demonstrate how quality assessment using summary scores can provide an incomplete, potentially misleading assessment of hospital performance.

This study is the first to analyse hospital performance in terms of the EQ-5D dimensions and to use multilevel modelling methods to do so. It demonstrates how the data being generated from the NHS PROMs programme can be used in creative ways to generate completely new insights into hospital performance and quality. Previously, PROMs data were available to download only in an aggregated form, for example, as averages for each hospital. Now, patient level data, including patients’ self-reported health on the dimensions of the EQ-5D before and after surgery, are available for download from the NHS IC.

This research was undertaken as part of an ongoing research programme funded by an NIHR Health Services Research Grant.

Download Gutacker, N., Bojke, C., Daidone, S., Devlin, N., and Street, A. (2012) Analysing hospital variations in health outcomes at the level of EQ-5D dimensions. CHE research paper. 74. York: Centre for Health Economics, University of York.

For a related paper by this research team, download
Gutacker, N., Bojke, C., Daidone, S., Devlin, N., Parkin, D. and Street, A. (2011) Truly inefficient or providing better quality of care? Analysing the relationship between risk-adjusted hospital costs and patients’ health outcomes. CHE Research Paper. 68. York: Centre for Health Economics, University of York.

For more on PROMs, download Devlin, N. and Appleby, J. (2010) Getting the most out of PROMs: Putting health outcomes at the heart of NHS decision making. London: King’s Fund and Office of Health Economics.

See also Parkin, D. and Devlin, N. (2011) Using health status to measure NHS performance: Casting light in dark places. BMJ Quality and Safety. Online first. 21 September. [Available for download by subscribers only]

Jon Sussex reviewed OHE’s research on spillovers at the Cancer Research UK Symposium held on 3 February 2012.  His presentation is available for viewing below.

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OHE research on this topic, listed below, is available for download free to registered users.

Buxton, M., Hanney, S., Morris, S., Sundmacher, L., Garau, M., Mestre-Ferrandiz, J., Sussex, J., Grant, J., Ismail, S., Nason, E., Wooding, S. and Kapur, S. (2008) Medical research: What’s it worth? Report for the Medical Research Council, the Wellcome Trust and the Academy of Medical Sciences. London: Office of Health Economics.

Mestre-Ferrandiz, J. and Sussex, J. (2009) Forward together: Complementarity of public and charitable research with respect to private research spending. OHE Consulting Report. London: pOffice of Health Economics.

OHE and RAND Europe. (2010) Enhancing the benefits from biomedical and health research spillovers between public, private and charitable sectors in the UK. Occasional Paper. London: Office Health Economics and RAND Europe.

Garau, M., Mordoh, A. and Sussex, J. (2011) Exploring the interdependency between public and charitable research: Report for Cancer Research UK. OHE Consulting Report. London: Office of Health Economics.

Download this presentation.

We have a range of events and activities planned throughout the year. Click here for more detail.

• On the best available evidence, competition at regulated prices has improved the quality of some NHS services

• Because health care consists of a wide variety of very different services, delivered in dissimilar locations, the OHE Commission has developed a tool to help show where competition is most likely to be effective

• Competition can help the integration of care – and there is no evidence that competition hampers integration

Competition in the NHS is controversial, but in the right circumstances it can be used to stimulate the provision of better health care than is achieved without competition. This does not mean that competition is desirable or feasible for all NHS services in all locations. The issue is not whether to have competition for all NHS services or for none; the question is for which services and where competition would benefit patients. The evidence on competition in the NHS is limited but implies that, used carefully, it can benefit patients. The OHE Commission recommends:

• That where current providers’ performance suggests health care could be improved, competition should be given serious consideration

• The likely effectiveness of competition can be assessed before it is tried – using the analytical tool developed by the OHE Commission and described in the report

• “Any qualified provider” arrangements allowing patients, helped by their GPs, to choose where to get their health care are suitable in some cases

• In other cases, competitive procurement by local NHS commissioning bodies on behalf of the populations they serve will be more appropriate

• Routine collection and publication of patient outcome measures should continue to be expanded to enable evaluation of the effects of competition

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Additional information on the Commission is available in the Featured Projects section of this website.

Downloads

Download Report of the Office of Health Economics Commission on Competition in the NHS. (2012) London: Office of Health Economics.

The Commission also commissioned three background reports, available for download below.

Download Forder, G. and Allan, S. (2011) Competition in the care homes market. Report for the OHE Commission on Competition in the NHS. London: Office of Health Economics

Download Goudie, R. and Goddard, M. (2011) Review of evidence on what drives economies of scope and scale in the provision of NHS services, focusing on A&E and associated hospital services. Report for the OHE Commission on Competition in the NHS. London: Office of Health Economics

Download Mordoh, A. (2012) Critical review of the quality and competition measures and identification strategies used in health care studies. London: Office of Health Economics.

Presentation from launch event

Contacts for further information

Jon Sussex, Deputy Director, Office of Health Economics — E-mail: jsussex@ohe.org

Adrian Towse, Director, Office of Health Economics — E-mail: atowse@ohe.org

Telephone: +44 (0) 20 7747 8850

This report examines two aspects of the impact of the HTA process on access. First, it examines the elapsed time between launch of a medicine to publication of a technology appraisal. If availability is delayed until NICE has published its appraisal, then this interval is an important determinant of speed of access. Second, the report analyses elapsed time between the start and completion of the technology appraisal process itself. The clear timelines established for NICE allow benchmarking of performance. Included also are changes in elapsed time for the process over the years; how elapsed time has been affected by the introduction of the single technology appraisal (STA) process; and any specific factors that may account for different elapsed times across decisions.

Download  O’Neill, P., Devlin, N. and Puig-Peiró, R. (2012) Time Trends in NICE HTA Decisions. OHE Consulting Report. London: Office of Health Economics.

Koonal Shah

The National Institute for Health and Clinical Excellence (NICE) routinely publishes details of the evidence and reasoning underpinning its recommendations, including its social value judgments. To date, however, although the principles related to cost-effectiveness are relatively explicit, those covering equity concerns generally are less specific. NICE takes a pragmatic, case-based approach to developing its principles of social value judgment, drawing on the cumulative experience of its advisory bodies in making decisions that command respect among its broad and diverse range of stakeholders.

In a University of York CHE Research Paper, OHE’s Koonal Shah collaborated with Richard Cookson, Tony Culyer and Peter Littlejohns to examine the inclusion of social value judgments in NICE guidance decisions and describe the social value judgments about equity in health and health care that NICE has used to guide its decision making to date.  Reviewed are both information on general social value judgments included in NICE guidance on methodology and case-specific social value judgments contained in NICE guidance about specific health care technologies and public health interventions.

The paper provides a brief overview of why NICE has implemented a policy of transparency for social value judgments, and why its social value judgments about cost-effectiveness are more specific than those about equity. It describes NICE’s social value judgments about three different types of equity concerns: (1) that health services be distributed according to need, (2) that health service recipients not experience discrimination based on personal or social characteristics, and (3) that unfair health inequalities be reduced.

For each of these three equity concerns, the authors have sought out both statements and suggestions in NICE guidance where social value judgments may have been applied. Although specifics cases are identified for the first of these – need – they are largely absent for discrimination and health inequalities for reasons detailed in the paper.

According to the authors, “Our central finding is that, although NICE advisory bodies are authorised to depart from the social value judgment that ‘a QALY is a QALY is a QALY’ on grounds of equity, they have in practice been extremely reluctant to do so explicitly except in the special case of life-extending end of life treatments.” They note, however, that advisory bodies implicitly have taken into account a range of equity considerations, without explicitly affecting the weighting of QALY gains.

It remains to be seen, according to the authors, whether NICE’s advisory bodies will take decisions on equity grounds in the future that explicitly imply a special additional weight on QALY gains for any population subgroup. The authors believe that the reluctance of advisory bodies to do so is “understandable, given the complex and politically controversial nature of equity concerns. An explicit decision that departs from current practice by giving explicit additional weight to QALY gains for a particular population group carries substantial risks of intense media attention, protracted legal appeals, and the setting of unhelpful precedents.”

As the authors note, giving “special additional weight to QALY gains” for any one subgroup – however determined – also logically implies a lower weight for those outside that subgroup.  For example: giving greater weight to QALY gains for socio-economically disadvantaged populations implies that QALY gains for socio-economically advantaged populations should be lower; and greater weight for the severely ill implies lower weight for those not severely ill.

In theory, the authors note, it should be possible to avoid such potentially uncomfortable implications by developing a “nuanced and context-sensitive set of general QALY weighting principles”.  In practice, however, several practical considerations mitigate against that, producing for NICE a “pragmatic, incremental approach in which social value judgments are developed in an iterative process through cumulative case-based experience and only later (if at all) codified into general principles”.  Nevertheless, they conclude, the fact that “NICE has explicitly identified so many of the issues and opened them up for research and public discussion must be counted as remarkable pioneering achievements not to be found elsewhere in decision making, in the UK or anywhere else, about public investments. It is surely an experience from which similar agencies elsewhere might usefully learn”.

Shah, K.K., Cookson, R., Culyer, A. and Littlejohns, P. (2011) NICE’s social value judgments about equity in health and health care. CHE Research Paper 70. York: University of York.  Available for download from the University of York website.

Related OHE research

Download: Shah, K.K., Wailoo, A. and Tsuchiya, A. (2011) Valuing health at the end of life: An exploratory preference elicitation study. OHE Research Paper 11/06. London: Office of Health Economics.

Download: Shah, K.K., Praet, C., Devlin, N.J., Sussex, J.M., Appleby, J. and Parkin, D. (2011) Is the aim of the health care system to maximise QALYs? An investigation of ‘what else matters’ in the NHS. OHE Research Paper 11/03. London: Office of Health Economics.

Prof Towse

In a recent editorial in the European Journal of Health Economics[1], Prof Michael Drummond of York University and Prof Adrian Towse of the OHE take a new look at an old issue: the appropriate role of co-payments in health care.

Co-payments have been in effect for decades in many countries, primarily for medicines, and designed to achieve one of two objectives. The first has been to reduce moral hazard by requiring patients to pay an ‘entry fee’ to gain access to care. The second has been to raise additional revenue to reduce the burden on the insurer.  An unintended consequence, however, has been that co-payments have made access to care inequitable.  Co-payments also have produced hidden costs when those unable to afford co-payments forgo needed care, increasing the possibility of poor health outcomes and/or more costly delayed treatment.

As the authors note, ‘Patient copayments have therefore never been very popular with health economists from countries with socialized healthcare, because of their expected negative impacts on equity, without corresponding benefits in terms of increased efficiency’.  Nevertheless, co-payments are applied in various forms throughout Europe, as the table below shows.

Recently, the debate over the role of co-payments for drugs has once again come to the fore, both because of the general financial crisis facing many governments and because of the escalating costs of some types of medicines — cancer drugs, for example.  Restricting access to these costlier therapies has raised two sets of questions (1) whether such restrictions accurately reflect societal preferences about access to care and (2) whether patients should be allowed to pay an additional amount to gain access to medicines not fully covered, or not covered at all, by the public health care system.  The authors note that ‘If the role of patient co-payments for pharmaceuticals in Europe is to be reconsidered, it needs to be done within a policy framework that recognises the joint objectives of efficiency, equity and budgetary responsibility’.

The authors see a paradigm shift in both the rationale for and the operation of co-payments. Under the ‘old world view’, decisions about therapy were made primarily by the patient and prescriber, with equity and efficiency issues limiting the usefulness of co-payments. In the ‘new world view’, the decisions about the value of the therapy are made by the third-party payer, which both determines pricing/availability based on assessments of value and explicitly shapes prescribing decisions through various guidelines and incentives.

In this new world, the authors posit, co-payment could become a way of recognising the heterogeneity of individual patient preferences while avoiding unequal access based on ability to pay. If value based pricing (VBP) is applied in a ‘rigorous and responsible fashion’, the payer’s willingness to pay threshold and the resulting VBP price ‘should be largely consistent with the values and preferences of the vast majority of the insured population’. Thus, the price set by the company and the price acceptable to the payer should both be at a level that minimises patients’ opting to pay an additional amount for access to any particular therapy.  If a substantial proportion of patients was willing to pay more, this would be a signal that the willingness to pay threshold was set too low in the first place.

From a practical point of view, one possible downside of co-payments in a value-based system is the administrative cost of collecting payments from patients. The authors note that nearly all European countries already have a mechanism for collecting co-payments in some form, suggesting that any additional cost would be minimal.

The authors stress that the success of this approach depends both on administrative feasibility and on third party payers setting prices that minimise the number of patients opting for treatments that require co-payments.

Financing, Organisation and Delivery of Health Care

Assessing value for money

Nancy Devlin is the co-author of a paper published by the Centre of Health Economics at the University of York that examines the relationship between risk-adjusted hospital costs and patients’  outcomes.[1]

As part of a strategic financial leadership program, Nancy gave a presentation at the CASS Business School on value for money and health care to Directors of Finance for NHS organisations.  She also gave a seminar to MSc students at City University London on current issues in valuing health and international research on them.

Containing spending on medicines and ensuring access

Policies intended to contain and shape spending for prescription medicines was the focus of several OHE activities during the third quarter of 2011.

Jorge Mestre-Ferrandiz participated in a roundtable in Madrid, organized by Contenidos de Salud, that discussed the issues involved in ensuring access to orphan drugs for paediatric use.

At the ISPOR Congress in November, Ruth Puig-Peiró delivered a presentation that summarized a literature review on Patient Access Schemes, Flexible Pricing Schemes and risk sharing schemes, all of which are becoming increasingly common approaches to shaping access to new drugs.

Value based pricing (VBP), due to take effect for newly approved medicines in the UK beginning in January 2014, was the topic of four presentations and discussions. Jon Sussex discussed the economic principles behind, and possible options for, value based pricing in the UK at the NextLevel Pharma conference and in a parallel session at NHS North West’s Health Innovation and Education Clusters conference.

Martina Garau discussed the principles and practice of VPB in the UK policy context at the European Pharmaceutical Pricing and Reimbursement conference in October. Adrian Towse was a panellist in the VPB session at the November ISPOR meeting, addressing issues that will present a practical challenge in implementing VBP.   Nancy Devlin delivered a guest lecture on current and future issues in value based pricing in the UK at the highly-regarded annual short course on health technology assessment at the University of Groningen.

Spending trends

Trends in drug spending were addressed by Jon Sussex in two forums. In November, he addressed an audience from the Wales National Assembly, discussing the recent OHE report on Health and the Use of Medicines in Primary Care in Wales. In October, John participated in a parallel session at the Annual Conference of the Institute of Healthcare Management in Scotland, presenting UK medicines bill projections to 2014.

HTA Methods and Processes

The societal perspective

Which HTA approaches will produce the best result was the subject of several of the OHE team members’ outside professional activities in the last quarter of 2011. Two of these considered adopting broader, societal approaches to HTA. At the NICE methods review workshop in Manchester in October, Nancy Devlin participated in a discussion that considered what effects should be included in NICE technology assessments if a societal perspective were to be adopted. At a November meeting sponsored by Epposi, the Brussels-based think tank, Martina Garau participated in discussions about how HTA agencies at national level can consider societal benefits that ensure not only good health outcomes, but also sustainable economies.

Examining the bases for decisions

Nancy Devlin was involved in three forums that focused on the methods and approaches for multi-criteria decision analysis (MCDA) and how these might be used to go beyond cost-effectiveness analysis to explicitly consider a greater range of criteria in health technology appraisal. Two of these were at ISPOR in November. In October, Nancy participated in the NICE Structured Decision-Making Methods Review Workshop with a presentation that examined the potential benefits of Appraisal Committees adopting a more structured approach to decision-making and HTA, such as multi-criteria decision analysis, rather than relying on deliberative processes.

Nancy also participated in a NICE methods review process workshop in London in November. She provided updates on progress in using the EQ-5D-5L, including plans for launching a study in England in 2012.

With Nils Gutacker (University of York), Nancy Devlin gave a presentation at the Advisory Group project meeting on the NIHR/Health Service Research grant-funded project: ‘Combining routinely collected data on costs and patient outcomes to measure the outcomes/cost ratios of hospital procedures and identify variations across providers’.  The presentation provided an overview of the project and its current status, including initial results from analyses of the PROMs data.

National Institute for Health and Clinical Excellence

Two of OHE’s activities during this time focused exclusively on NICE. Koonal Shah participated at a University of Sheffield seminar in late November, presenting preliminary findings from an empirical study on the relative priority members of the general public would give to life extending treatments at the end of life.  He also presented an overview of NICE’s technology appraisal and clinical guideline development activities to a delegation of Dutch commissioners visiting the UK on a study trip.

Economics and Regulation of the Pharmaceutical and Life Sciences Industries

Innovation

In October, Adrian Towse participated in a panel sponsored by the Harvard School of Public Health and Boston University that focused on what global initiatives could encourage the development of more medicines to counter antimicrobial resistance.  In November, he participated in a symposium on the economics of personalized medicine, discussing the four public policy challenges they present: clinical utility, regulatory, reimbursement and IP.

Jon Sussex gave a keynote presentation, ‘What’s Economics Got to Do It?’, at the conference to launch the University College London and Imperial College EPSRC Centre for innovative Manufacturing in Emergent Macromolecular Therapies.  Specifically, he described how economic considerations are vital to life sciences research, from evaluating returns to public and charitable research, to driving commercial R&D decisions, and increasingly determining pricing and reimbursement levels, including through VPB.

Pricing and Reimbursement

The OHE team addressed various aspects of pricing and reimbursement (P&R) during the last quarter of 2011.  At the ISPOR Europe meeting in November, Adrian Towse and Lou Garrison (University of Washington) presented an intermediate level short course on risk sharing/performance-based arrangements for drugs and other medical products. The course covered both theory and practice, including several examples of performance based schemes from Europe, the United States and Australia.  Also at ISPOR, Adrian moderated and presented in a session on developing good research practices for performance-based risk sharing, presented by the ISPOR Performance-Based Risk Sharing Arrangements Good Research Practices Task Force, of which he is a member.

In November, Adrian Towse presented at the Shanghai ISPOR Forum on Pharmaceutical Pricing/Reimbursement and HTA, organized by the Fudan Center for Pharmacoeconomic Research and Evaluation.  His presentation combined elements from two recent research products: The Evolution of HTA in Emerging Markets Health Care Systems, an OHE publication, and the NBER paper on pharmaceutical pricing in emerging markets, co-authored by Towse, Danzon and Mulcahy.

Jon Sussex

Written by RAND’s Jonathan Grant and OHE’s Jon Sussex, this post originally appeared on 28 November as a Research Fortnight blog post.

Increasingly, governments in the UK and throughout Europe see R&D driven growth as the best way out of the financial crisis.  Western economies, the argument goes, cannot compete with the low labour costs of manufacture base in China and India. Since the boom of the financial sector went bust, the best of what is left are our knowledge, ideas and our capacity to innovate.

The Government identifies the ‘UK’s world-class research base’ as a key driver of economic growth. But does the evidence of returns from public investment in R&D match the rhetoric?

Collectively the evidence seems compelling.  The work of two US economists – Richard Nelson and Kenneth Arrow – first made the case for public funding of research more than fifty years ago.  They argued that private sector investment in basic research would be less than optimal because of the public nature of knowledge. So, public funding of basic research would add social and economic benefits. More recent studies have shown a link between expenditure on research and productivity growth. In 2008, a study by three leading scientific institutions estimated a 39 percent rate of return arising from effects for publicly funded cardiovascular biomedical and health research: 30 percent due to increased annual GDP and 9 percent due to the value of longer life expectancy in better health.

There has been much talk this week about the Chancellor’s plans to invest in infrastructure to get the UK economy moving. The benefits of building a new road in terms of construction jobs are direct and can be counted. The spillover benefits only start when the road itself is open and traffic begins to move along it and to influence the way business is done and communities develop.

There is an important distinction to make between economic ‘multipliers’ and ‘spillovers’ that needs to influence how policymakers approach the issue.  Multipliers occur when, for example, I receive a research contract that allows me to employ a researcher.  The researcher spends her salary on rent, food, and entertainment and so directly benefits her local economy.  A spillover is the way that my investment in R&D enables other organisations to be more productive in their research and production. Multiplier effects happen quickly if at all; spillovers take a lot longer but have more lasting benefit.

The $5 billion provided to the US National Institutes of Health in 2009 as part of the American stimulus plan is an example looking for a multiplier effect.  The US government hoped to provide a fiscal stimulus to the economy and used the NIH as the honest intermediary in writing cheques.

Spillover benefits from the NIH stimulus money will be harder to measure and take longer to realise, but could be an order of magnitude larger than the multiplier effects.  In contrast, current UK policy seems to be focused on protecting science research budgets.  If the UK Growth Plan is predicated on R&D driven productivity gains then this will occur through economic spillovers, not the multiplier of fiscal stimulation.

What does this mean for economic growth?  Well the first thing to note is that the evidence for spillovers occurring is based on largely US-centric data, which is now out of date and biased to either the biomedical or agricultural sciences. This is not a reason to dismiss this evidence, but more of a plea to develop our understanding in a UK and European context.

What we don’t know nearly enough about is how spillovers come about.  This is a significant gap since government would want to maximise the spillover effect both in size and by reducing the time lag, but it is very difficult to formulate effective policies for doing so without understanding more about how spillovers occur.

Publicly funded R&D investment is a coherent policy to support long term economic growth.  Our only note of caution is about how far and how fast that growth can be delivered because the evidence we have is out of date and skewed towards the experience of just one country. Policymakers would be wise to update the evidence.

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Editor’s note: OHE has published two papers with RAND Europe on this topic, both available for download from the OHE website.

Download Office of Health Economics and RAND Europe. (2010) Enhancing the benefits of biomedical and health research spillovers. OHE Occasional Papers. London: Office of Health Economics.

Download Health Economics Research Group, Office of Health Economics and RAND Europe. (2008) Medical research: What’s it worth? OHE Consulting Report. London: Office of Health Economics.

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