Outcomes evaluations attempt to identify, measure, and evaluate the end results of health care services. Outcomes evaluation examines not only the clinical effects of health care services but also the economic and humanistic impact of these services, such as quality of life and satisfaction (Bootman et al., 1996). From an increasing consumerism perspective, and with regard to resources becoming more scarce, evaluation of these types of outcomes are increasingly important. The economic, clinical, and humanistic outcomes (ECHO) model assumes that the outcomes of medical care can be classified along the three dimensions of economic, clinical, and humanistic outcomes (Kozma et al., 1993). Clinical outcomes are defined as medical events that occur as a result of disease or treatment. Economic outcomes are defined as the direct, indirect, and intangible costs compared with the consequences of medical treatment alternatives. Humanistic outcomes are defined as the consequences of disease or treatment on patient functional status or quality of life. All three of these outcomes need to be balanced simultaneously to assess value.
Traditional cost-containment measures are not always consistent with improved patient care. Thus attention has turned toward demonstrating the value of health care, overall. A full evaluation of relevant costs and consequences would provide significantly more information that simply looking at traditional cost-containment strategies. Costs are defined as the value of the resources consumed by a program or treatment alternative. These include direct costs, or the resources consumed in prevention, detection, or treatment of a disease, nonmedical costs such as transportation to medical facilities or special diet considerations. Indirect costs include loss of productivity at work (such as when a patient is absent from work because of a migraine, or working but is suffering from depression), and intangible costs are things like pain, suffering, and grief. Consequences are defined as the effects, outputs, and outcomes of the program or treatment alternative (Eisenberg, 1989).
The economic evaluation of medical care may occur from many perspectives. These perspectives, or viewpoints, will influence the costs and consequences identified, measured, and compared for a program or treatment alternative. An economic evaluation can be conducted from a single perspective or multiple perspectives. Common perspectives are those of the patient, health care professional, insurer, and society. There are subtle differences between perspectives. A patient may be extremely concerned with his or her quality of life, level of pain, ability to see health care professionals, or how much time is spent in the hospital or nursing home, in addition to the actual direct costs of health care. However, an insurer may be interested only in the direct costs of health care to its organization. In fact, while a patient who is at the end of his or her life may be interested in extending life as long as possible, an insurer may see this as an expensive prospect.
There are also differences between the insurer's and societal perspectives. Many insurers assume that patients will not be covered on their plans throughout their lifetime, so expensive interventions that provide benefits in the very long term tend to be discouraged (i.e., screening programs for diseases that manifest in the elderly). However, from a societal perspective, these screenings may be appropriate because they identify patients at risk earlier. In the long run, such screenings are beneficial to society.
Types of Economic Evaluations
The basic task of economic evaluations is to identify, measure, value, and compare the costs and consequences of the alternatives being considered. Therefore, a full economic evaluation must have two features: a comparison of two or more alternatives and both the costs and consequences of the alternatives being examined.
Cost-minimization analysis is a tool used to compare two or more treatment alternatives that are assumed to be equal in efficacy. It simply compares the direct and indirect costs of treatment alternatives in dollars and does not consider the outcomes of the treatments (because they are assumed to be the same). Examples could be to compare the costs of intravenous versus oral dosage forms of the same drug or hospital versus home administration of intravenous pain management.
Cost-benefit analysis is used when outcomes can be expressed in monetary terms, such as in the amount of money an HMO might save if it implements a new program. The direct and indirect costs of a program or intervention are measured as they occur, and the benefits accrued from the program or intervention are identified and converted into dollars in the year in which they occur. These two values are then expressed as a ratio of the dollar value of the costs of the program or intervention to the dollar value of the outcomes that arose as a result of the program or intervention. For example, if the cost associated with new heart failure monitoring service were $100 per patient and, as a result of the service, the HMO saved $1,000 in hospital care per patient, the cost-benefit ratio would be expressed as the benefit, $1,000, divided by the cost, $100, or as 10:1. This ratio would be interpreted such that the service produces $10 of benefits for every $1 that is spent. The results may also be interpreted by subtracting the costs from the benefits or, in our example, as a $900 net benefit per patient.
Cost-effectiveness analysis is used when the treatment alternatives are not therapeutically equivalent or when outcomes cannot be expressed in monetary units. Cost is measured in monetary units, and outcomes are expressed in terms of obtaining a specific therapeutic objective, such as cases cured, lives saved, or millimeters of mercury drop in blood pressure. Cost-effectiveness analysis allows researchers to summarize the health benefit and resources used by two or more competing programs so that policymakers can choose among them (Detsky and Nagiie, 1990; Doubilet, 1986). For example, pharmacy director, anticipating an increase in prescription count, may want to consider adding another technician or purchasing an automatic dispensing system (i.e., dispensing robot). The pharmacy director can estimate the number of prescriptions, and other duties that a technician can perform and compare those duties to what a dispensing robot can perform. Clearly there are more upfront costs to a robot (i.e., purchasing the equipment and training the staff), whereas the costs for a technician are variable and can change (i.e., the director can hire the technician part-time with the potential for more hours, if needed). Using a cost-effective analysis, the pharmacy director can create a ratio of the prescriptions filled to the hourly cost of the technician or the extrapolated hourly cost of the robot to determine which would be more cost effective for the pharmacy. Another example that Cynthia might consider is whether hospitalizations and emergency department visits would be reduced more with a heart failure clinic or an asthma clinic. The therapeutic objective in this example would be a decrease in hospitalizations or emergency department visits, and the costs would primarily be Cynthia's personnel time at work.
Cost-utility analysis is used when quality of life is the most important outcome being examined. This is common in disease states in which how one feels or what one can do is more important than a clinical laboratory value or economic outcome (e.g., chronic diseases such as heart disease, diabetes, arthritis, cancer, or HIV/AIDS). Cost-utility analyses compare the direct and indirect costs of an intervention with some measurable level of humanistic outcome, such quality of life or level of satisfaction. Quality of life often is measured in quality-adjusted life years (QALYs).