Cost Effectiveness Analyses

To obtain clinical insights and compare different strategies based on their medical performance alone, the Markov chains outlined above may be sufficient. In recent years, Markov chains have been used increasingly to predict the outcomes of medical screening and surveillance, and to assess the amount of lifetime saved through different strategies. Because such questions also touch upon issues of public health and health policy, the comparison of various strategies needs to include costs and assess whether these strategies are economically feasible. The analysis shown in Figure 2-6 could have been expanded further by accumulating the costs that are incurred during each month spent in various states of the Markov chain. For example, if treatment of acute ulcers required additional medical expenses, those would have been multiplied by the fraction of patients with acute ulcers during each month and then added for the entire running period of the Markov analysis. In other more elaborate Markov models, the transitions among various states could also result in cost expenditures that need to be accumulated over the entire running period to estimate the overall costs of competing treatment strategies. Ultimately, such analyses deal with the average costs and lengths of time associated with various health states. The ratio of cumulative cost over time is referred to as the average cost effectiveness ratio ([ACER]; ACER = cost/time). The ACER combines the medical perspective of health time with the economic perspective of costs spent to make this health time happen.

The first Markov chain from above considered only two health states and a dichotomous grading of time (ie, healthy versus sick time). In more complex Markov models, however, patients are shifted among many more health states and spend various amounts of time in health states associated with varying health quality. Rather than focus solely on the healthiest state alone, the times spent in other less favorable health states also need to be accumulated and accounted for in the final analysis. Time spent in fear of medical disease, time spent in pain, time spent in a medical institution, or time spent after a debilitating medical procedure are all associated with different qualities. To compare and sum such different time periods, the quality of time associated with different health states needs to be

Basic model

1-HR

1-HR

acute ulcer

HR

healed ulcer

RR

1-RR

d death

Expanded model c.

acute ulcer

healed ulcer

b b hospital admission

FIGURE 2-7. Basic and expanded Markov chain models for the natural history of an ulcer (drawn in short form). HR = healing rate; RR = recurrence rate.

made commensurable by grading it on a continuous scale from 0 and 1. By definition, death becomes associated with 0 quality and perfect health with a quality value of 1. The quality of time multiplied by the length of time corresponds to the quality-adjusted time, usually expressed as quality-adjusted life years (QALYs). The ACER changes accordingly to a ratio of ACER = cost/QALYs.

Rather than being restricted to the ACER of one particular strategy, most cost effectiveness analyses are now concerned with the comparison of different treatment strategies, for example, no therapy versus COX-2 therapy versus PPI therapy of the present example. Each two strategies can be compared by their incremental cost effectiveness ratio (ICER):

costi - cost2 QALYi - QALY2

The indices 1 and 2 refer to the first and second strategy to be compared, respectively. The ICER tells the decision maker how many additional costs would be incurred in trying to achieve more time spent at a healthier state. For instance, how much would it cost to spend 4% more time ulcer-free with PPI as compared with COX-2? This chapter was focused on medical decision analyses that could be used by gastroenterologists as a bedside tool to resolve issues that arise in their daily care of patients. Most cost effectiveness analyses, however, reach beyond this clinical confinement. They require far more elaborate cost analyses and address issues relevant to general health policy rather than routine medical practice.

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