Cost and Effects Outside of Health

Non-health effects and costs associated with gaining or providing access to health interventions that don’t accrue to the health budget should be identified where relevant to the decision problem. All costs and effects should be disaggregated, either by sector of the economy or to whom they accrue.

Importance to decision-making
Most economic evaluations of health interventions are concerned with how available healthcare resources (eg. the relevant health budget) can be allocated to maximize gains in health outcomes. This requires estimating the direct health intervention costs (accruing to the available health budget) and outcomes that result from delivery of the alternative interventions being considered. If funding an intervention generates more ‘health’ than could be generated from using that funding elsewhere (ie. health opportunity costs) it is considered to be a ‘cost effective’ use of resources.

In addition to health outcomes and direct costs accruing to the health budget, other costs and consequences of interventions may also be relevant, depending on the context of the decision. They include wider impacts on families, communities, and other sectors of the economy (eg. on educational outcomes). They may also include other (direct and indirect) costs that are incurred in gaining access to an intervention or that result from associated health outcomes. For instance, these may include direct costs falling on individuals and families in accessing health interventions (eg. travel, out-of-pocket and care costs), indirect time costs (eg. relating to the productivity of individuals and informal carers), as well as costs falling on other sectors of the economy.

Non-health effects and costs that fall outside the health budget may be important because alternative interventions may result in different non health effects that have social value. They should therefore be included in the analysis but reported separately, with a justification for the selection of the non-health effects and an explanation of how they may be valued.

Deciding which non-health effects and costs that fall outside the health budget should be included in primary analyses is troublesome as it is not clear which costs and effects are deemed socially valuable. Where there is no consensus on how to codify societal preferences, conflicts between different elements of social value may result. A particular concern is that health resources, primarily intended to generate ‘health’, may be used to meet other objectives that society may or may not deem to be as valuable as health itself.

As a result of these difficulties in aggregating different effects, primary analyses should only reflect direct costs to the health budget and direct health outcomes. By presenting non-health effects separately, decision-makers are able to draw their own conclusions as to the relative merits of the different effects.

The issue of whether direct costs faced by individuals and their families should be incorporated into an analysis is also relevant. In those health systems in which a significant proportion of healthcare is funded through out-of-pocket (OOP) payments, there may be good reasons to adopt a perspective broader than that of the health care provider when direct OOP costs substitute for costs that would otherwise fall on the health budget. Researchers should take care that alternatives do shift costs to individuals, and they may choose to incorporate direct OOP costs into primary analyses in such cases. Of central concern is the opportunity costs faced in each case and how these are likely to be valued by society (this may also include concern for financial protection).

Society often values both health and non-health effects differently depending upon who benefits (see Section 2.11 on equity). Similarly, direct health intervention costs may impose different opportunity costs depending upon who is funding the intervention. In many LMICs, health interventions rely on direct funding from multiple sources (for instance national ministries of health may fund recurrent costs; whereas international donors may fund drugs or certain technologies). In these instances donor funds (including the direct provision of drugs and health care materials) may form a significant proportion of the budget available for health. It would therefore be inappropriate for the analysis to disregard the direct impact of an intervention of donor funds; however it is important that recognition is made of the different sources of the available health budget.

For these reasons, it is recommended that direct costs, health effects, non-health effects and costs that fall outside the health sector are disaggregated, so that it is clear who are the beneficiaries and the funders of interventions. This facilitates exploration of health system constraints, budget impacts and opportunity costs (see Part 2.10), and equity issues (see Part 2.11), and enables decision-makers to make assessments of the relative values of each in their own jurisdictions.

Non-health effects can be valued and presented in different units. Valuing non-health effects monetarily has the benefit that both outcomes and costs can be represented in a common metric, but there are contentious methodological issues relating to how to appropriately monetarise outcomes. Alternatively, outcomes can be reported qualitatively or valued in other units, and costs reported monetarily. Thorough exploration of how to value non-health effects is therefore recommended.

Method specification
The reported base case should reflect direct health care costs and health outcomes, and the analysis should adopt a disaggregated societal perspective, so that the funders and beneficiaries of health interventions can be clearly identified. Inclusion of particular costs and effects within the societal perspective may differ depending on the decision problem and context.

Direct costs incurred by funders where these costs would otherwise accrue to government health budgets, should be included in the base case. However, additional analyses should explore the impact of donor funding, and direct health care costs should be disaggregated between funders if it is known that they contribute differentially to the delivery of interventions.

OOP costs falling on individuals can be included if these displace costs that would otherwise fall on the health budget, however, the impact of excluding OOP costs should be included in sensitivity analyses.

Where there are believed to be important non-health effects and costs falling outside the health budget these should be included in the analysis but reported separately, with a justification for their selection and an exploration of the ways they can be valued. Any non-health effects and costs that fall outside the health budget that potentially conflict with other social objectives should be highlighted and discussed. For example, a particular intervention may be expected to have productivity benefits but its adoption may have an adverse impact on population equity.

Decision-makers should be made aware that interventions with positive incremental direct health costs are also likely to impose non-health opportunity costs associated with health interventions that are foregone (as interventions foregone are also likely to have non-health effects). For example, an intervention for HIV/AIDS may have non-health effects but if adopted may displace interventions for maternal health that have equal or even greater claims to generating positive social value.

Researchers should ensure that non-health effects and costs are not double counted, especially in cost-utility analyses. Double counting can occur where a particular effect (or cost) of an intervention relative to a comparator is attributed to more than one outcome measure – for example, there are debates as to the extent that productivity effects are already captured in quality of life measures.

Direct health costs should be disaggregated by funder. Both health and non-health effects should be disaggregated by characteristics of recipients and beneficiaries (see Part 2.11 on equity); and, in the case of non-health effects, the sector or area in which these are incurred.