Economic Evidence for Evidence-Based Practice

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Health Policy and Systems

Economic Evidence for Evidence-Based Practice
Patricia W. Stone, Christine R. Curran, Suzanne Bakken
Purpose: To explicate (a) the types of economic analyses available to nurses, (b) the measurement of costs in different types of economic evaluations, (c) recommendations for standardization, and (d) the assessment of economic evaluations for evidence-based practice. Methods: Five types of economic analyses are reviewed. Recommendations for standardization of cost-effectiveness analyses are included as well as a worksheet for use in critiquing economic evaluations for validity and applicability to clinical settings. Findings: Limited knowledge and a lack of consistent approaches to economic analyses are evident in the nursing and health care literature. However, nurses have not contributed to the conduct of rigorous economic evaluations or research to the extent found in other health care disciplines. Conclusions: Basing nursing practice on the best available evidence is now the expected standard of care. Applying economic evidence to practice requires understanding the methods used to conduct economic evaluations and to analyze the rigor of such evaluations.

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NURSING SCHOLARSHIP, 2002; 34:3, 277-282. ©2002 SIGMA THETA TAU INTERNATIONAL.

[Key words: cost-utility analysis, cost-effectiveness, quality-adjusted life years, evidence-based practice, economic evaluation]

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asing nursing practice on the best available evidence is now the expected standard of care. According to Sackett, Straus, Richardson, Rosenberg, and Haynes, (2000, p. 1), evidence-based practice is the “integration of best research evidence with clinical expertise and patient values.” But should “best practice” be done at all costs? Use of all effective clinical services can exceed available resources. Thus, nurses, as well as other clinicians, need evidence about the cost-effectiveness of care and how to measure economic value of interventions. Applying economic evidence to practice requires understanding of the methods used to assess the rigor of economic evaluations. Thus, the purpose of this article is to discuss the types of economic analyses available to nurses and the measurement of costs in economic evaluations. Recommendations for standardization of cost-effectiveness analyses are presented, as well as a worksheet for critiquing economic evaluations for validity and applicability to clinical settings.

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economic analysis, one needs to compare one or more alternative courses of action. Five different analytic tools are commonly used in assessing the economic effects of new health care interventions or technology (see Table 1). In all these economic outcome evaluations, alternative strategies are compared, and the incremental costs of the competing strategies are computed. The methods differ only in how effects (outcomes) are measured. In the following section, each method will be briefly described, examples from nursing and health care literature will be provided, and the methods will be illustrated using the following clinical research example. Holzemer and colleagues (Holzemer, Henry, Portillo, & Miramontes, 2000) developed the Client Adherence ProfilingIntervention Tailoring (CAP-IT), a structured nursing intervention aimed at enhancing adherence to HIV/AIDS medications. This new intervention is being compared to usual care in the ambulatory setting in a randomized

Types of Economic Evaluations
The terminology used in economic appraisal of health care can be confusing. All economic analyses are fundamentally about choices. Measuring the cost of a new therapy, although useful information as part of an economic analysis, is merely an exercise in accounting, not economics. To have a valid

Patricia W. Stone, RN, PhD, Alpha Zeta, Assistant Professor, School of Nursing; Christine R. Curran, RN, PhD, CNA, Alpha Zeta, Assistant Professor, Director, Informatics Program, Director, Research Resources; Suzanne Bakken, RN, DNSc, FAAN, Alpha Zeta, Alumni Professor of Nursing, Professor of Medical Informatics; all at Columbia University, New York. The authors are grateful to Dr. William Holzemer and colleagues for permission to cite their ongoing study. Correspondence to Dr. Stone, Columbia University, School of Nursing, 617 West 168th Street, New York, NY 10032. E-mail: [email protected] Accepted for publication May 8, 2002. Journal of Nursing Scholarship Third Quarter 2002 277

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Table 1. Economic Analyses
Type of economic analysis Cost-minimization analysis Cost-consequence analysis Cost-effectiveness analysis Cost-utility analysis Cost-benefit analysis (CMA) (CCA) (CEA) (CUA) (CBA) Description Costs are compared between alternatives only. Assumes equal effects. Outcome measure Not measured

Costs and effects are listed separately. $ and separate list of outcomes Effects between alternatives may have different measures. Consequences are measured in the same units Cost-effectiveness ratio such as between alternatives. $/outcome or $/LY gained Effects include both quantity and quality measures. $QALY gained Effects are measured as a single dollar measure. $

Note. $=dollars or other currency. LY=life year. QALY=quality-adjusted life year.

controlled trial. Effects of interest to the investigators include length of life, quality of life, adherence to therapeutic regimen, viral load, and viral resistance. However, if effective, clinicians may more easily use it in practice if the economic analyses are understood. With permission of the principal investigator, we use this example to illustrate alternative approaches to economic analysis. Cost-Minimization Analysis In a true cost-minimization analysis (CMA), only costs are evaluated. The alternatives are assumed to offer equivalent outcomes. For example, in the clinical research scenario, if a CMA were the method chosen, the researchers would assume equivalent outcomes from the CAP-IT intervention and usual care. Therefore, only the costs of the two alternatives would be calculated and compared; potential differences in adherence rates and other effects of interest would not be included. Because CMA is based on the assumption that clinical outcomes are the same, it is essentially a search for the least costly alternative—the minimal cost strategy. However, CMA is rarely an appropriate method of analysis because outcomes are not often considered equivalent. A review of literature indicated that most economic evaluations labeled as CMAs were designed to measure some level of effectiveness of the strategies being compared. For example, while measuring the incremental costs of practice guidelines for arterial blood gases in intensive care, the authors also included a measure of appropriateness of testing (Pilon et al., 1997). Therefore, this analysis is not a true CMA. Cost-Consequence Analysis In a cost-consequence analysis (CCA), the consequences of two or more alternatives are measured as well as the costs, but costs and consequences are listed separately. The analyst provides a matrix of the outcomes by each strategy evaluated. This comparison is done so decision makers can form their own opinions about the relative importance of the findings. To evaluate the effects of CAP-IT using CCA, the costs related to both CAP-IT and usual care would be computed. In addition, the consequences of the two alternative interventions would be measured using an appropriate scale for each consequence (e.g., medication adherence rate, quality of life, viral load, viral
278 Third Quarter 2002 Journal of Nursing Scholarship

resistance). Seminal work on early discharge of low-birth-weight infants whose care was managed by advanced practice nurses (APNs) compared to traditional care is a nursing example of a CCA (Brooten et al., 1986). Cost-Effectiveness Analysis In cost-effectiveness analysis (CEA), outcomes are measured in the same units between alternatives, such as dollars per life-year ($/LY) gained or cases avoided. Costs and effects are then summarized in a cost-effectiveness ratio, which is calculated using the following formula: Costeffectiveness ratio = (C1-C2)/(E1-E2) where C1 equals the cost of the new intervention, C2 equals the cost of the comparator, E1 equals the effect of the new intervention, and E2 equals the effect of the comparator. Examples of CEA can be found in the nursing literature (Bissinger, Allred, Arford, & Bellig, 1997; Stone & Walker, 1995). However, like many published CEAs, the methods employed in these analyses have been found wanting because of lack of adherence to recommendations, for example, using a standard outcome measure such as $/LY (Chang & Henry, 1999). In our clinical research scenario, the researchers could chose one main outcome of interest and calculate a costeffectiveness ratio. As with CCA, the costs associated with CAP-IT and usual care would be calculated. The CEA ratio would indicate the differences between CAP-IT and usual care in costs and in effects on the target measure (e.g., $/ adherence rate). Additionally, if the researchers hypothesize that length of life might be extended for participants receiving the structured CAP-IT nursing intervention, using $/LY gained would be appropriate. In health care, $/LY gained is often used as the common unit of analysis. One advantage of using a common unit for analysis is that comparisons can be made across groups or settings. Results of separate analyses from various health care settings can then be, at least in theory, compared across patient populations (Graham, Corso, Morris, Segui-Gomez, & Weinstein, 1998; Tengs & Wallace, 2000). However, one disadvantage of $/LY gained is that 1 year of life in an altered health state is considered equal to any other year of life. Dollars per life year gained includes only length of survival, not quality-of-life issues such as patient inconvenience or suboptimal health states.

Economic EBP

Cost-Utility Analysis Cost-utility analysis (CUA) is a special type of costeffectiveness analysis that includes measures for both quantity and quality of life. For the qualitative measure, individual preferences or utilities for different health outcomes are sought and included. Preferences generally indicate health states on a scale from 0 to 1. Perfect health is equal to 1 and death is a 0. Methods for eliciting utilities vary and are the focus of a unique body of science and research (Bosch, Hammitt, Weinstein, & Hunink, 1998; Gold, Siegel, Russell, & Weinstein, 1996; Hornberger & Lenert, 1996; Patrick, Starks, Cain, Uhlmann, & Pearlman, 1994). Increasingly, utilities are being collected for a variety of health states (Badia, Diaz-Prieto, Rue, & Patrick, 1996; Fryback et al., 1993; Lohr et al., 1996; Tengs & Wallace, 2000). The preference weights are then multiplied by the amount of time experienced in that health state. The outcome measure is quality-adjusted life years (QALYs). Table 2 shows the calculation of a QALY.

Effectiveness in Health and Medicine (Gold et al., 1996; Weinstein, Siegel, Gold, Kamlet, & Russell, 1996; Siegel, Weinstein, Russell, & Gold, 1996; Russell, Gold, Siegel, Daniels, & Weinstein, 1996) because they include both the quantity and quality of life and they require standardized measurement. Thus, comparison of people within and across disease states may be possible (Neumann et al., 2000; Chapman, Stone, Sandberg, Bell, & Neumann, 2000; Stone, Teutsch, et al., 2000). Cost-Benefit Analysis In cost-benefit analysis (CBA), outcomes are measured according to some monetary unit. A single-dollar figure, representing costs minus benefits, is calculated. The challenge with this approach is that many situations in health care are difficult to quantify financially. Some benefits require a value judgment. Furthermore, ethical concerns complicate assigning a dollar amount to the value of human life (Kenkel, 1997; Pauly, 1995). Because of these issues, the use of CEA is reported more often in the literature than is CBA (Elixhauser, Halpern, Schmier, & Luce, 1998). To use CBA to compare CAP-IT and usual care, dollar values would be assigned to the potential benefits (e.g., quality of life, decreased viral load) selected for inclusion in the analysis. Costs minus benefits is the metric for comparing CAP-IT and usual care. Perspectives on the Analysis and Costs The descriptions of the various economic methods, and illustration with the case scenario, indicate similarities and differences among these analytic tools. To complete any of the above analyses, the researcher must assign a value to the inputs or costs (Luce & Elixhauser, 1990). Table 3 shows some of the cost components frequently considered in CEAs. The “worth” of cost varies depending on the perspective from which the analysis is done (Gold et al., 1996; Stone, 2001a; Stone, 2001b). For example, from a patient’s perspective, cost may be measured as money and time spent, whereas an organizational administrator might include items such as supply costs, staffing costs, and potential patients gained or lost. Thinking more globally, one could also take a societal viewpoint. This perspective requires an attempt to measure the actual economic value (the social opportunity cost) of the resources that are consumed. Whether one uses a societal perspective or a health care focus, direct health care costs should include both costs related to the intervention itself and those associated with net downstream costs. For example, direct health care costs associated with a flu shot program would include the costs of obtaining and administering the vaccine as well as downstream costs (or savings), such as hospitalizations, outpatient visits, and other treatment costs associated with the occurrence of flu and possible complications such as pneumonia. Furthermore, when conducting an analysis from the societal perspective, costs and effects are included regardless of who accrues them. Therefore, costs other than health care costs are included, such as transfer costs. Transfer costs are resources that have been redistributed and not consumed. They
Journal of Nursing Scholarship Third Quarter 2002 279

Table 2. Calculation of Quality Adjusted Life Years (QALY)
Quality adjusted life years Person 1 Person 2 Utility 0.6 0.9 x x Life expectancy 40 years = 40 years = QALYs 24 QALYs 36 QALYs

Expecting that a person would sustain the same quality of life consistently over time is not realistic. People experience changes in health status. To calculate a QALY over time, individual QALYs are calculated for the time spent in each health state weighted by the quality of life in that health state. These scores are then summed to arrive at an overall QALY for each person. Because of the complexity of these equations, decision-analytic modeling techniques are often used (Stone, 1998). In a review of CUA literature, only one study was found in a nursing journal (Neumann, Stone, Chapman, Sandberg, & Bell, 2000). In this study, the investigators compared psychiatric nurse specialists working in the community to general physician practitioner care in an office setting (Gournay & Brooking, 1995). Although the use of this methodology is commendable, many of the recommended methods for CUA were not followed, such as correctly calculating incremental costs (Stone, 1998). An analysis of smoking cessation interventions, including cost-effectiveness ratios both as $/LY and $/QALY, is an excellent example of how to conduct a CEA and a CUA (Cromwell, Bartosch, Fiore, Hasselblad, & Baker, 1997). In our clinical research example, the CAP-IT researchers might choose to conduct a CUA because both quality of life and length of life were being measured. However, if this decision is not made a priori, the quality-of-life measurement might not be applicable (Hornberger et al., 1996). Composite outcome analyses, such as $/QALY, have been recommended by the United States Public Health Panel on Cost-

Economic EBP

Table 3. Possible Cost Components for Inclusion in Economic Analyses
Cost components Direct health care costsa Intervention Hospitalization Outpatient visits Long-term care Other health care Patient time receiving care Direct nonhealth care costs Transportation Family or caregiver time Social services Productivity Other

costs from different years must be calculated and placed into a standard year format using of the consumer price index (CPI) inflator found on the U.S. Department of Labor Web page (http://www.bls.gov).

Recommended Standardization
To standardize measures within cost-effectiveness ratios, a standard set of methodological practices, called a reference case, has been recommended (Gold et al., 1996; Russell et al., 1996; Siegel et al., 1996; Siegel et al., 1997; Weinstein et al., 1996). An ideal reference case would indicate: (a) a societal perspective (incorporating all costs and all health effects regardless of who incurs them); (b) results in dollars per QALY gained; (c) downstream net costs (and savings); (d) discount costs and QALYs at an annual rate of 3%. Therefore, costs other than those associated with health care are included, such as direct nonhealth care costs (Table 3); and (e) examination of uncertainty by conducting at least a minimal set of sensitivity analyses varying the discount rate, utility weights, and other appropriate variables. The utility or qualityof-life adjustment factor should be obtained from communitybased populations. Community preferences should be used because they are more likely to represent societal preferences rather than organizational or individual preferences. Because data on community preferences are not always available, may be prohibitively costly to obtain, and matter to different degrees in different analyses, the federal panel noted that patient preferences in certain situations might be acceptable in a reference case analysis. Assessing Economic Evidence for Applicability to Practice Evaluation of new services or programs generally includes consideration of costs. CEA is often used in these analyses because it indicates the expected benefits, harms, and costs of alternative strategies to improve health. However, CEA analyses tend to be complex. To facilitate evidence-based resource allocation decisions, guidelines for the use of economic evaluations have been developed (Drummond & Jefferson, 1996; Drummond, O’Brien, Stoddart, & Torrance, 1997; Drummond, Richardson, O’Brien, Levine, & Heyland, 1997; Drummond, Torrance, & Mason, 1993; O’Brien, Heyland, Richardson, Levine, & Drummond, 1997; Sackett et al., 2000). A worksheet based on these guidelines is presented in Table 4. The worksheet is designed for use in critiquing economic evaluations for validity and applicability to clinical settings. It follows evidence-based practice rules, and it can help nurses assess reports for validity, significance, and applicability to a specific practice environment (Sackett et al., 2000). Economic evidence should be reviewed just as effectiveness evidence has been reviewed, such as in the Cochrane collaboration collection (Mowatt, Grimshaw, Davis, & Mazmanian, 2001). The U.S. Preventive Services Task Force has initiated a process for systematically reviewing economic evidence when making recommendations about clinical

Note. aNot recommended for inclusion in cost-utility analyses by the United States Public Health Service’s Panel on Cost-Effectiveness in Health and Medicine (Gold, Siegel, Russell, & Weinstein, 1996). Adapted from Stone, Chapman, et al., 2000. Copyright 2000 by WTAHC.

may be appropriate to include if the analysis is conducted from the governmental perspective, but, in general, transfer costs are not routinely considered to be a cost to society. Resource utilization is often determined by using claims data (Lave et al., 1994). Although claims data are not without errors or variations in coding practices, these data may be the best source available. If a financial information system is in use, specifically a cost accounting system, data should be available from it. Direct health care cost components, such as variable costs (e.g., staffing and supplies) and fixed overhead costs (e.g., rent and percentage of administration costs), can be retrieved from this database. For resource utilization by individuals, selfreport diaries or retrospective surveys of costs can be effective (Stone, Chapman, Sandberg, Liljas, & Neumann, 2000). In the health care environment, charges generally do not equal true costs to the organization. Third-party payors negotiate payment for services rendered based on the cost of the service and a profit margin, in both for-profit and not-forprofit institutions. For the health care institution to generate more revenue, fee-for-service customers are often asked to pay full charges, that is, a higher rate of pay. This practice is called “cost shifting.” Therefore, when calculating institutional costs, an adjustment to charges is usually necessary to show true costs to the organization. All U.S. hospitals receiving federal reimbursement list costto-charge ratios (CCRs). These ratios are calculated by dividing the total costs in a cost center by the total charges for the same resource. CCRs are recognized as a gross adjustment to charges. They are better measures than are charges alone, but they are not as accurate as cost-accounting systems. Standardization of all costs to the same currency and year is essential. A helpful Web site to convert non-U.S. currency figures into U.S. dollars using the appropriate foreign exchange factor for that year is http://www.stls.frb.org/fred/ data/exchange.html. Additionally, because $1 in 1980 does not have the same purchasing power as a current dollar, the
280 Third Quarter 2002 Journal of Nursing Scholarship

Economic EBP

Table 4. A Worksheet to Assist in the Evaluation of Economic Evidence for Practice
I. Is this a valid economic evaluation? 1. Are the alternative courses of action well-defined? 2. Is the perspective of the analysis stated and appropriate costs considered? 3. Is the appropriate economic evaluation method employed? 4. If CUA methods are employed, are the preferences or utilities based on community or patient preferences? 5. Does the report cite good evidence on the efficacy and accuracy of the alternatives? 6. Are sensitivity analyses conducted on effectiveness, costs, and utility estimates? II. Are the valid results from this economic analysis important? 1. Are the resulting costs or costs/unit of health gained impressive? 2. Are the conclusions unlikely to change with sensible changes in costs and outcomes? (That is, are the results robust to the sensitivity analyses?) III. Should this economic analysis be applied in your practice? 1. Do the costs in the report apply in your own setting? 2. How do the results compare to other interventions?

clinical services will likely exceed available resources. Decisions about health care delivery will increasingly require assessing the cost-effectiveness of health care services. However, despite repeated recommendations for standardization, methods vary and frequent mislabeling of analysis has been found, resulting in suspicions about the credibility and comparability of studies (Gerard & Mooney, 1993; Gerard, Smoker, & Seymour, 1999; Mason, Drummond, & Torrance, 1993; Neumann et al., 2000). Economic evaluations (especially CEAs and CUAs) can be valuable tools for nurses and health policymakers to incorporate into their evidence-based decisions.
References Badia, X., Diaz-Prieto, A., Rue, M., & Patrick, D.L. (1996). Measuring health and health state preferences among critically ill patients. Intensive Care Med., 22, 1379-1384. Bissinger, R.L., Allred, C.A., Arford, P.H., & Bellig, L.L. (1997). A costeffectiveness analysis of neonatal nurse practitioners. Nursing Economics, 15, 92-99. Bosch, J.L., Hammitt, J.K., Weinstein, M.C., & Hunink, M.G. (1998). Estimating general-population utilities using one binary-gamble question per respondent. Medical Decision Making, 18, 381-390. Brooten, D., Kumar, S., Brown, L.P., Butts, P., Finkler, S.A., BakewellSachs, S., et al. (1986). A randomized clinical trial of early hospital discharge and home follow-up of very-low-birth-weight infants. New England Journal of Medicine, 315, 934-939. Chang, W.Y., & Henry, B.M. (1999). Methodologic principles of cost analyses in the nursing, medical, and health services literature, 19901996. Nursing Research, 48, 94-104. Chapman, R.H., Stone, P.W., Sandberg, E.A., Bell, C., & Neumann, P.J. (2000). A comprehensive league table of cost-utility ratios and a subtable of “panel-worthy” studies. Medical Decision Making, 20, 451467. Cromwell, J., Bartosch, W.J., Fiore, M.C., Hasselblad, V., & Baker, T. (1997). Cost-effectiveness of the clinical practice recommendations in the AHCPR guideline for smoking cessation. Agency for Health Care Policy and Research. JAMA, 278, 1759-1766. Drummond, M.F., & Jefferson, T.O. (1996). Guidelines for authors and peer reviewers of economic submissions to the BMJ. The BMJ Economic Evaluation Working Party. British Medical Journal, 313, 275-283. Drummond, M., O’Brien, B., Stoddart, G.L., & Torrance, G. (1997). Methods for the economic evaluation of health care programmes (2nd ed.). Oxford, England: Oxford Medical Publications. Drummond, M.F., Richardson, W.S., O’Brien, B.J., Levine, M., & Heyland, D. (1997). Users’ guides to the medical literature. XIII. How to use an article on economic analysis of clinical practice. A. Are the results of the study valid? Evidence-Based Medicine Working Group. JAMA, 277, 1552-1557. Drummond, M., Torrance, G., & Mason, J. (1993). Cost-effectiveness league tables: More harm than good? Social Science Medicine, 37, 33-40. Earle, C.C., Chapman, R.H., Baker, C.S., Bell, C.M., Stone, P.W., & Sandberg, E.A. (2000). Systematic overview of cost-utility assessments in oncology. Journal of Clinical Oncology, 18, 33023317. Elixhauser, A., Halpern, M., Schmier, J., & Luce, B.R. (1998). Health care CBA and CEA from 1991 to 1996: An updated bibliography. Medical Care, 36, MS1-147. Fryback, D.G., Dasbach, E.J., Klein, R., Klein, B.E., Dorn, N., Peterson, K., et al. (1993). The Beaver Dam Health Outcomes Study: Initial catalog of health-state quality factors. Medical Decision Making, 13, 89-102. Gerard, K., & Mooney, G. (1993). QALY league tables: Handle with care. Health Economics, 2, 59-64. Gerard, K., Smoker, I., & Seymour, J. (1999). Raising the quality of costutility analyses: Lessons learnt and still to learn. Health Policy, 46, 217238. Gold, M.R., Siegel, J.E., Russell, L.B., & Weinstein, M.C. (1996). Costeffectiveness in health and medicine. Oxford, England: Oxford University Press. Journal of Nursing Scholarship Third Quarter 2002 281

Note. Adapted from Stone, 2002. Copyright 2002 by Greenbranch Publishing.

preventive services (Harris et al., 2001; Saha et al., 2001). This evidence will be used in recommendations made in the forthcoming 3rd edition of the Guide to Clinical Preventive Services, scheduled for publication in 2003. A comprehensive systematic review of CUA evidence has been conducted (Chapman et al., 2000; Earle et al., 2000; Neumann et al., 2000a; Stone, Chapman, et al., 2000). A complete description of the project is available at http://www.hsph.harvard.edu/organizations/hcra/ cuadatabase/intro.html. In that review, results across analyses are standardized, which allows for better comparability of the results. Because the review is comprehensive, the results may be used when assessing what economic evidence exists in a certain area and how results compare to the cost-effectiveness of other accepted interventions. Nurses’ Contributions to Economic Evidence Nursing is lagging behind other disciplines in evidence of rigorous economic analysis. This deficit may exist because of the complexity of analyses and variations in the methods employed. Nurses directly influence costs and savings as well as effectiveness of care. Thus, understanding methods of economic evaluation is important. The ability to assess and contribute to rigorous economic evidence is an essential competency for responsible practice.

Conclusions
As health care technology continues to expand and available dollars decrease, the costs of using all effective

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