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Questions:
1. What other information would you need in order to evaluate the cost effectiveness (or net monetary benefits) of H4H versus NSA?

2. List three advantages of valuing life-years in monetary terms rather than in QALY terms Treasury has approved additional dedicated funding of $2.5million over 10 years to address the problem of chronic homelessness. This funding is intended to provide services to 1000 clients in local government areas with a significant concentration of chronically homeless persons. Which of the available programmes should this additional funding be spent on? 
Answers:

To calculate the Quality Adjusted Life Years, the following Formula was used:

QALY = Life Years X Utility Weight of Health State X Total Number of Sample Weight

Since, the study participants were transitioning after 3 months, the baseline QALY is calculated at 3 months Life Years or 0.25. The participants transitioned into stable shelters for 6 months. Hence, the QALY is calculated at 0.5 Life Years. The 12 month QALY is again calculated at 0.25 Life years since the participants may move out after the end of study period.  

Table 1 Quality Adjusted Life Years

 

AOD dependent

AOD problems

No AOD problems

Dead

Total QALY

H4H: baseline

16.25

12.58

12.1125

0

40.9425

H4H: 6 month

27.3

23.68

34.425

0

85.405

H4H: 12 month

14.69

11.47

15.725

0

41.885

NSA: baseline

16.25

12.58

12.1125

0

40.9425

NSA: 6 month

33.8

22.94

24.65

0

81.39

NSA: 12 month

16.38

11.285

12.9625

0

40.6275

Monetary and Non Monetary Benefits

Non Monetary Benefits include an improvement in QALY

Table 2 :QALY for Group A (AOD Dependent)

 

QALY From A

QALYFrom B

QALYFrom C

QALY From D

Total QALY

H4H: baseline

16.25

0

0

0

0

H4H: 6 month

27.3

0

0

0

27.3

H4H: 12 month

13.65

0.37

1.275

1

16.295

NSA: baseline

16.25

0

0

0

16.25

NSA: 6 month

32.5

1.85

0

0

34.35

NSA: 12 month

16.38

0

0

3

19.38

Table 3 QALY for Group A (AOD Problems)

 

QALY From A

QALYFrom B

QALYFrom C

QALY From D

Total QALY

H4H: baseline

0

12.58

0

0

0

H4H: 6 month

0

23.68

0

0

23.68

H4H: 12 month

0

11.47

0

0

11.47

NSA: baseline

0

11.47

0

0

11.47

NSA: 6 month

0

1.85

0

0

1.85

NSA: 12 month

0

11.4375

0

3

14.4375

Table4 QALY for Group A (No AOD Problems)

 

QALY From A

QALYFrom B

QALYFrom C

QALY From D

Total QALY

H4H: baseline

0

0

12.1125

0

0

H4H: 6 month

5.2

1.48

24.225

0

30.905

H4H: 12 month

0

0

15.725

0

15.725

NSA: baseline

0

0

12.1125

0

12.1125

NSA: 6 month

0

0.37

24.225

0

24.595

NSA: 12 month

0.13

0.1875

12.325

3

15.6425

Non Monetary Benefits  

Below is the calculation of Monetary Benefit using the Willingness to Pay Given. The Willingness To Paywas multiplied by the number of participants and the life years. Life Years were calculation at 0.25 for Baseline to 6 months, 0.5 years for the month group and 0.25 years for the 12 month evaluation group. The Willingness to Pay(WTP) reflects the Utility to participants in monetary terms. Appropriate WTP is taken for the given calculations. For participants who stay in the same state, the WTP is taken to be the WTP that would be applicable while moving from a worse condition to a better.

Table 4: Monetary Benefits For Group A

AOD Dependent (A)

Intervention

From A

From B

From C

Dead

Total Benefit (in $)

H4H: baseline

0

0

0

0

0

H4H: 6 month

0

0

0

0

0

H4H: 12 month

0

-3050

-46800

0

-49850

NSA: baseline

0

0

0

0

0

NSA: 6 month

0

-30500

0

0

-30500

NSA: 12 month

0

0

0

0

0

 

 

AOD Problems (B)

 

 

 

 

Intervention

From A (

From B

From C

Dead

Total Benefit (in $)

Table 5 Monetary Benefits For Group B

 

AOD Problems (B)

 

 

 

 

Intervention

From A

From B

From C

Dead

Total Benefit (in $)

H4H: baseline

0

195200

0

0

195200

H4H: 6 month

0

3904000

0

0

3904000

H4H: 12 month

0

189100

0

0

189100

NSA: baseline

0

207400

0

0

207400

NSA: 6 month

0

378200

0

0

378200

NSA: 12 month

0

186050

0

0

186050

Table 6 Monetary Benefits For Group B

No AOD problems  (Group c)

ntervention

From A

From B

From C

Dead

Total Benefit (in $)

H4H: baseline

0

0

270750

0

270750

H4H: 6 month

312000

38000

541500

0

891500

H4H: 12 month

0

0

351500

0

351500

NSA: baseline

0

0

270750

0

270750

NSA: 6 month

 

9500

541500

0

551000

NSA: 12 month

7800

4750

275500

0

288050

Table 7 Net Monetary Benefit Lost due to Death

Dead ()D

Intervention

From A

From B

From C

Total Benefit (in $)

H4H: baseline

0

0

0

0

H4H: 6 month

0

0

0

0

H4H: 12 month

-24,500

0

0

-24500

NSA: baseline

0

0

0

0

NSA: 6 month

0

0

0

0

NSA: 12 month

-73500

0

0

-73500

Table 8 Monetary Benefit for Unstable Housing Residents

Unstable Housing

Intervention

Unstable (D)

Supported (E)

Independent (F)

Dead

Total Monetary Benefit

H4H: baseline

0

0

0

0

0

H4H: 6 month

0

0

0

 

0

H4H: 12 month

0

-26100

0

0

-26100

NSA: baseline

0

0

0

0

0

NSA: 6 month

0

0

0

0

0

NSA: 12 month

0

-2900

-10200

0

-13100

Table 9 Monetary Benefit For Participants in Supported Housing

 

 

Supported (E)

 

 

Intervention

Unstable (D)

Supported (E)

Independent (F)

Dead

Total Monetary Benefit

H4H: baseline

0

0

0

0

0

H4H: 6 month

0

1015000

0

0

1015000

H4H: 12 month

0

466900

0

0

466900

NSA: baseline

0

0

0

0

0

NSA: 6 month

0

678600

0

0

678600

NSA: 12 month

0

333500

0

0

333500

Table 10 Monetary Benefit For Participants in Independent Housing

Independent (F)

Intervention

Unstable (D)

Supported (E)

Independent (F)

Dead

H4H: baseline

0

0

0

0

H4H: 6 month

0

0

78000

0

H4H: 12 month

 

9750

39000

0

NSA: baseline

0

0

0

0

NSA: 6 month

0

0

58500

0

NSA: 12 month

0

0

25350

0

The following information would be helpful to understand

  • If there are any personal costs to the patient during the process and the dollar value of those costs
  • If there are any additional costs to the healthcare system  and the dollar value of those costs. 

Valuation in monetary terms has three advantages

  • It is a tangible , quantitative measure instead of an abstract , qualitative measure
  • The quantitative aspect the costs to the health system and therefore , is better for the formulation of policies and budgeting.
Discounting

In order to calculate the Present Value, the Net Present Value function was used in Excel. The NPV function was used because the cash flows are irregular i.e the investment amount differs for every period. 

Table 11 PResent Value of Investment at 5% Discount Rate

H4H

NSA

$0.91

$0.81

 Table 12 Present Values at 10% (in Million $)

H4H Value

NSA

$0.47

$0.41

Arguments for Discounting Costs (Frederick, 1999)

  • Discounting Costs helps factor in the time value of money, and hence, is a more efficient way of calculating the true costs/benefits of an investment.
  • An public investment is made from scarce public resources and , it is really important to make decisions regarding whether  the future benefits are truly preferable to present consumption.
  • Discounting, also, helps understand whether the given investment will provide the desired rate of interest. For example, if a policy states a public good must have at least 10 % of expected returns for approval. Discounting will help understand whether thiscriteria would be fulfilled. 
Markov Models
  1. Absorbing States
  • Unrelated death
  • Related death
  1. Non Absorbing States:
  • AOD Dependent
  • AOD Problems
  • No AOD Problems
Hidden Values

The uncalculated values are calculated as (1- (Sum of all other probabilities of Transition given)

A

1

B

0.96

C

0.83

D

0.95

The following variables must be identified

  • Index of Monetary Costs of all interventions
  • Index of the Monetary Benefit From Every
  • Utility of intervention for group
Decision Rules

Table 13 Incremental costs and QALYs per 100 patients over 10 years versus NSA, ordered by increasing benefit

Intervention

 

(BT - B0) in QALYs

 

 

(CT - C0) in $000s

 

(BT - BN)

(CT -CN)

(CT - CN) / (BT - BN)

Supported accom (SA)

18

350

4

120

30

SA plus integrated GP

22

230

0

30

0

SA plus brief AOD Rx

22

200

2.5

-80

-32

SA plus integrated MHS

24.5

280

0.5

85

170

SA plus brief AOD Rx plus pre-employment counselling

25

195

2

-45

-22.5

SA plus integrated MHS plus job readiness training

27

240

2

-20

-10

SA plus integrated MHS plus job readiness training & supported employment

29

260

0

260

0

Table 14 Incremental costs and QALYs per 100 patients over 10 years versus NSA, ordered by increasing cost

Intervention

(BT - B0) in QALYs

(CT - C0) in $000s

(BT - BN)

(CT - CN)

(CT - CN) / (BT - BN)

SA plus brief AOD Rx plus pre-employment counselling

25

195

170

5

0.0294117647058824

SA plus brief AOD Rx

22

200

178

30

0.168539325842697

SA plus integrated GP

22

230

208

10

0.0480769230769231

SA plus integrated MHS plus job readiness training

27

240

213

20

0.0938967136150235

SA plus integrated MHS plus job readiness training & supported employment

29

260

231

20

0.0865800865800866

SA plus integrated MHS

24.5

280

255.5

70

0.273972602739726

Supported accom (SA)

18

350

332

-350

-1.05421686746988

 A intervention that is both

  • higher is terms of ‘Net Benefits provided’
  • Has Lower Costs

Is the dominating intervention and dominated other interventions. (Miller & Cantor, 2013)

Extended Dominance implies a situation of weak dominance by a strategy. The weak dominance could be due to lower benefits or higher costs as compared to the next best alternative.(Miller & Cantor, 2013)

1)The first two strategies in table 8 are completed dominated since the other strategies are more cost effective and have greater benefits

2) Calculations

Table 15 Calculation of Cost Benefit Strategy with the Exclusion of the non-dominant strategy

Intervention

(BT - B0) in QALYs

(CT - C0) in $000s

(BT - BN)

(CT - CN)

(CT - CN) / (BT - BN)

SA plus brief AOD Rx

22

200

2.5

-80

-32

SA plus integrated MHS

24.5

280

0.5

85

170

SA plus brief AOD Rx plus pre-employment counselling

25

195

2

-45

-22.5

SA plus integrated MHS plus job readiness training

27

240

2

-20

-10

SA plus integrated MHS plus job readiness training & supported employment

29

260

-29

260

0

 

3) The extendedly dominant strategies are

· SA plus brief AOD Rx

· SA plus integrated GP

Table 16 Incremental Costs/ Benefits after Extended Domination

Intervention

(BT - B0) in QALYs

(CT - C0) in $000s

(BT - BN)

(CT - CN)

(CT - CN) / (BT - BN)

Supported accom (SA)

18

350

4

70

17.5

SA plus integrated MHS

24.5

280

0.5

20

170

SA plus integrated MHS plus job readiness training & supported employment

29

260

0

0

0

Intervention Decision

In the analysis above, it is seen that

  • Supported accom (SA) , SA plus integrated GP , SA plus integrated MHS do not have very high benefits and are very expensive.
  • SA plus brief AOD Rx plus pre-employment counseling is very cost effective and has average net benefits.
  • SA plus integrated MHS plus job readiness training, SA plus integrated MHS plus job readiness training & supported employment have high benefits but also very high costs.

Hence, SA plus brief AOD Rx plus pre-employment counseling should be the preferred project since it will allow the state to reach out to more people while retaining quality of care.

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