Recently Published: Local Health Care Expenditure Plans and their Opportunity Costs

Recently published in Health Policy is an article by Sarah Karlsberg Schaffer, Jon Sussex, Nancy Devlin and Andrew Walker entitled “Local health care expenditure plans and their opportunity costs”.

Recently published in Health Policy is an article by Sarah Karlsberg Schaffer, Jon Sussex, Nancy Devlin and Andrew Walker, entitled “Local health care expenditure plans and their opportunity costs”. The article is an updated version of an OHE Research Paper.

The paper is focused on the cost-effectiveness threshold: the minimum level of cost-effectiveness for a particular medicine or health care service below which use in the NHS is assumed to displace more quality-adjusted life years (QALYs) than are gained. The value of £20,000-£30,000 per QALY gained currently used as a decision guide by health technology assessment (HTA) agencies in the UK is based on limited empirical evidence.

The authors test the feasibility of estimating the “true” cost per QALY threshold using information on the cost-effectiveness of “marginal” services in NHS Scotland – those planned to receive significant investment or disinvestment in the coming financial year. They also explore how the NHS makes spending decisions and the role of cost per QALY evidence in this process. 

The information for the study is derived from data on spending plans collected annually by the Scottish Government from all local NHS Boards, supplemented with information on prioritisation processes from interviews with Finance Directors. Of the 33 marginal services identified from these two sources, the authors were able to conduct literature searches for the cost-effectiveness of 15 of them.

The first key finding of the paper is that the cost-effectiveness of marginal services varies hugely, as is evident from Figure 1 (below). For this reason, it was not possible to obtain a reliable estimate of the cost per QALY threshold.

This is result is unsurprising given the second key finding: cost-effectiveness evidence was very rarely used to justify expenditure plans, which were driven by a range of other factors including Scottish Government initiatives, patient convenience, political pressure and centrally-led waiting time targets.

Figure 1: Cost per QALY of marginal services in NHS Scotland 2012/13

OVS = Orthoptic vision screening; PET = Positron emission tomography; AAA = Abdominal aortic aneurysm screening; PBT: Proton beam therapy; CPAP = Continuous positive airway pressure; ABI = Alcohol brief interventions

These results highlight the differences in objectives between HTA bodies (which make their recommendation decisions primarily on the basis of cost per QALY evidence) and local health service decision-makers. This has important implications for the interpretation of the threshold: if the NHS does not make spending decisions based on cost per QALY evidence, then a cost-effectiveness threshold expressed in QALYs is unlikely to represent the true opportunity cost of HTA decisions.

Finally, the paper highlights the difficulty experienced by the authors in attempting to locate evidence on the cost-effectiveness of various NHS services. The authors argue, therefore, that even if it were desirable, the use of cost-effectiveness evidence at local level would be highly challenging without extensive investment in health economics resources.

Reference: Karlsberg Schaffer, S., Sussex, J., Devlin, N. and Walker, A., 2015. Local health care expenditure plans and their opportunity costs. Health Policy, 119(9), pp.1237-44.

Access the full paper here.