implementing economic thinking to bring about improvement

Implementing economic thinking to bring about improvement

National Leading Transformation of Health and Wellbeing Programme

6th September 2012

“Promoting and delivering public health intelligence”

Structure

• What do we mean by economic thinking?• Efficient commissioning• Use of health intelligence to prioritise

investment • Anticipating demand to improve health and

reduce health inequalities• Using public health evidence and Derek

Wanless’ legacy• International comparisons


A challenge (to test me on at the end!)

• Is anything I have talked about today only of relevance to the NHS?

Hypothesis 1

• The NHS remains light years away from basing its decisions on economic evidence


Theory and practice

• Does NICE use economics? - yes• Is NICE guidance consistently implemented?

– no• Does the NHS use cost per QALY information

to make investment decisions? – no• Does the NHS use economic thinking? -

rarely



Economics as a discipline

• Economics is primarily a way of thinking in a structured way about problems– what are you trying to achieve (objectives)?– what outcomes are of relevance?– what resources are involved?– were the outcomes achieved efficiently?– who benefited from those outcomes (equity /

inequality)


Economic thinking

• scarcity and choice• opportunity cost• cost-effectiveness and efficiency do not

equate with cost-cutting• being clear what we mean by efficiency• cost-effectiveness / cost benefit?• cost per QALY and NICE guidance


Opportunity cost

• is a direct consequence of resources being scarce

• if scarce resources are used to produce a good or service, those resources cannot be used to produce other goods or services

• the opportunity cost of using resources in a particular way is defined as the benefits that would have resulted from their best alternative use


Efficiency (1)

• can be considered in relation to:– what health & social care is commissioned– how health & social care are provided

• technical efficiency is concerned with:– using inputs (people, buildings, equipment etc) in

a way that produces the most output from that set of inputs, or

– producing a set amount of output using the fewest inputs


Efficiency (2)

• allocative efficiency:– is a much broader concept and difficult to pin down– if we achieved it, it implies that we could not make any

change without making at least one person worse off– e.g. the amount we spend on primary school education in

relation to the outcomes we get from this spend is optimal: if we changed it then we would make things worse

– e.g. the amount we spend on heart disease and cancer in relation to the outcomes we get from this spend is optimal: if we changed it then we would make things worse

– not exactly practical!• but useful in terms of considering whether the right

things are being commissioned (as opposed to how efficiently they are being delivered)

Cost-effectiveness and cost benefit

• cost-effectiveness analysis– has a particular meaning in economics

– compares the cost of interventions aimed at achieving a single, common outcome

– outcome measured in natural units such as years of life gained or symptom-free days

• cost benefit analysis requires outcomes to be valued in monetary terms and is problematic in the health field– has been used traditionally in the transport and environment fields

– and traditionally avoided in the health field

• different NHS and local government cultures and language in the new public health system



Cost utility analysis

• is a special case of cost effectiveness analysis

• where the unit of outcome is the Quality Adjusted Life Year (QALY)– the QALY is a summary measure of outcome that

combines aspects of quality of life with life expectancy (or survival)

• standard methodology used by NICE• cost per QALY ‘league tables’


Questions to ponder

• If we had cost / QALY information for every conceivable intervention, would NHS and local government decision-makers use it?

• Which is the bigger problem: – (1) the lack of information, or– (2) the culture of using evidence / the incentives to

use evidence?

Hypothesis 2

• The key problem is cultural, combined with a capacity / capability shortfall


Efficient commissioning


Relevant commissioning competencies

WCC competency area

Description

3 Proactively seek and build continuous and meaningful engagement with the public and patients, to shape services and improve health (public preferences?)

4 Lead continuous and meaningful engagement with clinicians to inform strategy and drive quality, service, design and resource utilisation (incentive mechanisms?)

6 Prioritise investment according to local needs, service requirements and the values of the NHS

7 Effectively stimulate the market to meet demand and secure required clinical, health and well-being outcomes

8 Promote and specify continuous improvements in quality and outcomes through clinical and provider innovation and configuration

11 Make sound financial investments to ensure sustainable development and value for money


Health Intelligence Yorkshire & Humber (HIYAH) programme

• http://www.yhpho.org.uk/default.aspx?RID=10300• programme of work negotiated with our 14 PCT Chief

Executives (now 5 clusters)• range of training activities and projects • health economics work particularly around prioritising

investment:– prioritisation framework– programme budgeting factsheets and tool (SPOT)– step-by-step guide to marginal analysis (March 2010)

• HIYAH programme now integrated with Quality Observatory work programme– cluster QIPP packs central to this


Central questions at all levels of commissioning (NHS)

• What should be commissioned?– how much should be spent on cancer or mental

health?– how much should be spent on primary and

secondary prevention in diabetes, rather than treating complications?

• How should services / care be provided?– who is best-placed to give lifestyle advice?– who should screen for diabetic retinopathy?– should a procedure be provided on a day case

basis?


Parallel decisions in and across other sectors

• How much should be spent on primary and secondary education?

• Is the provision of nursing home care optimal?• What are the most efficient road safety

measures to minimise childhood accidents?• What is the optimal configuration of adult

mental health services?• Critical role for Health & Well-Being Boards to

challenge investment patterns


What is needed for efficient commissioning?

• Accurate and timely health intelligence• Alignment of incentives

– conflict between ‘Payment by Results’ in the hospital sector while we encourage more preventative care to keep people out of hospital

– health and social care working together (avoiding cost-shifting)

• Effective clinical engagement• Realistic time horizons

– recognising the need for short-term changes without losing focus on longer-term wider determinants

• More focus on quality and outcomes data– routine use of health status measurement tools


Cost-effective (de-)commissioning

• statutory duty for Joint Strategic Needs Assessment (JSNA)– consistent with a broader perspective for evaluation– work with partners to ensure focus on primary prevention as well as

designing optimum care pathways• NICE / NHS Evidence

– evidence of what works in terms of both effectiveness and cost-effectiveness

– problem of no evidence vs. evidence that intervention doesn’t work• areas of potential disinvestment

– socio-legal framework needs to be clear and understood before we start drawing up lists of what will not be commissioned

– process of decision-making is crucial• system incentives?• use of Programme Budgeting and Marginal Analysis (PBMA)

techniques - a tool to aid some of the allocative efficiency issues

Using health intelligence

Programme budgeting example


Background

• Department of Health commissioned the Association of PHOs to produce factsheets and quadrant tool

• Project led by Yorkshire & Humber PHO• Programme Budgeting Factsheets have been

developed for all PCTs, in conjunction with a Spend and Outcome Tool (SPOT)

• Both available from the YHPHO website:http://www.yhpho.org.uk/resource/view.aspx?RID=49488

• The tool contains more details about the information contained in the factsheets and allows PCTs to select different outcome measures for some programmes, which can be displayed on the quadrant chart

http://www.yhpho.org.uk/resource/view.aspx?RID=49488


The links at the bottom of page 1 ofthe Factsheet allow access to the

further Programme Budgeting information and work in the electronicversion of the Factsheet and the tool

The second link is to an nwwaddress and so is only accessible

to NHS users


The quadrant chart on page 2 uses the default outcome measures which are listed

in the Health Outcome and Expenditure Tool. Other outcome measures are listed for some programmeswithin the tool and these can be chosen on the main

menu within the Tool and the quadrant chart recalculated

As 22 programmes are shown on one chart there is inevitably some crowding and

overlapping of labels. If the labels can’t be seenon the Factsheet you can go to the tooland follow the instructions in the How to

use the Tool guide


For each indicator here, the spine chart shows how much the PCT

differs from the England mean . It also shows the level of variation across Yorkshire and Humber

for each indicator

You can compare the PCT with a groupof comparable PCTs (ONS Cluster). For each indicator here, the spine chart shows how the

PCT compares with the rest of the PCTs in its cluster .

It also shows the level of variationacross the cluster group for each

indicator


This chart compares the PCT spend with itsONS Cluster group. If the Miscellaneous Expenditure

category Is significant PCTs may want to take steps to reduce it as it may give a less accurate picture

of expenditure on each programme.

Commissioning for Value intelligence packs

YHPHO Commissioning for Value Intelligence Packs - Plan Background

Our approach - why is value important?

• CCGs are responsible for improving quality of healthcare and healthcare outcomes for their population within a fixed budget

• Demand for healthcare is increasing at a faster rate than the budget is increasing• Therefore in order to succeed it is vital to ensure that resources are used as

efficiently as possible and that value to the patient and population is maximised.

Background

Maximising value is one of the major challenges to all health services

Muir Gray identifies 5 major challenges:• Unwarranted variation in quality and outcome• Harm to patients• Waste and failure to maximise value• Health inequalities and inequity• Failure to prevent disease

Gray JAMG (2011) How to build healthcare systems Offox Press Oxford

Elements of value

Methodology used to produce this packM

ethodology

An intelligence driven transformation processN

ext Steps

Anticipating demand to improve health and reduce health

inequalities


Prevalence modelling work

• modelled estimates of coronary heart disease (CHD), stroke, hypertension and chronic obstructive pulmonary disease (COPD) at GP practice level

http://www.apho.org.uk/resource/item.aspx?RID=77180

• diabetes prevalence model

http://www.yhpho.org.uk/resource/browse.aspx?RID=9906


Joint Strategic Needs Assessment (JSNA)

• Joint Strategic Needs Assessment describes a process that identifies current and future health and well-being needs in light of existing services, and informs future service planning taking into account evidence of effectiveness

• Joint Strategic Needs Assessment identifies 'the big picture' in terms of the health and well-being needs and inequalities of a local population


APHO JSNA resource pack

• Produced in 2008• 5-part resource pack:

– JSNA core dataset– statistical validity– projection methods for use in JSNA– data-sharing for JSNA– measuring health inequalities

• Available from:http://www.apho.org.uk/resource/view.aspx?RID=53885

http://www.apho.org.uk/resource/view.aspx?RID=53885


HIYAH programme projects

• JSNA small area dataset for Y&H region• analyses of local populations using geo-

demographic segmentation tools• health intelligence toolkit for cardiac and

stroke networks across Y&H regionhttp://www.yhpho.org.uk/resource/view.aspx?RID=105148

APHO Health Inequalities Intervention Tool


Model in 2 parts

• Part 1: view gap in life expectancy between the most deprived quintile in the local authority selected and the choice of comparator (5 in total)

• Part 2: model the impact of four interventions on life expectancy in the local authority and the most deprived quintile of the local authority selected:– Smoking cessation – Interventions to reduce infant mortality – Treatment with antihypertensives – Treatment with statins


Adding resource use information

• identifying and supporting people most at risk of dying prematurely (NICE guidance September 2008)– proactive case-finding and retention and improving access

to services in disadvantaged areas– focus on smoking cessation and statins

• what do we know about the cost-effectiveness of targeting different age groups for smoking cessation services?

• reductions in price of generics (statin prescribing) mean that cost-effectiveness is likely to be more favourable

• but the key issue is incremental cost-effectiveness in proactively case-finding in ‘disadvantaged groups’

• ….and there remains an important trade-off between efficiency and equity– i.e. it may well be less cost-effective to case-find and intervene in

more disadvantaged groups / areas

The reality of working with public health evidence


Some pet dislikes

• “we don’t have sufficient evidence upon which to make decisions” (A)

• “we know all we need to know – we just need to implement” (B)

A B

• there is a spectrum, and the truth is we are

somewhere between these two extremes


NICE’s Public Health Interventions Advisory Committee (PHIAC)

• “considers and interprets evidence on the effectiveness and the cost effectiveness of public health interventions. It produces recommendations on the use of public health interventions in England in the NHS, local government and in the broader public health arena”

• Examples of published guidance:– Promoting mental well-being at work– Social and emotional well-being in secondary education– Identifying and supporting people most at risk of dying prematurely– Substance misuse– Workplace interventions to promote smoking cessation– School-based interventions on alcohol– Maternal and child nutrition– Community engagement


Perspective of NICE’s public health guidance

• Often the costs of public health interventions – and the benefits – will be borne outside the NHS, predominantly by other public sector organisations. As a result, it is necessary to adopt a public sector perspective. As defined by NICE’s statutory instruments, it shall perform: “such functions in connection with the promotion of excellence in public health provision and promotion and in that connection the effective use of resources available in the health service and other available public funds”.

• This public sector perspective differs from that used for NICE technology appraisals and clinical guidelines: these only consider the health service. However, for some public health guidance, an NHS and PSS perspective may be sufficient to capture all the major costs and benefits.

Extract from: Methods for development of NICE public health guidance (2009)

The reality of working with public health evidence

• dearth of evidence in many areas (resisting the temptation to be negative)

• the caricature of 80,000 studies of effectiveness, narrowed down to 1,500, subsequently 225 studies obtained in full, and applying the exclusion criteria, we ended up with 4 studies

• how to deal with grey literature and other ‘evidence’ of what works

• effectiveness and cost-effectiveness studies from different literatures

• huge research need for primary studies of effectiveness and cost-effectiveness where ethical to do so



Economic modelling

• often required due to the complete absence of cost-effectiveness studies

• frequently showing relative cost-effectiveness of PH interventions - even with large variations in cost or effectiveness in the sensitivity analysis

• need for more consistency in the calculation of incremental cost-effectiveness ratios

• comparison with existing practice (often unclear)• identifying relative cost-effectiveness by target group

Hypothesis 3

• There need to be incentives in the system to encourage the use of health economics research findings, and this also needs to address the process by which evidence is implemented



Where do we need to get to?

• Evidence we can trust (NICE has taken us a long way here)

• A socio-legal framework within which it is safe to make priority-setting decisions

• Incentive mechanisms and an NHS culture that supports such decisions (and doesn’t blame when things go wrong)

• Effective sharing of information, doing once at the most appropriate level

What is needed?

• asking the right questions • knowledge management expertise to:

– synthesise data and evidence to create timely health intelligence

• business cases for public health investment• identifying the impact of cost-effective interventions on

health inequalities• presenting intelligence effectively to different audiences• knowledge transfer skills to make a difference to care /

service delivery


Some truths in the use of health intelligence by the NHS

• we don’t make the best use of what we have– using what is already there– making connections between things that are already there

• we make excuses that we don’t have sufficient information upon which to make decisions

• we commission lots of management consultants, but they don’t have the answers either….

• ….so we muddle through repeating historical patterns of care

• we re-invent ‘made in NHS xxxxxx’• knowledge transfer skills needed


….so why so difficult?....

• complexity of evidence– lack of specificity– confidence in economic modelling?

• requires culture change, which takes time– using evidence to make decisions– being able to take calculated risks

• multiple (often conflicting) objectives– between sectors– efficiency / inequalities / equity


NHS economics: the Ferguson view

Key economic issues facing NHS

• Competition and choice; system re-design (e.g. getting money out of acute sector) - but recognise Monitor's role here too

- NHSCB responsible for price-setting / decisions on PbR - year of care tariffs etc; Monitor responsible for overseeing / regulating / ? arbitrating

• Measuring and improving outcomes to demonstrate value for money (Commissioning Outcomes Framework / NHS Outcomes Framework / PHOF)

• Investment in prevention / disinvestment - agenda with PHE. Analysis around Spending Review - maximise outcomes for expenditure

• Resource allocation


NHS economics (1): diagnosis

• Excess hospital supply (in places)• Excess (and increasing) demand • System is therefore in constant disequilibrium and there is no price

mechanism to adjust S&D• Relatively efficient / not huge scope for productivity gains at current

skill-mix levels• Equitable but significant inequalities• Considerable scope for quality improvements but will cost more and

more without large-scale system change


NHS economics (2): areas for attention and success criteria

Areas for attention:• Skill-mix• Self-care and use of technology • Investing in prevention• Enhanced role for primary & community care

Success will be determined by: • how well different parts of the system work together• flexibility of clinicians and their teams• public health stepping up to the mark in the economics of prevention• the quality of leadership (both managerial and clinical)• the extent to which evidence & intelligence is allowed to drive change

("no decision without evidence")


Use of technology and ‘self-care’

• e.g. British Gas / energy suppliers• Use of mobile phone apps• Consumer can now take & submit meter readings• Billing systems mostly now fully automated• Supplier - savings in billing costs / less labour-

intensive (e.g. meter readings)• Consumer – more in control / choice in relation to

appointment times


Wanless “fully engaged scenario”


Wanless Report 2004 (UK)

“Although there is often evidence on the scientific justification for action and for some specific interventions, there is generally little evidence about the cost-effectiveness of public health and preventative policies or their practical implementation”


Cost of cardiovascular disease

• Cost to UK economy in 2004: £29 billion• Health care the main cost component – 60%• Productivity losses due to mortality and morbidity –

23%• Informal care-related costs – 17%• Estimated 244,398 working years lost due to CVD

deaths• About 69 million working days lost due to CVD-

related morbidity

Source: Luengon-Fernandez et al. (2006)


Economic and social costs of mental illness

• Total costs of mental illness in England (2002/03) estimated to be £77.4 billion:– Health and social care £12.5 billion– Human costs (adverse effects of mental illness on

health-related quality of life) £41.8 billion– Output losses £23.1 billion, of which sickness

absence alone is nearly £4 billion

Source: Sainsbury Centre for Mental Health


Perspective and potential impact

• Potential impact– ‘industrial scale’ of applying cost-effectiveness

evidence– much of what we look at in public health is around

very small margins

• Broad perspective required:– NHS and Personal Social Services costs– wider public sector costs– informal care sector– private (individual) costs

Wanless legacy (1)

• Individual responsibility as well as community and government action (the degree of aggregation of individual actions will determine how far we get to the 'fully engaged' scenario)

• Emphasised role of information upon which to make healthy choices

• Highlighted paucity of the evidence base on c-e of PH interventions

• The role of self-care was also a feature of the report, including the development of 'expert patients'; skill-mix also an issue – e.g. role of community pharmacists in managing chronic conditions


Wanless legacy (2)

• One limitation of the Wanless Report is that the fully engaged scenario assumed productivity gains and it is not clear how these are to be measured in relation to PH services. This does not, however, mean that we should not try and measures of productivity of PH services will be required just as for health care services. Also need to think about the scope for efficiencies more generally in the NHS given reports that the system is in fact relatively efficient.

• He proposed that health spending as a percentage of the national income would have to rise from 7.7 per cent to around 9.5 per cent by 2008, and 12.5 per cent in 2023.

• But he also called for a healthcare system more grounded in the community, where primary care delivers an increasingly wide range of care, including diagnosis, monitoring and help with recovery, and the majority of general and less specialised medical and surgical care has moved out of large hospitals.


Learning internationally, but not from the USA

IHI Triple Aim initiative

1. improve the health of the population2. enhance the patient experience of care (including quality, access and reliability)3. reduce, or at least control, the per capita cost of care

Jonkoping in Sweden has been a partner with IHI for some 20 years.

• "The Jonkoping work has been shaped by an agenda focused on quality and safety which places the citizen at the heart of its services. The result has been genuine engagement from senior management to the frontline and real involvement of those who access and benefit from its services.

• The Jonkoping model underlines the strategic role public health plays in improving the health and wellbeing of a population. The commitment to embedding quality improvement methodology and ensuring the needs of local populations are the key priorities for each organisation. This is making a considerable difference.

• Jonkoping's commitment to partnership working across sectors, providing an almost seamless pathway for patients, is clearly one of the many reasons for its success and one we should be seeking to emulate.

• Another is the active involvement of patients and citizens in quality improvement programmes at every level….”


Jonkoping: main themes

• The vertical integration of a quality improvement approach to healthcare. The board receive performance reports that are generated from systems implemented by staff trained in change management and who have an ethos of strong quality improvement as an expectation of their employment.

• A corporate approach to systems improvement that enables cross-departmental process development with notable clinician-management co-operation.

• An aggressive and all-inclusive approach to training and education which ensures that every member of the workforce has the skills and understanding to know that improvement is a key part of each person's role.

• Cohesion and consistency between the delivery of healthcare and public health and social policy.

• A strong and agreed set of values which are manifest at all levels of work, clear leadership which has held to those values and stability which has allowed practice and requisite skills to be embedded.

• A strong link between systems development and the financial reporting required to service any change in systems reporting that might result from the improvement work. This is particularly noticeable with the introduction of the clinical micro systems working.


Swedish health system

• Sweden's healthcare system is a publicly funded comprehensive system. It has gained an international reputation for strong performance, equity and innovation. Recognising the limits of hospital care, Sweden was amongst the first countries to make a national commitment to primary care and preventative services. Although there is wide variation across the system, superior access and medical outcomes are achieved with moderate resource and cost levels. The Swedish system is highly decentralised and aims to achieve its objectives through public ownership as well as local and regional democracy, operation and accountability.


International comparisons: Sweden vs UK (Commonwealth Fund report 2011) [1]

• comparable %GDP and health care spending per capita: 10% vs 9.8% and $3,722 vs $3,487

• no. of practising physicians per 1,000 population: 3.7 vs 2.7• average annual no. of physician visits per capita: 2.9 vs 5.0• average LOS for acute care (days): 4.5 vs 6.8• % adults reported as daily smokers: 14.3 vs 21.5• obesity prevalence: 11.2% vs 23.0%• mortality amenable to health care (deaths per 100,000

population): 61 vs 83


International comparisons: Sweden vs UK (Commonwealth Fund report 2011) [2]

• able to get same / next day appointment when sick: 57% vs 70%• very / somewhat difficult getting care after hours: 68% vs 38%• waited >2 months for specialist appointment: 31% vs 19%• primary care routinely receives and reviews clinical outcomes data:

71% vs 89%• primary care routinely receives and reviews patient satisfaction and

experience data: 78% vs 96%• public views of health system:

– works well, minor changes needed: 44% vs 62% (USA 29%)– fundamental changes needed: 45% vs 34% (USA 41%)– needs to be completely re-built: 8% vs 3% (USA 27%)



In summary…..

• be careful about language when using terms like efficiency, cost-effectiveness and cost benefit analysis

• note: these conversations about efficiency say nothing about who benefits or whose outcomes are affected by different interventions or commissioning decisions

• so, we can make efficient commissioning decisions and make health inequalities worse

• there are lots of health intelligence tools out there to help• investing in health is critical if long-term system change is to be

achieved – Wanless was correct!• achieving efficiency and equity / reducing inequalities with

multiple system objectives

implementing economic thinking to bring about improvement

Documents

nhs use cost

way of thinking

effectiveness cost benefit

economic evidencepromoting

structured way

particular way

scarceif scarce resources

nice guidancepromoting