Implementing economic thinking to bring about improvement

1. Implementing economic thinking to bring about improvement National Leading Transformation of Health and Wellbeing Programme 6th September 2012

2. 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 “Promoting and delivering public health intelligence”

3. A challenge (to test me on at the end!) • Is anything I have talked about today only of relevance to the NHS? “Promoting and delivering public health intelligence”

4. Hypothesis 1 • The NHS remains light years away from basing its decisions on economic evidence “Promoting and delivering public health intelligence”

5. 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 “Promoting and delivering public health intelligence”

6. 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) “Promoting and delivering public health intelligence”

7. 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 “Promoting and delivering public health intelligence”

8. 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 “Promoting and delivering public health intelligence”

9. 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 “Promoting and delivering public health intelligence”

10. 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) “Promoting and delivering public health intelligence”

11. 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 “Promoting and delivering public health intelligence”

12. 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’ “Promoting and delivering public health intelligence”

13. 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? “Promoting and delivering public health intelligence”

14. Hypothesis 2 • The key problem is cultural, combined with a capacity / capability shortfall “Promoting and delivering public health intelligence”

15. Efficient commissioning

16. Relevant commissioning competencies “Promoting and delivering public health intelligence”

17. 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 “Promoting and delivering public health intelligence”

18. 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? “Promoting and delivering public health intelligence”

19. 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 “Promoting and delivering public health intelligence”

20. 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 “Promoting and delivering public health intelligence”

21. 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 “Promoting and delivering public health intelligence”

22. Using health intelligence Programme budgeting example

23. 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 “Promoting and delivering public health intelligence”

24. The links at the bottom of page 1 of the Factsheet allow access to the further Programme Budgeting information and work in the electronic version of the Factsheet and the tool The second link is to an nww address and so is only accessible to NHS users “Promoting and delivering public health intelligence”

25. 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 programmes within 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 seen on the Factsheet you can go to the tool and follow the instructions in the How to use the Tool guide “Promoting and delivering public health intelligence”

26. 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 group of 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 variation across the cluster group for each indicator “Promoting and delivering public health intelligence”

27. This chart compares the PCT spend with its ONS 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. “Promoting and delivering public health intelligence”

28. “Promoting and delivering public health intelligence”

29. Commissioning for Value intelligence packs

30. YHPHO Commissioning for Value Intelligence Packs - Plan Background

31. 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

32. Methodology used to produce this pack Methodology

33. Phase 2 An intelligence driven transformation process This pack Next Steps

34. Anticipating demand to improve health and reduce health inequalities

35. 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 “Promoting and delivering public health intelligence”

36. 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 “Promoting and delivering public health intelligence”

37. 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 “Promoting and delivering public health intelligence”

38. 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 region http://www.yhpho.org.uk/resource/view.aspx?RID=105148 “Promoting and delivering public health intelligence”

39. APHO Health Inequalities Intervention Tool

40. 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 “Promoting and delivering public health intelligence”

41. “Promoting and delivering public health intelligence”

42. “Promoting and delivering public health intelligence”

43. 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 “Promoting and delivering public health intelligence”

44. The reality of working with public health evidence

45. 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 “Promoting and delivering public health intelligence”

46. 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 “Promoting and delivering public health intelligence”

47. 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) “Promoting and delivering public health intelligence”

48. 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 “Promoting and delivering public health intelligence”

49. 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 “Promoting and delivering public health intelligence”

50. 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 “Promoting and delivering public health intelligence”