Cost Utility Analysis: What Should be Measured; Utility, Value, or Healthy Year Equivalents?
Richardson, J. (1990, September 10). Cost Utility Analysis: What Should be Measured; Utility, Value, or Healthy Year Equivalents? Centre for Health Program Evaluation, WP5.
Cost Utility Analysis
Purpose
This article focuses on the appropriateness of utility as the result of Cost Utility Analysis (CUA) measurements. The article explores variables which should be applied to discover alternatives to the use of utility.
Strengths and Weaknesses
Strengths:
o Attempts to maximize utility.
o Accounts for risk in the decision making
process.
o CUA’s goal is to remain simple and easy to
understand.
Weaknesses:
o “Quality,” as used in QUALYs, has no
exact meaning.
o Different social acceptances exist to
represent quality.
o Does not account for the specific utility
of risk.
o QUALYs do not have a clear and
unambiguous meaning.
Description
The article did not explain or address any specifics used for the CUA method. This paper was a very educated work on the necessity to adjust the CUA output unit of measurement. Using historical theory and philosophy as substantive backing, the work proposed more variables which must be intermingled with the current formula to produce a clearer and applicable result to CUA or other healthcare utility measurement methods.
Uses
Historically geared towards “talented lay people,” as referenced from a 1989 report, CUA is an attempt at advising towards the utility of allocating resources. It gives administrators a common ground on which to compare different health care interventions, initiatives, or resources. These different courses of action are then compared, fiscally, against their utility towards the outcome of the intervention.
Comparison
This paper is of a much higher theoretical value and is reflective of how a preliminary thesis work might read. The author appears to be writing for an audience that expertly understands the method and instills the ambiance of a preface to a debate. The work is littered with references to previous publications by other authors, but presents much more historical basis for observations and theories than any other article I have read on the topic of CUA.
Sources Cited
The author of the commentary listed the following sources for further information:
- Allais, M., 1984, "The Foundations of the Theory of Utility and Risk. Some Central Points of the Discussion at the Oslo Conference" in Hagen, O., and Wenstop, F. (eds) Progress in Utility and Risk Theory, D. Reidel Publishing Company.
- Allais, M., 1988, "A New Neo-Bernoullian Theory: The Machina Theory. A Critical Analysis", in Munier, B., Risk Decision and Rationality, D. Reidel Publishing Company Dordrecht.
- Bouyssou D., and Vansnick J.C., 1988, "A Note on the Relationships Between Utility and Value Functions", in Munier, B.R., Risk, Decision and Rationality, D. Reidel Publishing Company.
- Boyle, M.J., Torrance, G.W., Sinclair, J.C. and Horwood, S., 1983, "Economic Evaluation of Neonatal Intensive Care of Very Low Birth Weight Infants", New England Journal of Medicine, 308: 1330-1337.
- Brooks, R.G., 1988 "Scaling in Health Status Measurement: An Outline, Guide and Commentary", Institute of Health Economics Report, 1988: 4, The Swedish Institute for Health Economics.
- Carr-Hill, R.A., 1989, "Assumptions of the QALY Procedures", Social Science and Medicine, 29, 3, 469-477.
- Churchill, et al, 1984, "Cost Effectiveness Analysis Comparing Continuous Ambulatory Peritoneal Dialysis to Hospital Haemodialysis", Medical Decision Making, 4, 20-23.
- Drummond, M.F., Stoddart, G.L. and Torrance, G.W., 1986, "Methods for the Economic Evaluation of Health Care Programs', Oxford Medical Publications.
- Evans, R.W., et al, 1985 "The Quality of Life of Kidney and Heart Transplant Recipients", Transplant Proc. 17, 1579-82.
- Evans, R.W., et al, 1987, "The Quality of Life of Kidney and Heart Transplant Recipients", Transplant Proc. 17, 1579-82.
- Graaff, J., 1967, Theoretical Welfare Economics, Cambridge University Press, Cambridge.
- Hall, J., Gerard, K., Salkeld, G. and Richardson, J., 1990, "A Cost Utility Analysis of Mammographic Screening for Breast Cancer in Australia", Paper presented to the 2nd World Congress on Health Economics, University of Zurich, Switzerland, September 10-14, 1990.
- Harris, J., 1987, "QALYfying the Value of Life", Journal of Medical Ethics, 13, 117-123.
- Harsanyi, J., 1977," Rational Behaviour and Bargaining Equilibrium in Games and Social Institutions", Cambridge University Press.
- Harsanyi, J., 1983, "Use of Subjective Probabilities in Games Theory", in Stigum, B. and Wenstop, F., (ed), Foundations of Utility and Risk Theory with Applications, Reidel Press.
- Kaplin, R.M., Bush, J.W. and Berry, C.C., 1979, "Category Rating versus Magnitude Estimation for Measuring Levels of Well Being", Medical Care, May 1979, 27, 5, 501-521.
- Kaplin, R.M., and Ernst, J.A., 1983, "Do Category Rating Scales produce biased preference weights for a health index?", Medical Care, 21, 193-207.
- Kind, P., 1988, "The Development of Health Indices", in Teeling Smith, G., Measuring Health: A Practical Approach, John Wiley and Sons.
- Kind, P. and Rosser, R., 1988, "The Quantification of Health", European Journal of Social Psychology, 18, 63-77.
- Kind P., 1989, "The Design and Construction of Quality of Life Measures", Discussion Paper 43, Centre for Health Economics, Health Economics Consortium, University of York.
- Kuhse, H. and Singer, P., 1988, "Age and the Allocation of Medical Resources", The Journal of Medicine and Philosophy, 13, 101-116.
- Labelle, R., Feeny, D. and Torrance, G., 1989, "Conceptual Foundations of Health Status and Quality of Life Utility Measures", NIMEO, Department of Clinical Epidemiology and Biostatistics/Centre for Health Economics and Policy Analysis, McMaster University.
- Lane, D.A., 1987, "Utility, Decision, and Quality of Life", Journal of Chronic Diseases, 40, 6, 585—591.
- Loomes, G. and McKenzie, L., 1989, "The Use of QALYs in health care decision making", Social Science and Medicine, 28, 4, 299—308.
- Machina, M., 1982, "Expected Utility" Analysis Without the Independence Axiom", Econometrica, 50, 277—323.
- Marschak, J., 1950, "Rational Behaviour, Uncertain Prospects, and Measurable Utility", Econometrica, 18, 11—141.
- McDowell, I. and Newell, C., 1987, "Measuring Health: A guide to Rating Scales and Questionnaires", Oxford University Press, New York, 1987.
- Mehrez, A. and Gafni, A., 1989a, "Quality-adjusted life years, utility theory, and health-years equivalents", Medical Decision Making, 9, 2, 142—149.
- Mehrez, A. and Gafni, A., 1989b, "Healthy Year Equivalents: How to Measure Them Using The Standard Gamble", forthcoming Working Paper CHEPA, Department of Epidemiology and Biostatistics, McMaster University.
- Mooney, G. and Olsen, J.A., 1989, "QALYs: Where Next", Mimeo, Institute of Social Medicine, University of Cophenhagen.
- Morgenstern, O., 1979, "Some Reflections on Utility", in Allais, M. and Hagen, O., Expected Utility Hypothesis and the Allais Paradox, D. Reidel Publishing Company.
- Mosteller, F., 1989, "Finale Panel: Comments on the Conference on Advances in Health Status Assessment', Medical Care, 27, 3, Supplement, S2H2—S286.
- Philips, L., 1974, Applied Consumption Theory, North Holland Publishing Co., Amsterdam.
- Pope, R., 1983, "The Pre Outcome Period and the Utility of Gambling", in Stigum B. and Wenstop, F., (eds), Foundations of Utility and Risk Theory with Applications, D. Reidal Dorecht, 137—177.
- Pope, R.E., 1989a, "Additional Perspectives on Modelling Health Insurance Decisions", in Selby Smith C., 1989, Economics and Health, Public Sector Management Institute, Monash University.
- Pope, R.E., 1989b, "Machina's Decision Model: An Empty Box?", Memeo, Department of Economics, University of New South Wales, Campbell ACT, Australia.
- Popper, K., 1963, Conjectures and Refutations: The Growth of Scientific Knowledge, Routledge and Kegan Paul.
- Ramsey, F., 1950, "Truth and Probability", in Braithwaite, R. (ed), The Foundations of Mathematics and other Logical Essays, Humanities Press, New York.
- Richardson, J., Hall, J., Salkeld, G., 1990, "`Cost Utility Analysis: The Compatibility of Measurement Techniques and the Measurement of Utility Through Time", in Selby Smith, C., 1990, Economics and Health: Proceedings of the Eleventh Australian Conference of Health Economists, Public Sector Management Institute, Monash University.
- Robinson, Jan, 1965, The Accumulation of Capital (2nd E.), London:Macmillan.
- Rosser, R.M., and Kind, D.P., 1978, "A Scale of Valuations of States of Illness: Is There a Social consensus?", International Journal of Epidemiology, 7, 347.
- Savage, L.J., 1954, The Foundations of Statistics, second revised ed., Dover Pub., New York.
- Shoemaker, P., 1982, "The Expected Utility Model: Its Variants, Purposes, Evidence and Limitations", Journal of Economic Literature, 20, 529—563.
- Torrance, G.W., 1976, "Social Preferences for Health States, An Empirical Evaluation of Three Measurement Techniques", Socio Economic Planning Science, 10, 129—136.
- Torrance, G.W., 1986, "Measurement of Health-State Utilities for Economic Appraisal: A Review", Journal of Health Economics, 5, 1—30.
- Torrance, G.W. and Feeny, D., 1989, `Utilities and Quality Adjusted Life Years', International Journal of Technology Assessment in Health Care, (forthcoming).
- Viner, J., 1925, "Utility Concept in Value Theory and its Critics", in Page (ed.), 1968, Utility Theory: A Book of Readings, John Wiley & Sons.
- Von Neumann, J. and Morgenstern, O., 1947, " Theory of Games and Economic Behaviour", Princeton University Press.
- Watkins, J.W.N., 1977, `Towards a Unified Decision Theory: A Non-Bayesian Approach', in Butts and Hintikka (eds), Fundamental Problems in the Special Sciences, Reidel Dordrecht pp. 347—379.
- Williams, A., 1987, "Response: QALYfying the Value of Life", Journal of Medical Ethics, 13, 123.
- Wright, S.J., 1986, "Age, Sex and Health: A Summary of Findings from the York Health Evaluation Survey", Discussion Paper 15, Centre for Health Economics, University of York.
Most Informative
The most informative element of this paper is the historical references to CUA and early discussions about its purpose and applicability. The insight of early health care utility analysts seem to clarify many current issues of debate and much like the U.S. Constitution is constantly misinterpreted, the CUA method appears to be a victim of such misunderstanding for some academics.
Source Author
Jeff Richardson is a professor at Monash University and is Foundation Director of the Centre for Health Economics. Professor Richardson is an adjunct associate at several universities and a veteran of several international organizations and foundations. Professor Richardson has published over 350 works on the topic of health economics, many of which have been presented to counsels and peer panels for discussion and review. As the author of this article, Richardson has extensive education and knowledge regarding the subject matter and is a very reliable source regarding the use of CUA.
Source Reliability
According to the Dax Norman Trust Evaluation Worksheet for online sources, the source has a Very High Reliability rating.
Critique Author
Mark L.
Mercyhurst College, Erie PA,
Advanced Analytic Techniques Course
January 20, 2011
