NICE process and methods

10 Modelling and health economics considerations

The key challenge of service guidance is linking process developments to a health benefit. This obviously poses a challenge when conducting health economic analyses for service guidance, but it will also be difficult with respect to the quality and lack of evidence of effectiveness for service configurations, and so modelling will usually be needed to generate the health benefits used within the health economic analyses using scenario analyses. In addition, given the considerable resource and health impact of any service recommendations, there must be an explicit consideration of the opportunity cost of implementing a recommendation, preferably analytically or qualitatively.

Developing design-orientated conceptual models linked to each review question should help the health economist to decide what key information is needed for developing effectiveness and cost-effectiveness analyses. It is anticipated that developed effectiveness and economic models will relate to several review questions, so that almost all recommendations are underpinned by some form of modelled analysis.

The choice of appropriate model structure is a key aspect of the design-orientated conceptual model. When designing the implementation model, Brennan's taxonomy of model structures[4] should be considered for guidance on which of types of models may be appropriate to the service delivery decision problem.

Even if a fully modelled analysis is not possible, there is value in the process of development, as it will help to structure Committee discussions. For example, a model might be able to demonstrate how a service change will impact on demand for a downstream service or intervention.

For any cost-effectiveness analysis, the reference case remains that outlined in table 7.1 of 'The guidelines manual'; a cost–utility analysis should be aspired to, producing an incremental cost-effectiveness ratio (ICER). This allows the Committee to use the same decision rules as those outlined in chapter 7 of 'The guidelines manual'. Other methods of economic analyses such as cost–consequence, cost-effectiveness, cost–benefit, cost minimisation and microcosting analyses may be used if these can provide the Committee with sufficient information on which to base recommendations. For example, if a service is associated with better health outcomes and fewer adverse effects, then a cost-minimisation analysis may be justifiable. However, given the complexity of services, a series of simple analyses may be misleading, by not accounting for interactions.

One main area where assessing cost effectiveness will differ from standard NICE methods is that any analysis will need to consider resource constraints. These might be monetary, but might also be resources such as staff, beds, equipment and so on. However, affordability should not be the sole driver for service recommendations, and there needs to be explicit consideration of the impact on quality of care of any proposed changes.

10.1 Health service related operational research

For the areas that are considered in service guidance, operational research methods are likely to be the most appropriate way to assess cost effectiveness. It is not appropriate for this guide to discuss in detail all available methods. Operational research in cost-effectiveness analysis of service delivery interventions, a report for NICE by the Clinical Guidelines Technical Support Unit, outlines the approaches that are available, in what circumstances they can be used and the data and resources required.

Experts in these operational research methods should be consulted for advice on the suitability of methods for certain types of service delivery question. This should be done when developing review protocols to identify whether operational research methods are likely to be useful. The use of these methods should be discussed and agreed with NICE, since additional resources and time may be required.

All methods used and results obtained should be described clearly in the full guidance, and should follow the principles outlined for statistical and health economics analyses in chapter 7 of 'The guidelines manual'.

10.2 Local considerations

Cost-effectiveness analyses will need to account for local factors, such as the expected number of procedures and the availability of staff and equipment at different times of the day, week and year. Models will need to incorporate the fact that each local provider may be starting from a different baseline of identified factors (for example, the number of consultants available at weekends). It is therefore important that these factors are identified and considered explicitly by the Committee. Results obtained from the analysis should include both the national average and identified local scenarios to ensure that recommendations are robust to local variation.

10.3 Service failures

Service designs under consideration might result in occasional service failure – that is, where the service does not operate as planned. For example, a service for treating people with myocardial infarction may differ at the weekend compared with on weekdays – that is, the number of places where people can be treated might be reduced at weekends as a result of staffing considerations. Therefore more people will need to travel by ambulance and the journey time will also be longer. Given the limited number of ambulances, a small proportion may be delayed, resulting in consequences in terms of costs and QALYs. Such possible service failure events should be taken into account in effectiveness and economic modelling. This effectively means that analyses should incorporate the 'side effects' of service designs.

10.4 Perspective on costs

The perspective on costs should remain that of the NHS and personal social services (PSS); however, service recommendations are likely to have additional costs. These include implementation costs and costs to other government budgets, such as social care. Implementation costs should be included in economic analyses in a sensitivity analysis. Costs to other government budgets can be presented in a separate analysis to the base case.

10.5 Service demand

Introducing a new service or increasing capacity will often result in an increase in demand. This could mean that a service does not achieve the predicted effectiveness because there is more demand than was planned for. This should be explicitly addressed either in the analysis or in considerations.

10.6 Equity considerations

Basing economic evaluations on local circumstances may result in recommendations for a different provision of services in different areas. This could be perceived as being inequitable. The Committee should give careful consideration to equity concerns and this should be explicitly addressed in the guideline, in particular consideration should be made of how recommendations that may lead to inequities of service provision would be mitigated.

10.7 Health benefits

The QALY remains the most suitable measure for assessing the impact of services, since it can incorporate benefits from extension to life and experience of care. In addition, it can explicitly include the trade-offs of benefits and adverse events.

If linking to a QALY gain is not possible, links to a clinically relevant or a related outcome should be considered. Consideration should be given to optimising outputs for the lowest resource use. Any surrogate outcome such as a process outcome (for example, bed days) needs to be justified explicitly in terms of linking it to a clinical outcome (either directly or indirectly), similar to when a clinical surrogate outcome is used instead of an outcome that is relevant to a patient. However, when QALYs are not used, issues such as trade-offs need to be considered explicitly.

[4] Brennan A, Chick SE, Davies R (2006) A taxonomy of model structures for economic evaluation of health technologies. Health Economics 15: 1295–310.