Economic Impact of Disease - Health and Medicineiom.nationalacademies.org/~/media/Files/Activity...

IOM/NRC/NAS September 30, 2008

Economic Impact of Disease and the Case for Surveillance

Bruce Lee, MD MBAAssistant Professor of Medicine, Epidemiology, and Biomedical

InformaticsUniversity of Pittsburgh


Overview

• The Value of Surveillance• Cost of Disease • Public Health Response

Costs• Direct Health Care Costs• Productivity Losses• Additional Economic Costs• Conclusions


Value of Surveillance




Economic Value of an Intervention

Net Returns = -Savings from

Outcomes Averted

Cost of Intervention

Economic Value of Influenza Vaccine

Cost of Influenza

Outcomes Prevented

Cost of Influenza Vaccine

= -


Surveillance as “Insurance”

2009 2010 2011 2011 2012 2013 2014 2015 2016 2017 2018 2019

Disease Costs

Surveillance Costs

?

?

? ?


Actuarially Fair Premium

Value of “Insurance”

= Reduction of Loss Probability

Value of Avoidable Loss

X


What can be done during this time to alter “history”?

Value of Time and Reduction in Loss

Surveillance Detection of

DiseasePublic Health Manifestation

of Disease

Value of Surveillance


Early Response can Be Cost-Savings

Start of Post-attack Treatment (days)

Savi

ngs

($

bill

ion

)Anthrax Tuleremia Brucellosis

20

15

10

5

0

0 1 2 3 4 5 6 0 1 2 3 4 5 6 7 14 23 56

Kaufmann AF, Meltzer MI, Schmid GP. Emerg Infect Dis. 1997


Economic Value of BioWatch

• Cost-benefit model of biological surveillance

• Reduces time to treatment to 48 hours

• Economic benefit: $1.11 billion to $50.74 billion

• Depends on nature of release and value of statistical life assigned.

• Costs of BioWatch justified when probability of biological threat >1.26 percent.

Schneider, J Environ Health. 2005.


Early Information Interrupts Chain

Disease

Morbidity

Mortality

Productivity Loss

Productivity Loss

Health Care Costs

InfectedOutbreak

Decrease transmission

Alter the course of disease

Alter outcomes of disease

Reallocate replacement resources


Potential Interventions

Decrease Transmission

Alter Course of Disease

Alter Outcomes of Disease

Reallocate Replacement Reosurces

Vector Control

?

Supportive Care

Always Possible

West Nile Virus

VaccineNPI

Antivirals

Supportive Care

Antivirals

Always Possible

Influenza

NPI

?

Supportive Care

Always Possible

SARS

Environmental Containment

Antibiotics

Supportive Care

Always Possible

Anthrax Animal-Human

Human-Human

Environment-Human Combined


Cost of Disease

• The Value of Surveillance• Cost of Disease• Public Health Response



Types of Economic Studies

Prospective

Active data collection

during outbreak or

epidemic

Validity

Requires surveillance

systemGeneralizability

Retrospective

Review of records,

interviews, and surveys

Validity Data captureGeneralizability

Modeling and Simulation

Mathematical/computer

model

GeneralizabilityScenario analysis

Sensitivity analyses

Needs to be grounded in data

Study Methods Advantages Disadvantages


Time Frame or Time Horizon

Time

Cost

Study Time Frame


Components of Economic Costs

67%

33%

Productivity Loss

Medical Costs

Total: $96.2 millionAbout $240 per person

• Retrospective analysis of Milwaukee Cryptosporidiumoutbreak

• Corso, et al. 2003

• Societal perspective

• 4 month horizon


Public Health Response Costs




2002 Louisiana West Nile Virus Epidemic

$20.1 Million 329 of 4,156 Cases

June 2002 to February 2003Medical

$4.4 MNon-Medical

$6.5 M

Public Health

Response $9.2 M

Zohrhabian, EID, 2004


Cost of Public Health Response

• One case of measles in Iowa, 2004

• 2525 hours of personnel time for contact tracing and quarantine

• Estimated cost: $142,452

(Dayan, Pediatrics, 2005)


Direct Health Care Costs




Hospitalization Costs

Pneumonia

Influenza

Respiratory Failure

Bacteria Infection

3.69 +/-0.07%

0.99 +/-0.13%

19.73 +/-0.35%

2.74 +/-0.37%

62.11 +/-0.42%

77.47 +/-0.93%

33.13 +/-0.67%

69.64 +/-1.79%

$5,329

$3,415

$12,260

$5,881

Deaths Routine DischargeMedian

$8,127 +/- $111

$5,341 +/- $186

$21,298 +/- $533

$12,419 +/- $748

Mean

Source: National Inpatient Sample (NIS) from Healthcare Utilization Project (HCUP)


Total Costs from Hospitalizations

$0

$2 Million

$4 Million

$6 Million

$8 Million

$10 Million

$12 Million

$14, Million

1 99 197 295 393 491 589 687 785 883 981Hospitalizations

Cos

t


Underestimation of Hospitalization Costs

Common Diagnosis

Infinite Hospital Capacity

Infinite Resources

No In-Hospital Transmission

Linear Curve

Testing/Diagnostic Costs

Transfer Costs

Decreased efficiency

Isolation, Quarantine, and Decontamination Costs

Complex Curve

No Re-Admissions

Equivalent Acuity

Repeat Hospitalizations

Treatment Costs

No Additional Procedures Procedural Costs


Secondary Hospitalizations

Infected Patients

Worried Well

Misdiagnosed Patients

Stress-Induced Co-Morbidity

Exacerbations


Outpatient Costs

Initial Clinic Visit

Follow-Up Clinic Visit

Chest X-Ray

*Assuming Cost-to-Charge Ratio of 0.463

99214

99213

71020

CPT Code

$95.70

$63.69

$36.64

Charge

$44.31

$29.49

$16.96

$90.76

Cost*


Cost of Outpatient Visits

$-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

$400,000

$450,000

$500,000

1 473 945 1417 1889 2361 2833 3305 3777 4249 4957Patients

Cos

t


Underestimation of Outpatient Costs

Common Diagnosis

Infinite Clinic Capacity

Infinite Resources

No In-Clinic Transmission

Linear Curve

Testing/Diagnostic Costs

Transfer Costs

Decreased efficiency

Isolation, Quarantine, and Decontamination Costs

Complex Curve

Minimal Follow-Up

Equivalent Acuity

Additional Visits

Treatment Costs

No Additional Procedures Procedural Costs


Secondary Clinic Visits

Infected Patients

Worried Well

Misdiagnosed Patients

Stress-Induced Co-Morbidity

Exacerbations


Productivity Losses




Productivity Losses

+

+

# Deaths

# Hospitalizations

# Outpatients

NPV Future Earnings

8 Hours

4 Hours

X

X

X

Average LOS

# Visits/Patient X X

X X Average Wage

Average Wage


Age Distribution

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%5

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

> 85

Age


Life Expectancy Distribution

0

10

20

30

40

50

60

70

80

900 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80 84 88 92 96 100

104

108

Age

Life

Exp

ecta

ncy


Wage Increases Since 1990Year Index Increase

1990 21,027.981991 21,811.60 3.7%1992 22,935.42 5.2%1993 23,132.67 0.9%1994 23,753.53 2.7%1995 24,705.66 4.0%1996 25,913.90 4.9%1997 27,426.00 5.8%1998 28,861.44 5.2%1999 30,469.84 5.6%2000 32,154.82 5.5%2001 32,921.92 2.4%2002 33,252.09 1.0%2003 34,064.95 2.4%2004 35,648.55 4.6%2005 36,952.94 3.7%2006 38,651.41 4.6%

Average IncreaseMedian Increase

3.9%4.3%


Net Present Value of Lifetime Earnings

NPV of 35 Year Old Working Until 65 Years

Old


Old

=

=

Σ (Wage)Age-35 / (1.03)Age-35

Σ (Wage)Age-35 / (1.03)Age-35

=

=

$1.67 million

$2.4 million


Old= Σ (Wage)Age-35 / (1.03)Age-35 = $0.5 million


Productivity Losses from Mortality

$-

$100 Million

$200 Million

$300 Million

$400 Million

$500 Million

$600 Million

1 21 41 61 81 101 121 141 161 181 200Deaths

Prod

uctiv

ity L

oss

General Population to 75

General Population to 65

Older Population


Productivity Losses from Hospitalizations

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

1 211 421 631 841 1051 1261Hospitalizations

1471 1681 1891

Prod

uctiv

ity L

oss


Productivity Losses from Clinic Visits

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

Prod

uctiv

ity L

osse

s

$350,000

$400,000

$450,000

1 523 1045 1567 2089 2611 3133 3655 4177 4699Clinic Visits


Underestimation of Productivity Loss

Maximum efficiency and no queues

No test waiting timesMinimal travel

Maximum efficiency and no delaysDischarge to home and no recovery time.

Wages are a perfect proxyNo operational concerns

Minimal length of stay.

Perfect insurance.

Hospital Time

Perfect insurance

Immediate scheduling

Clinic Time

Productivity Losses


Additional Economic Costs




Congressional Budget Office: Pandemic Influenza

• Lost production as a result of work absence.

• “Mild” scenario: would cost about 1% of GDP while a

• “Severe” scenario would cost 4.25%of GDP.

• Costs of $130-550 billion • Did not consider threshold and

compounding effects • Did not include other important

economic effects.


Blackouts Disrupted Operations

• On August 14, 2003, 50 million people, from Cleveland to Toronto to New York City lost electricity for almost a day. Significant disruptions.

• 1967 blackout in New York City resulted in looting, arson, and mayhem.

• Infectious disease outbreak could be worse.


Major Economic Disruptions

Tourism

Stock Market

Consumer Confidence


Threshold at which Costs Explode

Costs

% of Population Infected


Economic Trends

Increased Specialization

Just in Time Inventory

Maximal Operating Capacity

Lave, Casman, and Lee, 2008

Decreased Interchangeability and Adaptability

Decreased Reserves

Minimal Surge Capacity

Shift Failure Curve to the

Left

10%


Conclusions




Summary

$4,000 to $13,000 Per Hospitalization

$200 Per Clinic Visit

$1-2 Million Per Death

$26,000 to $150,000 Per Case

Additional Treatment Costs Follow-Up Care

Additional Treatment Costs Follow-Up Care

Operational Costs

Communications Costs

Investor and Consumer Confidence

Follow-Up Care

Transaction Costs

Legal Costs


Conclusions

• Economic studies and models are likely to produce optimistic underestimates of the cost-of-disease.

• Costs do not scale linearly• Economic trends increasing the

potential costs of outbreaks and epidemics

• Anything that affects more than 10% of a local population may cause an explosion in costs.

• Positive Externalities: Facilitate research and understanding in seasonal and endemic infectious diseases (e.g., influenza, mononucleosis, Lyme disease)

Direct Health

Care Costs

Public Health Response and Productivity Losses

Economic Impact of Disease - Health and Medicineiom.nationalacademies.org/~/media/Files/Activity...

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