Essay Sample on Cost-Effectiveness Analysis: Assessing Healthcare System Efficiency

Introduction

Cost-effectiveness analysis refers to the valuation of both the effectiveness and costs of the healthcare system. In other words, it is a way of examining both the expenditures and health outcomes of the medical interventions. It aids in making a comparison between one intervention to the other through approximating how much it costs to achieve a given unit of health outcome such as death prevented or a life-year gained. Cost-effective analysis enhances the assessment of gains made in the healthcare system relative to the costs of each intervention. In mathematical terms, it encompasses the division of the costs of interventions in monetary units by the anticipated health gains measured in natural units. The application of cost-effectiveness analysis enhances the identification of the neglected opportunities by emphasizing interventions that are comparatively cheap but have the capability of considerably plummeting the burden of maladies. In the Canadian healthcare system, cost-effectiveness analysis aids in the identification of different ways on how to redirect resources to achieve an effective patient outcome. It may also redirect the resources from less to more cost-effective interventions. The purpose of this paper is to elaborate on why Canada's health care system should make more formal use of cost-effectiveness analysis for resource allocation decisions, especially when deciding what medicines to pay for.

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Arguments for the Statement

Canada's healthcare system is one of the most advanced schemes globally. Healthcare is one of the essential components of any country's annual economic spending. It does not only accounts for the overall health of its population but also accounts for the making and implementation of policies (Marchildon, 2013). These policies look at a range of public health-related issues, right from maintaining records to effective handling of insurance claims, and from prescribing standardized practices inpatient care to reaching out to the marginalized in society. To enhance the effective management of the above activities, the application of cost-effectiveness analysis is essential. The approach has both advantages and disadvantages; however, the advantages outweigh the disadvantages.

Strengths of Cost-Effective Analysis

Cost-effective analysis aids in the formulation of rational decisions. Therefore, policymakers within the Canadian Government can use the approach to make lucid decisions in universal health coverage. The health care system of Canada is based on universal health coverage. As a result, Canada's publicly funded health care system can be best described as a system in which there is an interlocking set of ten provincial and three territorial health systems (Marchildon, 2013). Cost-effective analysis often provides clarity in unpredictable situations. With the complicated Canadian Medicare, focusing on the formal use of cost-effectiveness analysis will provide light into making investments on effective interventions while minimizing the costs on the ineffective ones. Effective medical processes should be based on the cost versus the outcome of treatment or medication processes.

In the cost-effectiveness analysis, there are ratios that often prevents some analytical difficulties and ethical dilemmas that often arise within the healthcare system. The application of the above approach requires assigning fiscal values to each of the years of life (Marchildon, 2013). Through these steps, cost-benefit analysis exclusively draws attention to health benefits, which are, in many cases, not monetized. In many cases, when an intervention leads to health savings, the costs associated with the services need to be subtracted from the intervention costs after a comparison has been made to other health outcomes.

Weaknesses of Cost-Effectiveness Analysis

The application of cost-effectiveness analysis often requires complex approaches that, when added to the intricacy of the Canadian healthcare system, may require robust tactics. Also, the system may nosedive in erratic situations. The cost-effectiveness analysis does not account for all variables; therefore, its use in Canada's healthcare system may fail some cases. The Canadians refer to their systems as "Medicare." Whenever the citizens of Canada need health care, they have access to primary health care services, which is their first point of contact with the health care system. Many factors affect the results of cost-effectiveness analyses in the Canadian healthcare system. For example, one of the biggest challenges arises not only from the data employed in the evaluation of costs and effects but also in the choice of the comparator and whether the smaller group of the target population is analyzed. On the other hand, there is no doubt that other disparities in the inputs can as well have considerable effects on the estimate of a cost-effectiveness ratio. In the same vein, if the country uses studies that do not reflect the policy context accurately, overreliance on cost-effectiveness ratios in guiding decision-makers would result in wrong decisions being made.

In Canada, the primary health care does not only provide the direct provision of first-contact health care services, but it also coordinates the health care services offered to the patients to ensure continuity and referral when more specialized services are needed. For that reason, a patient may be referred for specialized care at a hospital or a facility for long-term care or in the community. On the other hand, additional Services are available to certain people, such as the elderly, children, and low-income residents (Marchildon, 2013). The country also provides health services that are generally not covered under the publicly funded health care system, such as the prescription of drugs outside hospitals, dental care, vision care, medical equipment, and appliances such as prostheses and wheelchairs. On the other hand, the Canadian Government has also developed some national standards to provide financial support for the country's medical services offered to the citizens of Canada. The provincial and territorial governments are the institutions responsible for the provision of hospital services in their respective region. Citizens of Canada receive services on hospital located on their provinces or other regional medical organizations.

Cost-effectiveness analysis is applicable in the healthcare sector, given that it is wrong to measure the monetary value of a given health effect. There is no doubt that cost-effectiveness offers an analysis method that puts priorities in the allocation of resources for health interventions by pinpointing several projects yielding the greatest health improvement. On the other hand, the expression of cost-effectiveness analysis is in ratio terms where the denominator is the cost associated with a certain health gain, whereas the denominator represents a gain in health such as years of life or reduced premature births. In the case of the Canadian healthcare system, cost-effectiveness analysis has been lauded for its importance in determining the cost-effectiveness of imaging techniques used in the screening of various cancers such as colorectal cancer. Cost-effectiveness analysis helps in determining the gains of using imaging to determine cancer costs compared to the cost associated with the gains since some cancers are curable, especially when detected early. The approach is essential in balancing the costs and the outcomes of the interventions being applied in various departments within the healthcare system. Cost is one of the major concerns in the provision of medical services; there has been the existence of conflicts between the medical providers, patients, and insurers. Federal Government alone cannot control the costs of medical provisions (Marchildon, 2013).

Annually, many new cases of cancer cases, as well as deaths, are reported in Canada. It has been proven that imaging is an effective tool in determining the state of cancer that is important in treatment. As a result, imaging helps the healthcare personnel in Canada to determine the most appropriate treatment for cancer. Secondly, cost-effectiveness analysis is an important technique in determining the allocation of resources for various health interventions. Conducting a cost-effectiveness analysis, for example, of imaging as a tool used in colorectal cancer screening, would have a significant impact on the healthcare of many individuals. Making policies based on the findings of the study would promote early detection and recovery of colorectal cancer in Canada. Thirdly, evaluation is crucial in the health care industry both from a business perspective and from an individual standpoint. The Government of Canada uses cost-effectiveness analysis when there are elective methods of attaining results, such as life years or quality of life. It is a major clinical health outcome for chronic diseases like obesity.

Arguments Against the Statement

The Canadian healthcare system already has elaborate mechanisms for resource allocation (Marchildon, 2013). They have an operational system that is already providing services to the majority of the population. Therefore, even though the application of the formal cost-effectiveness analysis may create positive impacts, it may not alter the traditional practices that have been in operation for many years. Even though some economist argues that there is a need for the Canadian healthcare system to adopt the cost-effectiveness in the decision-making processes, there are real problems associated with the method. However, the system relies on the quality of the data. If a given cost-effectiveness analysis depends on one or more randomized clinical outcome, it will only be as good as the information or data in the trial. If the trial becomes biased or inadequately generalizable, the application of cost-effectiveness analysis may be impacted by these same limitations. Besides, if cost-effectiveness analysis is based on the simulation of a specific disease model instead of a clinical trial, it can only become as meaningful as the input values.

In the Canadian healthcare system, cost-effectiveness analysis is mainly an approach for analyzing competing therapies. In other words, it cannot address all the questions concerning therapies; also, it is by no means the sole approach that the Canadian economists can apply. Therefore, in the Canadian context, the cost-effective analysis by itself cannot address the questions raised by Kaul and Diamond, including the number of patients that can be helped and the much this can cause to the society, as well as the means or approaches of payment. Even though the cost-effectiveness analysis may aid in the formulation of decisions, thus enabling the healthcare system to make informed choices that may offer good values, it may not address the fundamental issues and cover the entire variables in the decision-making processes.

In cost-effectiveness analysis, there are always more concerns when it comes to the evaluation of value than offering a ratio of cost per outcome gained as well as the distribution of denominator and numerator of the ration. If not properly employed, cost-effectiveness analysis may not render explicit the entire assumptions surrounding the healthcare system analysis. With the lack of the cost-effectiveness analysis approach, the Canadian healthcare system can still manage to apply the traditional approaches to enhance effective resource allocations. However, there may be some limitations which may not greatly impact the healthcare system. The cost-effectiveness approach may, however, be used in conjunction with other strategies to establish an appropriate and a functional healthcare system.