PMID- 25362257
OWN - NLM
STAT- MEDLINE
DCOM- 20151029
LR  - 20150124
IS  - 1179-1896 (Electronic)
IS  - 1175-5652 (Linking)
VI  - 13
IP  - 1
DP  - 2015 Feb
TI  - Kinky thresholds revisited: opportunity costs differ in the NE and SW quadrants.
PG  - 7-13
LID - 10.1007/s40258-014-0136-3 [doi]
AB  - Historically, a kinked threshold line on the cost-effectiveness plane at the 
      origin was suggested due to differences in willingness to pay (WTP) for health 
      gain with trade-offs in the north-east (NE) quadrant versus willingness to accept 
      (WTA) cost reductions for health loss with trade-offs in the south-west (SW) 
      quadrant. Empirically, WTA is greater than WTP for equivalent units of health, a 
      finding supported by loss aversion under prospect theory. More recently, 
      appropriate threshold values for health effects have been shown to require an 
      endogenous consideration of the opportunity cost of alternative actions in 
      budget-constrained health systems, but also allocative and displacement 
      inefficiency observed in health system practice. Allocative and displacement 
      inefficiency arise in health systems where the least cost-effective program in 
      contraction has a higher incremental cost-effectiveness ratio (ICER = m) than the 
      most cost-effective program in expansion (ICER = n) and displaced services 
      (ICER = d), respectively. The health shadow price derived by Pekarsky, [Formula: 
      see text] reflects the opportunity cost of best alternative adoption and 
      financing actions in reimbursing new technology with expected incremental costs 
      and net effect allowing for allocative (n < m), and displacement, inefficiency 
      (d < m). This provides an appropriate threshold value for the NE quadrant. In 
      this paper, I show that for trade-offs in the SW quadrant, where new strategies 
      have lower expected net cost while lower expected net effect than current 
      practice, the opportunity cost is contraction of the least cost-effective 
      program, with threshold ICER m. That is, in the SW quadrant, the cost reduction 
      per unit of decreased effect should be compared with the appropriate opportunity 
      cost, best alternative generation of funding. Consequently, appropriate 
      consideration of opportunity cost produces a kink in the threshold at the origin, 
      with the health shadow price in the NE quadrant and ICER of the least 
      cost-effective program in contraction (m) in the SW quadrant having the same 
      general shape as that previously suggested by WTP versus WTA. The extent of this 
      kink depends on the degree of allocative and displacement inefficiency, with no 
      kink in the threshold line strictly only appropriate with complete allocative and 
      displacement efficiency, that is n = d = m.
FAU - Eckermann, Simon
AU  - Eckermann S
AD  - Australian Health Services Research Institute, University of Wollongong, 
      Wollongong, NSW, Australia, simoneck4@hotmail.com.
LA  - eng
PT  - Comparative Study
PT  - Journal Article
PL  - New Zealand
TA  - Appl Health Econ Health Policy
JT  - Applied health economics and health policy
JID - 101150314
SB  - IM
MH  - *Cost-Benefit Analysis
MH  - Health Care Costs/*statistics & numerical data
MH  - Humans
MH  - Models, Economic
EDAT- 2014/11/05 06:00
MHDA- 2015/10/30 06:00
CRDT- 2014/11/03 06:00
PHST- 2014/11/03 06:00 [entrez]
PHST- 2014/11/05 06:00 [pubmed]
PHST- 2015/10/30 06:00 [medline]
AID - 10.1007/s40258-014-0136-3 [doi]
PST - ppublish
SO  - Appl Health Econ Health Policy. 2015 Feb;13(1):7-13. doi: 
      10.1007/s40258-014-0136-3.