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ROI Tools

Glossary

Assumption of Effect

This allows you to set the level of impact you expect to see for your selected package of interventions.

It should be noted that the impact scenarios are reported separately for adults and children, as the data for these 2 populations cannot be combined.

Average effect: This assumes that the effect of the package is only as good as its most effective intervention. The idea behind this assumption is to capture a situation in which different interventions are included in the package, but the beneficiaries (those for which the interventions have an effect) are the same individuals. For example, in the Physical activity tool - in a population of 100 people:

  • Intervention A: allocation 30%; effect 10%.
    Therefore, as a result of the intervention, 3 individuals become physically active (i.e. 0.3 x 0.1 x 100).
  • Intervention B: allocation 20%; effect 20%.
    Therefore, as a result of the intervention, 4 individuals become physically active (i.e. 0.2 x 0.2 x 100).

The conservative impact scenario assumes that, to some extent, the individuals receiving the interventions are the same and, as a result of the overall package (i.e. intervention A and B combined), 4 individuals become physically active

Cumulative effect: This assumes that every intervention has its individual effect, and that these effects can be added together. In contrast to the conservative scenario, the maximum scenario thus assumes that the populations benefiting from the interventions are distinctive. Following the example above, under the maximum impact scenario, 7 individuals (3 individuals from A plus 4 individuals from B) become physically active as a result of the overall package.

Conservative effect: This is a simple average of the conservative and maximum impact scenarios. It assumes that the effect of the overall package lies in between the single most effective intervention and the cumulative effective of the whole package.

Avoidable burden of disease

The number of QALYs gained per person and the population reached by the intervention / package (the population reached is the proportion of the UK population affected by the condition). This provides an indication of the scale of the health problem that can be resolved by the intervention / package. In the tobacco tool, this metric is standardised as QALYs gained per 1000 smokers and is given separately for 2, 5, 10 years and lifetime.

Baseline estimates

Count of events (e.g. days of absenteeism, GP visits or hospitalisations), productivity losses or health and social care costs due to tobacco or alcohol use or lack of physical activity. These estimates refer to current economic burden of tobacco / alcohol use or lack of physical activity in the local area.

Benefit-Cost Ratio

including all cost savings and value of health gains
The sum of all cost savings and value of health gains (monetary value of QALY multiplied by the number of QALYs gained) divided by the cost of the package. A value greater than 1 indicates that the benefits of the package exceed its costs.

including all cost savings The sum of all cost savings divided by the cost of the intervention / package. A value greater than 1 indicates that the benefits of the intervention / package exceed its costs.

including only health care cost savings and value of health gains
The health care cost savings and value of health gains (monetary value of QALY multiplied by the number of QALYs gained) divided by the cost of the intervention / package. A value greater than 1 indicates that the benefits of the intervention / package exceed its costs.

including only health care cost savings
The health care cost savings divided by the cost of the intervention / package. A value greater than 1 indicates that the benefits of the intervention / package exceed its costs.

including only social care cost savings
The social care cost savings divided by the cost of the package. A value greater than 1 indicates that the benefits of the intervention / package exceed its costs.

including only productivity cost savings
The productivity cost savings divided by the cost of the intervention / package. A value greater than 1 indicates that the benefits of the intervention / package exceed its costs.

including only transport benefits
The transport benefits divided by the cost of the intervention / package. A value greater than 1 indicates that the benefits of the intervention / package exceed its costs.

Burden of Disease

The impact of a health problem in an area measured by financial cost, mortality, morbidity, or other indicators. It is often described in terms of QALYs or DALYs, which combine the burden due to both death and morbidity into one index.

Cost effectiveness plane
Cost effectiveness plane

The 4 quadrants or parts of the graph are labelled NW, NE, SW and SE. Any intervention located in the NW quadrant costs more AND is less effective than the status quo which is designated as ‘c’ in the graph (should be rejected), any interventions in SE is more effective AND cost less ( therefore the interventions dominate and should be accepted), any intervention in NE is more effective but it costs more (need to work out if cost effective - NICE uses a threshold of £20,000 per QALY) and any intervention in SW is less effective but costs less (again, it’s a judgement call - are we prepared we lose a few QALYs in order to save money?).

Cost per death avoided

The incremental cost of the package minus the sum of health care cost savings divided by the number of deaths avoided. A negative number indicates that the health care cost savings are greater than the original cost of the intervention.

Cost per life year gained

Amount in £s that it costs to produce one extra year of life.

Cost per life year saved

The incremental cost of the package minus the sum of health care cost savings divided by the number of life years saved.  A negative number indicates that the health care cost savings are greater than the original cost of the intervention.

Cost per QALY gained

The incremental cost of the package minus the sum of all cost savings divided by the number of QALYs gained. A negative number indicates that the health care cost savings are greater than the original cost of the intervention.

Cost per quitter

Amount in £s that it costs to produce one person who stops smoking. The model assumes that if someone is a confirmed quitter at 1 year, then they are counted as a quitter in all future years.

DALY

Disability Adjusted Life Year

Disability Adjusted Life Year

Disability adjusted life year is a measure of overall disease burden expressed as the number of years lost due to ill-health disability or early death.

Discount Rate

The rate, per year, at which future values are diminished to make them comparable to values in the present.

Gross cost savings 

Cost savings achieved without the cost of the intervention taken into account.

Health Inequalities

Inequalities in respect of life expectancy or general state of health which are wholly or partly a result of differences in respect of general health determinants.

ICER

Incremental Cost-Effectiveness Ratio

ICER

including all cost savings
Difference in the expected cost of two interventions, divided by the difference in the expected effect produced by the two interventions.

The ICER can be either:

  • A positive number.
  • Dominant (would accept): if cost of the intervention / package minus the sum of all cost savings < 0 and QALYs gained > 0.
  • Dominated (would reject): if cost of the package minus the sum of all cost savings > 0 and QALYs gained < 0.
Net cost saving, 1 year

including health care cost saving
Net cost savings per recipient for year 1 (health care cost savings in the first year minus the cost of the intervention).

including health care cost saving and the value of productivity saving
Net cost savings per recipient for year 1 (health care cost savings and the value of productivity savings in the first year minus the cost of the intervention).

NPV

Net Present Value

Net Present Value

including health care cost saving
The sum of health care cost savings per recipient less implementation cost per recipient. A positive value indicates that the value of the benefits exceeds the intervention costs.

including health care cost saving and health gain
The sum of health care cost savings and value of health gains (monetary value of QALY multiplied by the number of QALYs gained) per recipient less implementation cost per recipient. A positive value indicates that the value of the benefits exceeds the intervention costs.

Productivity Gains

The impact of an intervention on the productivity / income of those receiving the intervention.

QALY

Quality Adjusted Life Year

Quality Adjusted Life Year

A measure of disease burden, including both the quality and the quantity of life lived. It is used in assessing the value for money of health interventions.

ROI

Return on Investment

Return on Investment

A general term encompassing the techniques for comparing the costs and benefits generated by an investment.

Short run productivity gain

Productivity gains per recipient for the first 2 years following the intervention.

Short Term
Passive Smoking Savings

The savings in the number of adults and children who are exposed to second-hand smoke and associated costs averted in the first two years of investment

Short Term Productivity Gains

Value of productivity gains in the first two years of investment.

Short Term
Quasi-societal Savings

Value of productivity gains, healthcare and social care cost-savings and cost-savings due to a reduction in the activity of interest (e.g. passive smoking). In relation to smoking, social care costs refer to Local Authority costs of looking after patients who have had smoking-attributable stroke. Inclusion of social care costs in any ROI analysis is being given importance recently but it is important to emphasise here that these need to be looked at in terms of social care costs that are attributable to smoking. Unfortunately, such data is not available to the extent they are needed to include in the tool. Therefore, using best evidence available, we have included social care costs related to only one condition, i.e. stroke. This means that unless we can include all smoking related social care costs the figures are likely to be very small (e.g. social care costs of smoking attributable stroke).

Short Term Resource Use Savings

The savings in the number and corresponding costs of for example, GP visits, hospital admissions, prescriptions, nurse visits, and Local Authority costs of caring for stroke patients averted in the first two years of investment

Time horizon

The tool allows users to look at the benefits and ROI for a specified time period. Please select either 1, 2, 5, 10 or Lifetime (calculated as 48 years). This function gives the user flexibility to adjust the analysis based on the time perspective (short, medium, long term) they are most interested in.

Value of a QALY

A Quality-Adjusted Life-Year (QALY) takes into account both the quantity and quality of life generated by public health interventions. Generally NICE considers that interventions costing the NHS less than £20,000 per QALY gained are cost-effective. Those costing between £20,000 and £30,000 per QALY gained may also be deemed cost effective, if certain conditions are satisfied (see section 7.7 of the NICE guidance manual).

Amending the Cost of a QALY value in the tool will impact on the ROI Metrics.