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Scientific article - Cost-benefit analysis methodology for investment in refractive surgery - Lead Beneficiary - “Victor Babeș” University of Medicine and Pharmacy Timisoara

07.Jan.2019

Article published online in SEA - Practical Application of Science:

https://recalt.umft.ro/2-Administrator/Research%20reports/4/SPAS_18_21.pdf?_t=1547239465

Scientific article - Social value of refractive surgery services - Lead Beneficiary - “Victor Babeș” University of Medicine and Pharmacy Timisoara

12.Nov.2018

Abstract

 

The current study targets to assess the social value of refractive surgery services over the Romanian-Serbian cross-border region (border of the European Union). Refractive errors (Myopia, Hyperopia, Astigmatism, Presbyopia) are the leading cause of visual impairment worldwide, decreasing the quality of life and the productivity of a large percentage of the population. Lately, modern surgical techniques that allow for the correction of refractive errors are becoming available in the more developed regions of the world. However, refractive surgery services require important capital allocations for investments in modern medical equipment and the training of the medical personnel. Such allocations are necessary in the public healthcare system over the Romanian-Serbian cross-border region, but can only be based on feasibility studies. The cost benefit analyses included in the feasibility studies are in great need of benchmarks for the conversion of social effects into monetary form. The current research employs the contingent valuation method for the estimation of a benchmark (applied on 210 patients). 

 

 

 

 

 

Introduction

Conducting any type of activity generally involves the consumption of resources, whether it’s materials, fuel, electricity, labor force or services. As such resources are limited, their consumption has to be justified by the end results (Brindescu-Olariu, 2014). The ends of human activities may be extremely diverse, ranging from financial objectives (under the form of profits, value added, net cash flows, etc.) to social objectives (reduction of fossil fuel consumption, protection of endangered species, saving of human lives, increase of the quality of life, reduction of crime, etc.). In economics, the decision to allocate resources for their consumption within a specific activity is based on the comparison between the value of the resources to be consumed and the value of the results to be obtained. In the field of healthcare, the particular challenges of such analyses are associated to the difficulties in identifying all types of costs and benefits, in forecasting their quantities and in finding instruments for their evaluation. To perform the analysis, the reflection of all costs and benefits under a monetary form is necessary. This poses an apparent ethical problem, as the potential benefits of the activities carried out in the field of healthcare often include saving human lives, increasing life expectancy, increasing the quality of life, reducing the physical or mental impact of different pathologies on patients and their families.

Refractive errors affect a high percentage of children and young adults and most of the adults past 40 years of age. The disabilities will differ from one type of refractive error to the other (Myopia, Hyperopia, Astigmatism, Presbyopia), as well as in function of the gravity of the error. The effects of the pathology on the patient's life might vary significantly (from a small discomfort to the inability to perform basic activities). The treatment options will vary as well, as some conditions might be treated by wearing glasses or contact lenses, while others will demand for immediate surgical intervention. As such, the costs of eye surgery, the costs of the alternative treatments, the risks, and the impact on the quality of life of the patient will differ.

Refractive surgery services are becoming available in more parts of the world. Such surgical interventions have the potential of correcting the refractive errors, leading to the reduction or the total elimination of their impact on the patient’s life.

Over the Romanian – Serbian cross border region, the access to such services is limited by the lack of investments in modern medical equipment, the lack of training of the medical personnel, as well as by the low budgets of the patients (that cannot afford traveling to other regions and paying for the refractive surgery services). Future public investments in Fempto Lasik technology as well as in training the medical personnel would facilitate the access of the regional population to such services, with positive impact on the quality of their lives. Nevertheless, such investments need to be justifiable from the socio-economic perspective. The regional public healthcare system does not target financial returns. For this reason, financial effects (as net operating cash-flows) cannot stand for a basis of the feasibility analysis. Instead, the public healthcare system targets social effects. While the investments in refractive surgery equipment, operatory rooms and training are directly measured in money, their effects on a social level, although evident, are harder to evaluate (and thus easier to ignore). As no public investment is made at regional level without a prior feasibility analysis, cost benefit analysts need benchmarks for the conversion of the social effects of investments into monetary form. The current study targets to establish a benchmark for the social value of refractive surgery services over the Romanian-Serbian cross-border region.

 

Literature review

In its report form 1980 “The Implications of Cost-Effectiveness Analysis of Medical Technology”, the Office of Technology Assessment was concluding that a cost-benefit analysis had the potential to be very helpful to decision makers. At the same time, OTA was noting that the cost benefit analysis had too many methodological limitations to justify relying only on its results in the decision process. At the present time, the cost-benefit analysis has become a mandatory requirement for decisions regarding public investments all over the world. Laying down the benefits targeted through an investment can only clear up the purpose of the capital allocation. Forecasting the costs of operating the investment will offer essential information concerning further capital requirements and financial sustainability.  Evaluating the feasibility of the investment based on the forecasted costs and benefits is only logical in the process of deciding whether the investment is sociably desirable, or of prioritizing several investment options. Nevertheless, the importance that the cost-benefit analysis has gained during the last decades in public decisions demands the development of methodologies that can guarantee a great level of accuracy. In particular, the methodologies for identifying and measuring the social costs and benefits present important improvement potential. As the social conditions vary from one region of the world to another, local benchmarks need to be established (and constantly updated).

Refractive errors affect large proportions of the population all over the world, being the leading cause of visual impairment (Norouzirad et al., 2015). While refractive errors are not directly life-threatening, they negatively affect the quality of life in general and the labor productivity in particular. The prevalence of refractive errors is high worldwide, reaching its peak in populations over 40 years of age (most persons over 40 are affected by refractive errors). Studies over the children and young adults show various prevalence rates from region to region: 63% in Timis, Romania (Budau, 2003), 28,1% in Arad, Romania (Turcin and Jompan, 2013), 22,6% in Serbia (Risovic et al., 2008), 55% in Poland (Czepita, 2007), 41,8% in Bosnia – Herzegovina (Popović-Beganović et. al, 2018), 19,7% in Bulgaria (Oscar et al., 2014).

The contingent valuation is the most popular method for assessing the value of improved medical services, as perceived by patients. Through the contingent valuation method, patients are asked how much money they would be willing to pay for improved services (Pavel, Chakrabarty, Gow, 2015).

Smith et al. (2003) used the estimated loss of GDP to evaluate the social impact of uncorrected refractive errors. Nevertheless, the GDP is not generated only by the labor force, but is also based on the contribution of the shareholders or banks that supply the companies with the capital required for sustaining the operating activity, as well as on the contribution of the state (that supplies public services). Information concerning the productivity loss related directly to refractive errors for the Romanian – Serbian cross – border region was not available. Even if an estimation of the productivity loss was made, the value of the losses (affecting the employees, the investors of the state budget) cannot constitute the sole basis for the estimation of the benefits of refractive eye surgery (factors as the loss of time, cost of additional medication, physical and psychological discomfort or risks also need to be taken into consideration). Considering the inevitable estimation errors for the labor productivity losses, as well as the need to take into consideration additional factors, the possibility of dealing with refractive errors by using glasses or contact lenses (which involve specific costs), the estimation of the social value of the refractive surgery services must be based on the willingness to pay for its net benefits. For this reason, we opted to use the willingness to pay of the population as a means for evaluating the social value of the refractive surgery services. 

 

Methodology

Te objective of the study was to establish a benchmark for the value of refractive surgery services, valid over the Romanian-Serbian cross-border region. The benchmark is destined in particular to cost – benefit analysts that elaborate feasibility studies for investments in this field. The service taken as a reference consists in refractive surgery for both eyes using Fempto Lasik technology. In other parts of the world, such services are made available widely by private healthcare institutions. Therefore, there are consistent bases for a financial feasibility analysis. Over the Romanian – Serbian cross-border region, the services are not available in the private sector, which is why a value of these services is not established by the local market. Under these circumstances, the current study attempts to estimate the social value of the services based on the willingness to pay of the regional population. The negative impact of refractive errors on the lives of the patients are divers, ranging from physical discomfort in wearing glasses or contact lenses, to difficulty in performing certain physical tasks or emotional distress. Not to be ignored are the current expenses with medical investigations, glasses or contact lenses, as well as the additional time consumed in related activities. The social value of the refractive surgery services is based on the evaluation of the negative impact of refractive errors on the lives of the patients. Nevertheless, the separate evaluation of each negative effect of refractive errors was considered impractical, as the population is never in the position to deal with only one effect at a time. Instead, the estimation of the social value of refractive surgery services (aimed at removing the aforementioned effects) was performed based on the willingness to pay of the regional population. For this purpose, a survey was conducted at regional level, based on a questionnaire. The main question targeted the estimation of the price that the respondent would be willing to pay for refractive surgery for both eyes using Fempto Lasik technology. Each respondent was explained the purpose of the study, the specifics of the surgery and its expected effects. The sample included 210 respondents from the Romanian – Serbian cross-border region (both patients that were already suffering from refractive errors and persons that were healthy or suffering from other pathologies). Of the 210 responses, 199 were considered valid. The main goal of the research was to estimate an average value of the surgery services. The average value would be proposed as a benchmark in the valuation of social effects of investments in this field. As a secondary objective, the testing of several hypotheses (concerning the determinants of the value) was had in view:

  1. Hypothesis 1: the willingness to pay for refractive surgery services is correlated to the age of the patient. At some point in life, every person ends up having ophthalmological problems. Refractive surgery is normally not applicable to persons under the age of 18-20, as their eye globes are still in development. Therefore, refractive surgery services are normally not available for children. On one hand, parents could be expected to pay more for the health of their children than for their own health. The remaining life expectancy of children is expected to be longer than the remaining life expectancy of an adult, which is why the impact of refractive pathologies on the quality of life of children is higher (the quality of life is negatively affected for a longer period of time). On the other hand, children have to wait for a longer period of time until the surgery services are available to them, which impacts the current value of the services through the discounting process. With age, the life expectancy reduces, which is why it was estimated that the value of the services reduces. After the age of 40, the applicability of refractive surgery reduces drastically, which is why its social value is expected to reduce as well. Considering the aforementioned factors, a linear correlation cannot be expected.
  2. Hypothesis 2: the willingness to pay for refractive surgery services is influenced by the gender of the patient. Wearing glasses can affect in different ways the image of the patient, with different acceptance rates between men and women. Glasses and contact lenses make physically demanding activities more difficult. If it is to be assumed that men are more inclined toward physical activities, the value of refractive surgery services (that reduce the need for glasses or contact lenses) could be expected to be higher for men. The life expectancy of women over the cross-border area is significantly higher than that of men, which is why their willingness to pay could be higher.
  3. Hypothesis 3: the willingness to pay for refractive surgery services is influenced by the residence of the patient. It is expected that patients that live in developed urban areas would have better access to information about the progresses made in medicine and thus have higher expectancies for their own health. At the same time, the population from developed urban areas is expected to have higher revenues, which would make high quality medical services more available to it. The population from rural area is expected to be less informed and, in particular, to be significantly more reluctant to medical visits. The average income level in rural areas is significantly lower compared to urban areas. For such reasons, the willingness to pay for refractive surgery services might be lower in rural areas. At the same time, because of more time of exposure to sunlight, the incidence of refractive pathologies in rural areas is expected to be lower. Suburban areas near large cities are often the residence of wealthier people that work in the urban areas. For such reasons, they might be willing to pay more.
  4. Hypothesis 4: the willingness to pay for refractive surgery services is positively correlated to the level of education of the patient. Patients with higher levels of education are expected to be more likely to show refractive pathologies. At the same time, they are likely to be more informed about the progresses made in medicine and more willing and able to pay for refractive surgery.
  5. Hypothesis 5: the willingness to pay for refractive surgery services is influenced by the health status of the patient. Respondents were asked to evaluate their general health status by attributing to themselves health indexes from 1 to 100 (100 meaning perfect health). Individuals with good health status might be generally investing more in their health. In addition, for individuals with low health, the refractive pathologies might not constitute a priority.
  6. Hypothesis 6: the willingness to pay for refractive surgery services is positively correlated to the household revenue. Respondents were asked to indicate the average monthly revenues of their households. It was expected that higher levels of the households increase the payment capacity of the patients and therefore, the willingness to pay. As the revenues of the household could be distributed among a different number of family members, the monthly average revenues / family member were also tested as a determinant of the willingness to pay.
  7. Hypothesis 7: The length of time during which the patient had worn glasses or contact lenses was also expected to be a factor for the willingness to pay. People already wearing glasses might be more willing to pay to restore their vision. At the same time, people wearing glasses for a long time might have gotten used to them and have a weaker incentive to pay for surgery.
  8. Hypothesis 8: People with more serious ophthalmological pathologies might be more used to going to the doctor and therefore be more susceptible to pay for surgery. At the same time, people with serious eye pathologies might see the refractive errors as unimportant.
  9. Hypothesis 9: Patients with other types of pathologies might show less interest to the less-important / non life-threatening refractive pathologies (thus being less willing to pay).

Data

Data was collected from a total of 210 respondents. Because of incomplete information, 11 responses were eliminated, leaving the dataset at 199 valid entries. The main question asked to each respondent was to estimate the price that they would be willing to pay for refractive surgery services for both eyes, using the Fempto Lasik technique. As the technique is new, basic information concerning its application was provided to the respondents. In addition, separate questions were asked about:

-               Age of the respondent;

-               Gender of the respondent;

-               Residence of the respondent;

-               Education level;

-               Health status of the respondent;

-               Household revenue;

-               Number of family members;

-               The length of time during which the patient had worn glasses or contact lenses;

-               The presence of ophthalmological pathologies or other pathologies.

 For the purposes of the research, the sample was structured in the following age groups:

-               Up to 18 years old: teenagers that aren’t yet fit for refractive surgery (as their eye development is in progress), but are soon to be ready for the intervention and have the longest lifespan left with the effects of the surgery.

-               Age 19 – 21: young people that are just becoming fit for surgery.

-               Age 22 – 30: young adults that are at a proper age for refractive surgery and are the first to probably have it on their own finances.

-               Age 31 – 40: adults with probably a more stable carrier and more stable finances,

-               Over 40: adults that are becoming unfit for surgery (or are left with little time to benefit of the effects of the surgical procedure fully).

Most of the respondents were from the age group 19 – 40 (the group best fitted for surgery).

 

Results

In a first stage, the average price that the population included in the sample was willing to pay was calculated. Thus, on average, the price that a person is willing to pay for refractive surgery on both eyes is of 3.437 lei (approximately 740 euro). In a second stage, average prices were calculated on sub-samples, with the purpose of identifying significant differences in the willingness to pay (and thus, possible determinants of the willingness to pay). The data was processed in SPSS, with the objective of identifying the determinants of the price attributed by the population to the refractive surgery services and, possibly, proposing an estimation model. However, the correlations of the price to the proposed factors proved to be relatively weak for these purposes.

As presented in table 1, the willingness to pay shows significant differences between age groups, but the correlation between age and the price paid is not linear. In fact, the age groups that are not suited for refractive surgery are willing to pay for it more. The perceived health index doesn’t change drastically with age, with the unexpected conclusion that the youngest respondents perceive themselves as less healthy. As shown in table 2, the differences between the average prices proposed by men and women are relatively low, with women perceiving themselves as less healthy. The level of education (analyzed in table no. 3) is positively correlated to the level of income, but not to the willingness to pay for refractive surgery services. Persons with ophthalmological pathologies value refractive surgery services more (as shown in table no. 4). Persons that were recently forced to wear eye glasses are willing to pay for refractive surgery services more than persons that have already got used to glasses (table no. 5).

 

Conclusions

On average, the regional population is willing to pay 740 euro for refractive surgery on both eyes. This price is lower than the prices demanded by private hospitals in other regions (1.290 euro in Bucharest, 1.100 euro in Belgrade). Nevertheless, the price of 740 covers the average costs (estimated at regional level at 323 euro). Thus, a private hospital that would register complete costs of 323 euro / refractive surgery on both eyes and would charge 740 euro would be able to cover current consumptions (materials, utilities, personnel, etc), recover the invested capital (by also covering the depreciation costs) and obtain profits. A public hospital that would not charge direct fees to patients would recover the value of the costs (of refractive surgery) from the insurance fund. The public budget would support payments of 323 euro, but the social value of the effects of the surgery can be estimated at 740 euro. Under these circumstances, both private and public investments made in this field have the potential of being feasible (financially or socially).

The same condition will have different impacts on the quality of life of the patients depending on the profile of the patient (age, field of activity, hobbies, and other medical conditions). For some patients, wearing contact lenses does not pose a significant problem. In such cases, the effects of refractive surgery on the quality of life might be more modest. On one hand, the surgical procedure will involve financial costs for the patient or for the community, as well as risks, discomfort, loss of time, additional costs with the post-surgery medication, additional loss of time and money with the follow-up. On the other hand, continuing to wear contact lenses might only involve minor discomfort and costs with the regular purchases of the contact lenses.

Other patients with the same pathology might not have the option of wearing contact lenses because of allergies. For such patients, the incremental benefits of a possible eye surgery will be higher.

Some patients might not perceive a significant discomfort while wearing glasses, while others might have great difficulty in performing their tasks while wearing glasses (as in the case of athletes). Young people might also feel that eye glasses negatively affect their looks, while for older people this aspect might be less important.

For patients with degenerative conditions, the surgical intervention might be more urgent and the alternative options might prove more limited.       

Patients with diabetic maculopathy face the risk of progressively losing their eye sight. The benefits of eye surgery must be judged in accordance to their condition, which might be influenced by their education, food consumption, physical activity, age, alcohol consumption, other medical conditions (blood pressure, cholesterol). Based on our research, we recommend the value of 740 euro as a benchmark for converting the net social benefits of refractive surgery for both eyes using Fempto Lasik technology. The benchmark should be employed by cost-benefit analysts in feasibility studies for investments made over the Romanian-Serbian cross-border region.

 

References

Journal articles

[1] Budău, M., Gamaniuc, E.,Moise, C., Korbuly, B. Study of refractive changes in Timis county. Oftalmologia, 58(3):64-9.

 

[2] Czepita, D., Mojsa, A., Ustianowska, A., Czepita, M., Lachowicz, E. (2007). Prevalence of refractive errors in schoolchildren ranging from 6 to 18 years of age. Annales Academiae Medicae Stetinensis, 53 (1), 53 – 56.

 

[3] Norouzirada, R., Hashemib, H., Yektac, A., Nirouzada, F., Ostadimoghaddamd, H., Yazdanic, N., Dadbine, N., Javaherforoushzadehe, A., Khabazkhoobf, M. (2015). The prevalence of refractive errors in 6- to 15-year-old schoolchildren in Dezful, Iran. Journal of Current Ophthalmology, 27, 51–55.

 

[4] Oscar A, Cherninkova S, Haykin V, Aroyo A, Levi A, Marinov N, Kostova S, Elenkov C, Veleva N, Chernodrinska V, Petkova I, Spitzer J. (2014). Amblyopia screening in Bulgaria. Journal of pediatric ophthalmology and strabismus, 51(5), 284-288.

 

[5] Popović-Beganović, A., Zvorničanin, J., Vrbljanac, V., Zvorničanin, E. (2018). The Prevalence of Refractive Errors and Visual Impairment among School Children in Brčko District, Bosnia and Herzegovina. Seminars in Ophthalmology, 33(7-8),858-868.

 

[6] Pavel, S., Chakrabarty, S., Gow, J. (2015). Assessing willingness to pay for health care quality improvements. BMC Health Services Research, 15 (1), 1-10.

 

[7] Risovic, D.J., Misailovic, K.R., Eric-Marinkovic, J.M., Kosanovic-Jakovic, N.G., Milenkovic, S.M., Petrovic, L.Z. (2008). Refractive errors and binocular dysfunctions in a population of university students. European Journal of Ophthalmology, Vol. 18 (1), 1-6.

 

[8] Turcin, L., Jompan, A. (2013). Prevalence of refractive errors in schoolchildren in Romania. Jurnalul pediatrului, 16 (61-62), 38-44.

 

[9] Smith, T., Frick, K.,  Holden, B., Fricke, T., Naidoo, K. (2009). Potential lost productivity resulting from the global burden of uncorrected refractive error. Bull World Health Organ, 87 (6), 431–437.

 

Books

[10] Brindescu-Olariu, D. (2014). Bankruptcy assessment methods based on financial ratios, Timisoara, Mirton, 9-10.

 

[11] The Implications of Cost-Effectiveness Analysis of Medical Technology (5-6), Retrieved from https://www.princeton.edu/~ota/disk3/1980/8011/8011.PDF.

 

Acknowledgement

This work was supported by a grant from the Romania-Serbia Cross-Border Cooperation Program, project RECALT, RORS 11.

 

 

 

Appendix

 

Table no. 1 Data analysis - classification by age groups

N.

Category

Volume

Health Index

Household revenue

Family members

Household revenue / family member

Average price (lei)

1

<=18

15

81,0

4.753

4,0

1.317

3.880

2

19 - 21

57

84,6

5.084

3,7

1.411

3.982

3

22 - 30

53

87,0

5.398

3,9

1.590

3.019

4

31 - 40

41

85,1

6.263

2,9

2.319

2.868

5

> 40 years

33

83,9

7.518

3,3

2.388

3.670

6

Overall

199

85,0

5.789

3,6

1.801

3.437

 

 

Table no. 2 Data analysis - classification by genders

N.

Category

Volume

Health Index

Household revenue

Family members

Household revenue / family member

Average price

1

Female

139

83,9

5.624

3,6

1.726

3.468

2

Male

60

87,3

6.173

3,5

1.974

3.365

3

Overall

199

85,0

5.789

3,6

1.801

3.437

 

 

Table no. 3 Data analysis - classification by education level

N.

Category

Volume

Health Index

Household revenue

Family members

Household revenue / family member

Average price

1

< high school

5

79,8

2.640

3,8

740

2.560

2

high school

87

84,6

4.837

3,8

1.362

3.701

3

Post - high school

7

82,4

4.657

2,9

1.698

2.614

4

Bachelor's degree

59

85,3

5.807

3,8

1.766

3.232

5

Master's degree

31

86,1

7.271

2,8

2.702

3.471

6

PhD

10

87,0

11.750

3,2

3.633

3.250

7

Overall

199

85,0

5.789

3,6

1.801

3.437

 

 

Table no. 4 Data analysis - classification by the presence of ophthalmological pathologies

N.

Category

Volume

Health Index

Household revenue

Family members

Household revenue / family member

Average price

1

Yes

92

82,1

6.013

3,6

1.886

3.684

2

No

107

87,4

5.597

3,6

1.728

3.224

3

Overall

199

85,0

5.789

3,6

1.801

3.437

 

 

Table no. 5 Data analysis - classification by the use of glasses

N.

Category

Volume

Health Index

Household revenue

Family members

Household revenue / family member

Average price

1

No

94

88,7

5.786

3,7

1.727

3.314

2

Less than 1 year

14

75,0

4.250

3,8

1.211

4.150

3

1 - 3 years

15

83,2

6.813

3,4

2.158

2.607

4

More than 3 years

76

82,5

5.875

3,4

1.930

3.621

5

Overall

199

85,0

5.789

3,6

1.801

3.437

Article published online in SEA - Practical Application of Science:  

https://recalt.umft.ro/2-Administrator/Research%20reports/3/SPAS_18_19%20-.pdf?_t=1547239455

Research concerning the socio-economical implications of refractive pathologies / The social value of refractive surgery services - Lead Beneficiary - “Victor Babeș” University

13.Aug.2018

The social value of refractive surgery services

Through the RECALT project, the University of Medicine and Pharmacy Timisoara has made investments of over 1 million euro in medical equipment for refractive surgery (Fempto Lasik equipment and Micropulse laser). The investment was financed mostly through European and national subsidies (Interreg-IPA CBC Romania-Serbia Programme). Under these circumstances, the investment targets the generation of social benefits (instead of financial gains). The services are being offered to the population without pay, which eliminates the possibility of recovering the investment or making the investment feasible from the financial point of view. However, the investment generates an important impact at regional level, from the socio-economic point of view. Similar investments could be made by the public authorities in other regions, for the benefit of the local populations. The investments would involve the allocation of public capital. In order to adopt such decisions, feasibility studies are mandatory. As in such cases the investments being financially feasible is out of the question, the socio-economic feasibility represents the only valid justification. The net present value of such an investment can be estimated as follows:

Investments  

The investments in this field would consist in most cases in purchases of medical equipment and construction works for the rehabilitation of the operating rooms. The calculation of the net present value of the investment (NPV) requires the estimation of the yearly payments for such investments (i = the investment year, m = the duration of the implementation period, in years). The value of the total investment will be estimated under the form of investment budgets (which, in Romania, will follow the structure imposed by order 906/2016). The schedule of the investment payments will be influenced by both technical and financial parameters.

Net operating cash-flows  

The exploitation of the investments in the field of refractive surgery will generate additional financial flows for the healthcare unit. In the private sector, each surgical procedure (together with the preliminary consultations and the follow-up) will involve a fee, paid by the patient and, possibly, by the Health Social Security. The operating cash inflows obtained in this manner should cover both monetary and non-monetary costs of the services and allow at the same time for obtaining a surplus. Thus, the investment could be recovered (more specifically, the capital invested) and a certain financial return could be generated. In the public sector, the Health Social Security might cover the monetary cost of the services, with no perspective of covering the non-monetary costs (like depreciation) or generating a positive financial return. For both private and public sectors, the main operating outflows would consist of wages, medical supplies, utilities and possibly rents. Generally, the wage payments in the private sector will be higher.

Discount ratio (d)

The same discount ratio was considered for the treatment of both financial and non-financial effects of the investment. Different discount ratios could also be employed (the European Commission  recommends it in some cases). The discount rate should reflect the expectations of the stakeholders, in terms of financial (and possibly non-financial) returns.

The socio-economic lifespan of the investment  

The socio-economic lifespan of the investment represents the period in which the investment is expected to generate net socio-economic benefits. In the field of refractive surgery, the socio-economic life-span of an investment in surgical equipment could be expected to be of aprox. 8 years. With the socio-economic lifespan of the investment being relatively short, the explicit forecasting period of the operating activity (n) should cover it entirely. However, if the explicit forecasting period of the operating activity (n) does not cover the socio-economic lifespan of the investment entirely (the investment might also include construction works, with longer socio-economic lifespan), a financial residual value (FRV) as well as a social residual value (SRV) should be estimated for the end of the explicit forecasting period of the operating activity (n).

Net social benefits

For patients with refractive errors, wearing glasses or wearing contact lenses might represent alternatives to eye surgery. The disabilities will differ from one type of refractive error to the other (Myopia, Hyperopia, Astigmatism, Presbyopia) as well as in function of the gravity of the error. The effects of the pathology on the patient's life might vary significantly (from a small discomfort to the inability to perform basic activities). The treatment options will vary as well, as some conditions might be treated by wearing glasses or contact lenses, while others will demand for immediate surgical intervention. As such, the costs of eye surgery, the costs of the alternative treatments, the risks, the impact on the quality of life of the patient will differ.

It was estimated that 95 percent of those who undergo the Fempto Lasik procedure achieve a visual acuity of 20/40, while 85 percent returned to 20/20 vision.  Lasik takes a few months in total to adjust vision, but once the eyes adjust, the results are permanent. Follow-up laser eye surgery might still be required as the eyesight changes slightly with age.

The recovery after the surgical procedure is quick, most patients returning to their normal lifestyle and schedule within as little as 24 hours. Patients experience significant savings each year because they do not need to update their eyeglass and contact lens prescription. Not needing to wear eye glasses or contact lens has an important effect on the quality of life of the patient.

At the same time, the Fempto Lasik surgical procedure can involve social costs. The first cost perceived by the patient is the fee for the surgical procedure (if the patient pays the fee himself). In addition, the procedure will negatively affect the quality of life of the patient on the short – run, as it involves stress, missing from work during the preparatory consultations and during surgery, discomfort for a few days following the procedure. Changes made to the cornea through the Fempto Lasik surgical procedure are permanent, which is why possible errors can have an important negative effect. In some cases (estimated to aprox. 1%), the patients can suffer a worsening of the eyesight problem.

The value of the net socio-economic benefits of refractive surgery is under these circumstances one of the most important parameters of the feasibility analysis. The net socio-economic benefits of a specific investment will be proportional to the number of patients treated, as well as to the net socio-economic benefits / individual. While the estimation of the number of patients treated does not pose special difficulties, the analysts need benchmarks for the net socio-economic benefits / individual. Such a benchmark will be influenced by many socio-economic factors, which is why its value is expected to be different for each region.

In the attempt to estimate a benchmark for the net socio-economic benefits of refractive surgery / individual over the Romania-Serbia cross-border region, the following parameters were taken into consideration:

- the cost of performing a surgical procedure with the Fempto Lasik technology;

- the prices for such surgical procedures in other regions;

- the willingness to pay of the local population.

1) Hospital costs

Hospital costs were analyzed for patients that underwent refractive surgery through the RECALT project.

The costs cover both eyes. The analysis covered all pathologies. A detailed analysis, on pathologies, will be performed.

The costs include wages and social contributions of the direct and indirect staff, medical materials, materials specific to the laser equipment, depreciation, utilities. It is expected that the average costs would differ significantly from one region to the other, in particular because of the differences in wages. Depending on the type of cost calculated and the cost calculation method employed, the volume of the patients may be a factor.

2) Prices for refractive surgical procedures in other regions

The following table reflects the prices for Fempto Lasik surgical procedures in different regions.

N.

Medical service provider

Country

City

Price / 2 eyes

Source

1

Laser Vision Med

Romania

Bucharest

1.290

http://laservisionmed.ro/preturi/

2

Milos Clinic

Serbia

Belgrade

1.100

https://www.healthbreakserbia.com/en/selected-services/refractive-surgery-femto-laser

3

Luxor

Bulgaria

Plovdiv

1.740

https://www.lasercorrection.bg/en/prices-financing/

4

Medical Care Hungary

Hungary

Budapest

1.920

http://www.beautyhungary.com/eye-vision-correction/laser-eye-surgery-costs

5

Eye Laser

Austria

WIEN

3.200

https://www.eyelaser.at/en/prices-laser-eye-surgery/

6

Silmäasema

Finland

Helsinki

2.190

http://www.femtolasik.fi/en/localities-and-prices/helsinki/prices/

7

VISYA - Clinique de la Vision

France

Paris

1.400

http://www.cliniquedelavision.com/financement

8

Gemini

Czech Republic

Prague

1240

http://www.gemini.cz/en/pricelist/42-femto-lasik

9

Euro Eyes

Germany

Berlin

3.900

https://www.euroeyes.com/costs/

10

Focus Eye Clinic

Belgium

Wemmel

3.250

https://www.focus-eye-clinic.com/en/laser-eye-surgery/femto-lasik/

11

Average price

USA

average

3.567

https://www.allaboutvision.com/visionsurgery/cost.htm

12

Average price

UK

average

4.271

https://www.lasereyesurgeryhub.co.uk/typical-lasik-eye-surgery-costs-uk-clinics/

13

Average price

India

average

1.300

http://newvisionindia.com/lasik-costs/

14

Eye Laser

Switzerland

ZÜRICH

3.869

https://www.eyelaser.ch/en/prices-laser-eye-surgery/

15

Vista Laser

Spain

Malaga

1990

https://www.vista-laser.com/fees/

 

The differences in prices are based on many factors, such as the differences in staff costs, volume of patients and economies of scale, quality of the services, purchase power of the population.

The closest medical facilities to the Romanian – Serbian cross-border region with Fempto Lasik technology also demand for some of the lowest prices worldwide.

3) The willingness to pay of the local population

A questionnaire – based study is being conducted over the Romanian – Serbian cross-border region with the purpose of estimating the willingness to pay of the population for refractive surgery with Fempto Lasik technology. The questionnaire was administered both through face to face interviews, as well as online.

As the population is generally not aware of the details of the surgical technique, the technique was described in the face to face interviews and information was written for the online questionnaires. Part of the respondents do not consider wearing glasses as a problem affecting significantly the quality of their lives, circumstances under which they would not be willing to pay for a surgical procedure.

The price that the respondents are on average willing to pay for refractive surgery to both eyes is of 749 euro, a price significantly lower compared to the offer of private healthcare providers from Romania or Serbia.

 

Age, medical background and personal finances are factors for the willingness to pay of the population.

Research concerning the socio-economical implications of refractive pathologies - Lead Beneficiary - “Victor Babeș” University of Medicine and Pharmacy Timisoara

31.May.2018

The selection of patients was performed based on the type of pathology (senile cataract, glaucoma, keratoconus, hyperopia, retinal detachment, degeneration of the macula and posterior pole, hemorrhage of the vitreous body, astigmatism, conjunctival tumor, malignant orbital tumor, myopia). Information was collected for each patient included in the sample (for each patient, a sheet with extracts from medical charts, cost registers and other sources was elaborated). A database with medical, financial and socio-economical information was built. The data was processed through statistical analysis.

 

 

Parameters of the main sample

 

N.

Gender

Number

%

1

Male

52

52%

2

Female

48

48%

3

Total

100

100%

 

N.

County

Number

%

1

Timiș

77

77%

2

Caraș-Severin

15

15%

3

Mehedinți

5

5%

4

North Banat

0

0%

5

Central Banat

0

0%

6

South Banat

0

0%

7

Borski

0

0%

8

Branicevo

0

0%

9

Podunavski

0

0%

10

Other

3

3%

11

Total

100

100%

 

N.

Area

Number

%

1

Urban area

61

61%

2

Developed rural area

6

6%

3

Remote rural area

33

33%

4

Total

100

100%

 

N.

Eyes treated

Number

%

1

left eye

42

42%

2

right eye

49

49%

3

both eyes

8

8%

4

Total

99

100%

 

N.

Number of Pathologies

Number

%

1

single pathology

6

6%

2

multiple pathologies

93

94%

3

Total

99

100%

 

 

N.

Age

Number

%

1

Age <= 10 years

0

0%

2

10 years < Age <= 20 years

0

0%

N.

20 years < Age <= 30 years

0

0%

3

30 years < Age <= 40 years

0

0%

4

40 years < Age <= 50 years

1

1%

N.

50 years < Age <= 60 years

6

6%

5

60 years < Age <= 70 years

37

37%

6

70 years < Age <= 80 years

42

42%

N.

80 years < Age <= 90 years

14

14%

7

90 years < Age <= 100 years

0

0%

8

Age > 100 years

0

0%

N.

Total

100

100%

 

N.

Hospital stay (days)

Days

1

Minimum

0

2

Average

3,29

3

Maximum

16

 

 

N.

Hospital stay (days)

Number

%

1

Hospital stay < 3 days

50

50%

2

Hospital stay = 3 days

20

20%

3

Hospital stay > 3 days

30

30%

4

Total

100

100%

 

N.

Hospital costs (lei)

 

1

Minimum

222

2

Average

1.010

3

Maximum

3.090

 

 

N.

Hospital costs (lei)

Number

%

1

Hospital costs < 1000

61

61%

2

Hospital costs > 1000

39

39%

3

Total

100

100%

Costs and benefits of refractive surgery - Lead Beneficiary - “Victor Babeș” University of Medicine and Pharmacy Timisoara

31.May.2018

Conducting any type of activity generally involves the consumption of resources, whether it’s materials, fuel, electricity, labor force or services. As such resources are limited, their consumption has to be justified by the end results. The ends of human activities may be extremely diverse, ranging from financial objectives (under the form of profits, value added, net cash flows, etc.) to social objectives (reduction of fossil fuel consumption, protection of endangered species, saving of human lives, increase of the quality of life, reduction of crime, etc.). In economics (the science of administrating rare resources), the decision to allocate resources for their consumption within a specific activity is based on the comparison between the value of the resources to be consumed and the value of the results to be obtained.  Such comparisons contain analyses that have to establish:

  • the types of resources that need to be consumed within the targeted activity;
  • the determinants of each type of consumption;
  • the specific consumption of resources;
  • the total quantity to be consumed of each type of resource;
  • the risks of surpassing the planned consumptions;
  • the price of each type of resource;
  • the risks of price increases;
  • the time of occurrence for each consumption;
  • the moment of payment for each purchased resource;
  • the beneficiaries of the results of the targeted activity;
  • the types of benefits expected to be generated by the targeted activity;
  • the quantity of each type of benefits expected to be obtained;
  • the risks of obtaining lower benefits than expected;
  • means of expressing the expected benefits into a monetary form, based on their value for their respective beneficiaries;
  • the time of occurrence for each benefit;
  • a set of indicators that take into account the value of the resource consumption, the value of the benefits and the risks of the forecasting;
  • benchmarks for each indicator, together with a methodology of interpretation.

In the field of healthcare, the particular challenges of such analyses are associated to the difficulties in identifying all types of costs and benefits, in forecasting their quantities and in finding instruments for their evaluation. To perform the analysis, the reflection of all costs and benefits under a monetary form is necessary. This poses an apparent ethical problem, as the potential benefits of the activities carried out in the field of healthcare often include saving human lives, increasing life expectancy, increasing the quality of life, reducing the physical or mental impact of different pathologies on patients and their families. In the common belief, a human life is priceless. In this perspective, rejecting the consumption of the resources necessary to save a life is considered unethical, no matter the cost of the resources in question. Nevertheless, the persons with such a perspective aren’t generally aware of the other lives that could be saved with the limited resources that are available or of the lives that are being lost or wasted for the accumulation of such resources. The proof that for most individuals all human life is not “priceless” consists in the fact that they do not consume all their personal resources in order to save the lives of people they have never met. While we might like to believe that a human life is priceless, the reality shows that a human life generally has significant value for the close circles of the individual (immediate family) at the most. The large volume of the current world population makes the contribution of an individual to the society relatively insignificant, which is why the society is not willing to consume infinite resources for saving a life or for improving the quality of life of a single person.

Under these circumstances, it would be unethical to make the decision to allocate resources for a social purpose without using an accepted methodology of analysis, as, while all allocation options might generate social benefits, it is probable that some options would ensure greater benefits than others. Therefore, choosing an allocation option without a prioritization methodology will most likely sacrifice the optimal option in favor of a less useful one, which would translate into a loss for the society. Making such decisions in any other way than based on an accepted methodology would make the choice subjective and, inevitably, unethical. The challenge is to develop solid methodologies, capable of correctly taking into consideration all the factors that are relevant for the society (or, more accurately, for the decision maker). Such methodologies can be neither strictly medical, nor strictly economic. As the economic science deals with the administration of rare resources, economic instruments must be used to measure the consumption of resources. The medical science needs to point out the possible impact of the medical pathologies and the direct benefits of the treatment options. To complete the analysis, the consumption of resources and the benefits must be expressed in the same measurement units, with the monetary units being the most logical choice.  

In its report form 1980 “The Implications of Cost-Effectiveness Analysis of Medical Technology”, the Office of Technology Assessment was concluding that a cost-benefit analysis had the potential to be very helpful to decision makers. At the same time, OTA was noting that the cost benefit analysis had too many methodological limitations to justify relying only on its results in the decision process. At the present time, the cost-benefit analysis has become a mandatory requirement for decisions regarding public investments all over the world. Laying down the benefits targeted through an investment can only clear up the purpose of the capital allocation. Forecasting the costs of operating the investment will offer essential information concerning further capital requirements and financial sustainability.  Evaluating the feasibility of the investment based on the forecasted costs and benefits is only logical in the process of deciding whether the investment is sociably desirable, or of prioritizing several investment options. Nevertheless, the importance that the cost-benefit analysis has gained during the last decades in public decisions demands the development of methodologies that can guarantee a great level of accuracy. In particular, the methodologies for identifying and measuring the social costs and benefits present important improvement potential. As the social conditions vary from one region of the world to another, local benchmarks need to be established (and constantly updated).

For patients with refractive errors, wearing glasses or wearing contact lenses might represent alternatives to eye surgery. The disabilities will differ from one type of refractive error to the other (Myopia, Hyperopia, Astigmatism, Presbyopia) as well as in function of the gravity of the error. The effects of the pathology on the patient's life might vary significantly (from a small disconfort to the inability to perform basic activities). The treatment options will varry as well, as some conditions might be treated by wearing glasses or contact lensses, while others will demand for immediate surgical intervention. As such, the costs of eye surgery, the costs of the alternative treatments, the risks, the impact on the quality of life of the patient will differ.

The same condition will have different impacts on the quality of life of the patients depending on the profile of the patient (age, field of activity, hobbies, other medical conditions). For some patients, wearing contact lensses does not pose a signifficant problem. In such casses, the effects of refrective surgery on the quality of life might be more modest. On one hand, the surgical procedure will involve financial costs for the patient or for the comunity, as well as risks, disconfort, loss of time, additional costs with the post-surgery medication, additional loss of time and money with the follow-up. On the other hand, continuing to wear contact lensses might only involve minor disconfort and costs with the regular purchases of the contact lensses.

Other patients the same pathology might not have the option of wearing contact lensses because of allergies. For such patients, the incremental benefits of a possible eye surgery will be higher.

Some patients might not perceive a signifficant disconfort while wearing glasses, while others might have great difficulty in performing their tasks while wearing glasses (as in the case of athletes). Young people might also feel that eye glasses negatively affect their looks, while for older people this aspect might be less important.

For patients with degenerative conditions, the surgical intervention might be more urgent and the alternative options might prove more limited.       

Patients with diabetic maculopathy face the risk of progressively losing their eye sight. The benefits of eye surgery must be judged in accordance to their condition, which might be influenced by their education, food consumption, physical activity, age, alcohol consumption, other medical conditions (blood pressure, cholesterol).