PALY ally: Calculating cost-effectiveness of healthcare

Monash Lens

The numbers are stark.

  • Zanfina Ademi

    Associate Professor, Health Economics and Outcomes Research, School of Public Health and Preventive Medicine

If hypertension is reduced by one quarter, the potential savings to the Australian economy would be A$34.3 billion in gross domestic product (GDP) over the working lifetime.

In Indonesia, if smoking prevalence is reduced by half, the savings would be US$91.8 billion in GDP over the working lifetime.

Huge numbers.

In health economics, there are several ways to capture the burden of disease and quality of life at the population level, with the most-common measures being DALYs (Disability Adjusted Life Years) and QALYs (Quality Adjusted Life Years). These measures are also used to estimate the cost-effectiveness of healthcare.

A focus on productivity

Now, a Monash team has invented another metric, the PALY (Productivity Adjusted Life Year). The PALY’s point of difference is that it specifically captures the impact of disease on people’s work productivity, arising from unemployment, days off work, reduced work efficiency, and premature death.

A significant advantage of the PALY is that it provides a direct reflection of the broader economic impact of disease, as well as relevant interventions.

The team, including Associate Professor Zanfina Ademi and colleagues at the new Monash Outcomes Research and Health Economics Unit (MORE), first reported on PALYs in 2018, and already has 13 research teams in eight countries applying it to its own work.

Files in a cabinet with labels reading 'production', 'employees', company', and 'sick leave'

The international researchers’ application of the PALY has already revealed more about the broader economic costs of diabetes, heart disease, smoking, kidney disease, pneumococcal disease, high blood pressure, occupational hearing loss, high cholesterol, epilepsy, migraine, blood cancers, streptococcal infections, and depression.

Two papers have been published on Indonesian healthcare issues smoking and heart health – lost Indonesian productivity for both conditions amounts to more than US$200 billion.

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“Indonesia is a country with one of the highest rates of smoking in the world, and is the only country in Southeast Asia not to have joined the World Health Organisation’s Framework Convention of Tobacco Control [FCTC] treaty, to address the growing tobacco epidemic,” says Associate Professor Ademi.

“It’s important we can discuss PALY findings with policymakers to use a metric like this to inform decision-making; not to replace other metrics, but work alongside them.

“For example, in epilepsy, if we can reduce seizures, we can increase the likelihood of those affected returning to work.”

Working to inform preventive strategies

The PALY project began in 2012 through the work of Monash’s eminent Professor Danny Liew, deputy head of the School of Public Health and Preventive Medicine, and Associate Professor Ademi.

After a stint at the University of Basel in Switzerland, Associate Professor Ademi and the team began a series of studies to assess productivity loss due to hypertension, coronary heart disease, diabetes, and epilepsy, and it’s grown rapidly from there.

“Our hope is we can use the work to inform preventive strategies. For example, new treatment could be assessed through evaluation of the number of PALYs gained from their use.”

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