Article Date: 6/1/2012

health economics

Analyzing the Economics of Anterior Segment Disease

Recent research into keratoconus, bacterial conjunctivitis and corneal infiltrative events provides a basis for cost/benefit analysis.

Andrew F. Smith, Ph.D. Ottawa, Ontario, Canada

In today’s economic climate, patients, clinicians and policy-makers who shape health-care reform are becoming increasingly aware of the need to balance the costs of various medical interventions with their benefits. How will such an economic analysis affect eye care? Although a complete answer would require volumes, recent research has provided cost information in three clinical areas: keratoconus, bacterial conjunctivitis and corneal infiltrative events. (See “TABLE 1: Key Direct Medical, Direct Non-Medical and Individual Direct Costs,” page 32, and “Cost Calculation,” page 33.)


In 2011, a study revealed that, through an average disease duration of 37 years, the cost of care for a keratoconic patient is $25,168 more than the cost of care for a myopic patient.1 The key driver of this value is the expected cost of penetrating keratoplasty and postsurgical complications, such as immunological rejection. The estimated cost of regular ophthalmologic or optometric care for a myopic patient is $10,224, or 42.3% of the total cost of care for a keratoconic patient.

Therefore, the study’s researchers concluded that keratoconus treatment represents a significant cost to patients and third-party payers. And combined with the significant impaired vision-related quality of life and relatively young age of disease onset, it is a significant public health concern.

The researchers arrived at the aforementioned numbers by constructing a simplified economic model that simulated keratoconus progression from a lesser to a more clinically significant state and the associated forms of treatment, from contact lenses and eyeglasses to corneal transplantation and enucleation. Then, using data from various clinical databases, including the Australian Graft Registry, the researchers populated a cohort of 1,000 simulated subjects. Modelling continued until 500 re-samplings were completed, yielding a total of 500,000 models. The researchers collected cost data from relevant sources, such as contact lens fitting clinics, the U.S. Centers for Medicare & Medicaid Services (CMS) and ambulatory surgery centers. The researchers discounted costs through time using a discount rate of 3%.

This study generated data at the micro level, using comparative clinical effectiveness data and healthcare resource cost data. The following examples rely on a more macroeconomic viewpoint.

Bacterial conjunctivitis

Although typically considered a minor infection, bacterial conjunctivitis (BC) can have a considerable impact on absenteeism at work and at school. In extreme cases, although rare, it can result in permanent or sight-threatening sequelae, such as bacterial keratitis and endophthalmitis.

Approximately four million cases of BC were reported in the United States in 2005, yielding an estimated annual incidence of 135 per 10,000, revealed a study.2 Through base-case analysis, the study’s researchers estimated the total direct and indirect costs of treatment for these cases were $589 million. Oneway sensitivity analysis, that is, assuming either a 20% variation in the annual incidence of BC or treatment costs, generated a cost range of $469 million to $705 million.2 Two-way sensitivity analysis that assumed a 20% variation in both the annual incidence of BC and treatment costs occurring simultaneously resulted in an estimated range of $ 377 million to $ 857 million.2

TABLE 1: Key Direct Medical, Direct Non-Medical and Indirect Costs*
Direct Medical CostsDirect Non-Medical CostsIndirect costs
Inpatient hospital careCare provided by friends and familyProductivity changes due to changes in health status
Specialized hospital, terminal or hospice careHousekeepingProductivity changes due to changes in morbidity
Nursing homeModification to home for patientProductivity changes due to changes in mortality
Institutional or home health careSocial servicesJob absenteeism
Emergency room visitsRetrainingLoss of income of family members
Physician servicesRepair to property (e.g. in case of alcoholism)Forgone leisure time
Primary care physiciansProgram monitoring and evaluationTime lost seeking medical services
Medical specialistsLaw enforcement costsTime spent attending patient (e.g. hospital visits)
Other ancillary staff (psychologists, social workers, physical and occupational therapists, nutritionists, volunteers, ambulance workers)Data analysis costs
Medication use (treating side effects, preparation of the drug, training in new procedures, dispensing and administration, monitoring)
Overall allocated to technology (fixed cost of utilities, space, storage, support services, capital costs (depreciated through time), construction costs for facilities, relocation costs, device and equipment costs
Variable costs of utilities (electricity, water, etc.)
Medication costs (prescription and non-prescription costs), drug costs, monitoring costs
Research and development costs
Diagnostic test costs
Treatment costs
Prevention costs
Rehabilitation costs
Training and education costs
*Adapted from: Smith A.F. Understanding cost-effectiveness: a detailed review, Br J Ophthalmol. 2000 Jul:84(7):794-798

The study’s researchers concluded the economic burden of BC is significant. They opined that their findings may help decision-makers allocate appropriate healthcare resources to address this condition.

The researchers gleaned these numbers by supplementing data from a literature review with data from an analysis of the National Ambulatory Medical Care Survey. Additional cost estimates for medical visits and laboratory or diagnostic tests were derived from the CMS current procedural terminology (CPT) fee schedule; the cost of prescription drugs was obtained from standard reference sources. Lost productivity was calculated as an indirect cost, and no cost discounting was performed because of the acute nature of BC. (see “Influential Factors” page 34.)

Corneal infiltrative events

Corneal infiltrative events (CIEs), which are most often associated with soft contact lens wear, can range from asymptomatic and clinically non-significant to symptomatic and clinically significant or severe.3,4 Lens care solutions have been linked with CIEs. These events often cause the ceasing of contact lens wear, sometimes for prolonged periods.

The estimated direct and indirect cost for non-severe CIE was $1,002.90, while for a severe CIE, the cost was $1,496.00, says a study.5 Overall, the total estimated costs of both non-severe CIEs and severe CIEs in the United States in 2010 were $57,927,900.

Cost Calculation

When calculating the overall cost of a specific healthcare intervention or program, three key categories should be considered: 1) direct medical costs, 2) direct non-medical costs and 3) indirect costs. Intangible costs, such as pain, suffering and psychological distress, are sometimes collected but have been omitted here because they are inherently difficult to measure. Depending on the nature of the healthcare intervention in question, the specific components of the individual cost categories will change, but the general structure is unlikely to vary greatly.2

The researchers concluded that although CIEs are rare, the economic impact of these events is significant and places a considerable burden on the healthcare system and individual patients in the United States. They further noted that strategies designed to minimize the occurrence and impact of CIEs, such as an improved lens care regimen or daily disposable contact lenses, may reduce this economic burden.

To get these numbers, the researchers estimated the annual incidence of CIEs and compiled direct and indirect costs from the literature and published tariffs. Given the short duration of most CIEs, no cost discounting was performed. The researchers estimated approximately 35.2 million people in the United States were wearing non-single use daily-wear soft contact lenses (non-extended wear) in 2010. Using an estimated annualized incidence rate, they calculated 32,032 non-severe and 17,248 severe CIEs during that year.

Costs vs. effects

In each example, the goal was to show how various components of health economic models are constructed, the evidence base used to generate the data and how underlying data uncertainties are handled. Of interest: the degree to which health economic studies can estimate absolute costs associated with a given anterior segment eye disease, such as BCs or CIEs, as well as comparative costs when evaluating treatment options for a single disease, such as keratoconus. By using a multi-pronged approach, you can compare healthcare resource utilization, costs and health effects. With an understanding of the economic impact of treating a specific condition, you may now be in a better position to use this data to provide the best possible clinical care in a cost-effective manner. OM

This Medmetrics Inc. research project was supported by a Bausch + Lomb grant.

1. Rebenitsch RL, Kymes SM, Walline JJ, Gordon MO. The lifetime economic burden of keratoconus: a decision analysis using a markov model. Am J Ophthalmol. 2011 May;151(5):768-773.e2.

2. Smith AF, Waycaster C. Estimate of the direct and indirect annual cost of bacterial conjunctivitis in the United States. BMC Ophthalmol. 2009 Nov 25;9-13.

3. Morgan PB, Efron N, Brennan NA, et al. Risk factors for the development of corneal infiltrative events associated with contact lens wear. Invest Ophthalmol Vis Sci. 2005 Sep;46(9):3136-43.

4. Sweeney DF, Jalbert I, Covey M, et al. Clinical characterization of corneal infiltrative events observed with soft contact lens wear. Cornea. 2003;22:435-442.

5. Smith AF, Orsborn G. Estimating the annual economic burden of illness caused by contact lens-associated corneal infiltrative events in the United States. Eye Contact Lens. 2012 May;38(3):164-170.

Influential Factors

In any general introduction to health economics, it is important to mention some key factors that can significantly influence study findings.

► Perspective. Most health economic analyses take the societal or ministry-of-health perspective, with the goal of maximizing funding to provide the greatest health benefits across the entire population. Typically, the societal perspective is adopted in countries that have organized systems of socialized medicine and healthcare delivery. In jurisdictions without publicly funded healthcare systems, the perspective of the economic analysis is often that of the health insurance agency or health maintenance organization that is paying its members’ expenses. In still other cases, the perspective can be that of the physician or patient.

► Time frame. The time frame through which a health economic analysis is conducted can significantly affect the cost of any intervention. Therefore, it is important to determine the “analytical horizon” of a specific intervention or program. In general, the analytical horizon should be long enough to capture all relevant costs and health effects associated with an intervention or technology.

► Range of values. Given the potential for wide variations in the accuracy of cost and health effects data, it is crucial that such uncertainties be appropriately addressed. Typically, a range of potential values is incorporated into the analysis to explore their impact on the health economic model or analysis. These sensitivity analyses are particularly helpful in determining the overall robustness of the data used to populate the model.

Dr. Smith is president and founder of Medmetrics Inc., a health economic research and consulting firm based in Ottawa, Canada. E-mail him at Andrew., or send comments to optometricmanagement@

Optometric Management, Volume: 47 , Issue: June 2012, page(s): 30 - 34