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The economic burden of falls
Falls are a leading cause of injury among older adults, and they are expensive. Florence et al. (2018) estimated that the medical costs of fatal and nonfatal falls among US adults aged 65 and older were about $50.0 billion in 2015. For nonfatal falls, Medicare paid about $28.9 billion, Medicaid $8.7 billion, and private and other payers $12.0 billion, and medical spending for fatal falls was about $754 million. These figures make falls a natural target for prevention, but decision-makers still need to know whether a specific program offers good value.
Types of economic evaluation
Drummond et al. (2015) describe the main types of full economic evaluation, which compare both costs and consequences of alternatives:
| Type | Outcome measure | Question it answers |
|---|---|---|
| Cost-minimization | Assumes equal outcomes | Which option costs less? |
| Cost-effectiveness | Natural units, such as falls prevented | What does each unit of outcome cost? |
| Cost-utility | Quality-adjusted life years (QALYs) | What does a year of healthy life cost? |
| Cost-benefit | Outcomes valued in money | Do benefits exceed costs? |
The incremental cost-effectiveness ratio
The key result is the incremental cost-effectiveness ratio (ICER):
ICER = (cost of new program − cost of usual care) ÷ (effect of new program − effect of usual care)
A worked example
A health system is considering a 12-month community exercise and balance program for adults aged 65 and older at risk of falling. All figures are illustrative.
| Usual care | Program | Difference | |
|---|---|---|---|
| Program cost per person | $0 | $600 | +$600 |
| Fall-related medical costs per person | $1,200 | $1,000 | −$200 |
| Total cost per person | $1,200 | $1,600 | +$400 |
| QALYs per person over 12 months | 0.800 | 0.810 | +0.010 |
ICER = $400 ÷ 0.010 = $40,000 per QALY gained.
Is that good value?
There is no official US threshold. A figure of $50,000 per QALY has been widely cited for decades, although its origins are unclear and it hasn't been updated for inflation. Neumann et al. (2014) argued that thresholds of $100,000 or $150,000 per QALY are more consistent with current values and recommended reporting results against a range. At $40,000 per QALY, this program would be considered cost-effective by any of these benchmarks.
Testing the result
Economic evaluations must report their assumptions and test how sensitive the result is to them (Drummond et al., 2015):
- Perspective: a payer perspective counts medical costs; a societal perspective also counts caregiver time and lost productivity.
- Time horizon: 12 months may miss longer-term benefits of avoided fractures and nursing home stays.
- Discounting: future costs and benefits are usually discounted, often at about 3% a year.
- Sensitivity analysis: if adherence falls and the QALY gain halves to 0.005, the ICER doubles to $80,000 per QALY, still within the upper benchmarks.
Implications for DNP-prepared leaders
When proposing a program, DNP-prepared nurses should present both the budget impact (what it will cost the organization) and its value (cost per outcome), state the assumptions clearly and show how results change under different scenarios.
References
Drummond, M. F., Sculpher, M. J., Claxton, K., Stoddart, G. L., & Torrance, G. W. (2015). Methods for the economic evaluation of health care programmes (4th ed.). Oxford University Press.
Florence, C. S., Bergen, G., Atherly, A., Burns, E., Stevens, J., & Drake, C. (2018). Medical costs of fatal and nonfatal falls in older adults. Journal of the American Geriatrics Society, 66(4), 693–698. https://doi.org/10.1111/jgs.15304
Neumann, P. J., Cohen, J. T., & Weinstein, M. C. (2014). Updating cost-effectiveness — the curious resilience of the $50,000-per-QALY threshold. New England Journal of Medicine, 371(9), 796–797. https://doi.org/10.1056/NEJMp1405158
