Basket | Login


Health economic aspects of dementia

Cost of dementia

by Anders Wimo, MD, PhD, professor, Karolinska Institutet, Linus Jönsson, PhD, I3 Innovus and Anders Gustavsson, Senior Analyst, I3 Innovus

The viewpoint

A health economic analysis can be presented from different perspectives. A societal perspective is reccommended by most economists. It includes all relevant costs (direct medical and non-medical costs within the health and social sectors and indirect costs due to production losses and costs of informal care) and outcomes (1). However, the analysis can also be done from a specific payer´s point of view such as a municipality, a county council, an insurance company, a caregiver or a patient (the latter correspond to“out of pocket costs“). Depending on the chosen perspective, the results of the analysis are different. Crucial in any health economic analysis is transparency regarding the viewpoint.

Costing taxonomy

There are different ways to define costs. It is common do present costs as direct costs and indirect costs (although this is under debate). Direct costs are derived from “resources used” such as costs in the formal health care and social service systems (e.g. hospital care, nursing home care, medications, home aids etc.) while indirect costs reflect “resources lost”, such as loss of production due to morbidity and mortality. Direct costs can be divided into direct medical costs (within the medical sector such as hospital care, visits to physicians) and non-medical direct costs, such as costs of long term institutional care, social services etc. The classification, quantification and costing of unpaid informal care is complex and controversial (2,3). The costing process consists of two phases; firstly resource utilization is measured in physical units (such as days i nursing home, hours of home support) and secondly, resource utilization is expressed in terms of cost, mostly by a multiplication of unit costs (e.g. a cost of nursing home care at US$ 200/day) and physical units of resource utilization). A comprehensive and validated instrument in dementia is the Resource Utilization in Dementia instrument (RUD)(4).

Cost of illness approaches

Cost of illness (COI) studies are descriptive and cannot be used in priority discussions. However, COI-studies show how costs are distributed among different sectors and payers in the formal and informal care systems and they can also be used to follow costs over time.

In a COI study it must be clarified how the cost calculations were carried out and which cost categories that are included.

It is important to differ between costs for patients with a disease (sometimes referred as gross costs) and costs specifically due to a disease (net costs). All costs of a person with dementia are not caused by the dementia disorder. Other conditions may contribute, such as diabetes, arthritis, cardiac disorders and for those who live in an institutional setting a part of the costs refer to needs for any person such as housing and eating (so called hotel costs).

There are also two ways to collect data. With a top down approach, the sources are often register data of total costs of all kinds of care on e.g. a national level and then costs are distributed to special disorders. With a bottom-up approach, a representative sample of patients with a specific disorder, such as dementia, are carefully examined with a focus on resource utilization and costs. In a next step, these costs are extrapolated to e.g. a nations total population by a multiplication of the cost per person by the prevalence. These two methods are often combined due to insufficiencies of data with just one of the approaches.

Cost of illness can also be described in terms of a prevalence or an incidence approach. The prevalence estimate the total costs for all persons with a disease during an specified period (mostly a year), while with the incidence approach, costs are estimated from the beginning of a disease and forwards during the whole course of the disease.

Costs can also be presented vs different states of dementia . The most frequent used “vehicle of costs” is the Mini mental State examination (5). It is also possible to use other “vehicles”, such as ADL-capacity in terms of Katz´ index of ADL (6) and CDR (Clinical Dementia Rating scale (7)) .

Burden of dementia

There are some effects of disorders that are difficult to estimate in terms of costs, such as intangible costs (e.g.pain, psychosocial negative effects, problems in social functioning and activities of daily living). Such costs are in general not included in cost of illness estimates because of the problems to express the effects in terms of costs, even if the intangible costs are significant for many diseases (8). As a proxy of the intangible costs, the burden can be expressed in terms of disability adjusted life years (DALYs) (9) or lost quality-adjusted life-years (QALYs). Burden figures do not provide any information of how costs are distributed amongst different “payers” and give no information of how big proportion of the total resources that a particular disorder use. DALYs has been criticized because it favours productivity and because gender differences not are incorporated sufficiently (10, 11).

Furthermore, the use of QALYs are not uncontroversial, particularly regarding the elderly (12). One advantage with QALYs is that comparisons with other disorders are possible. However, this may disfavour chronic, incurable, progressive disorders when these are compared with e.g. curative surgical treatment or cataract or hip replacement surgery, where the incremental effects are substantial. Due to the natural characteristics of dementia and many other mental conditions, many patients have difficulties to provide necessary information for the calculations of e.g. QALYs and the use of proxies is unavoidable. Furthermore, if the proxy is a family member, the answers may partly reflect the situation and interests of the proxy. Another approach, HYE Healthy Years Equivalents (HYE) (13) are also controversial (14) andrequire a great number of health scenarios to analyze (15).

WHO presents global estimates of the burden of disease in terms of i.a. DALYs, and with all the possible disadvantages in mind, DALYs are here extracted for Europe (16) . As a comparison, we have used DALYs of diabetes.


  1. Jonsson B, Jonsson L, Wimo A. Cost of dementia. In: May M, Sartorius N, editors. Dementia WPA Series Evidence and experience in Psychiatry. London: John Wiley & Son; 2000. p. 335-63.
  2. Koopmanschap MA. Indirect costs and costing informal care. In: Wimo A, Karlsson G, Jonsson B, Winblad B, editors. The Health Economics of dementia. London: John Wiley & Sons; 1998. p. 245-56.
  3. van den Berg B, Brouwer WB, Koopmanschap MA. Economic valuation of informal care. An overview of methods and applications. Eur J Health Econ. 2004 Feb;5(1):36-45.
  4. Wimo A, Wetterholm AL, Mastey V, Winblad B. Evaluation of the resource utilization and caregiver time in Anti-dementia drug trials - a quantitative battery. In: Wimo A, Jonsson B, Karlsson G, Winblad B, editors. The Health Economics of dementia. London: John Wiley & Sons; 1998. p. 465-99.
  5. Folstein MF, Folstein SE, McHugh PR. "Mini-mental state". A practical method for grading the cognitive state of patients for the clinician. J Psychiatr Res. 1975 Nov;12(3):189-98.
  6. Katz S, Ford AB, Moskowitz RB, Jackson BA, Jaffe MW. A standardized measure of biological and psychosocial function. JAMA. 1963;185:914-9.
  7. Berg L. Clinical Dementia rating (CDR). Psychopharmacology Bulletin. 1988;24:637-9.
  8. Andlin-Sobocki P, Jonsson B, Wittchen HU, Olesen J. Cost of disorders of the brain in Europe. Eur J Neurol. 2005 Jun;12 Suppl 1:1-27.
  9. Allotey P, Reidpath D, Kouame A, Cummins R. The DALY, context and the determinants of the severity of disease: an exploratory comparison of paraplegia in Australia and Cameroon. Soc Sci Med. 2003 Sep;57(5):949-58.
  10. Anand S, Hanson K. Disability-adjusted life years: a critical review. J Health Econ. 1997 Dec;16(6):685-702.
  11. Hanson K. Measuring up: gender, burden of disease, and priority-setting. In: Sen G, George A, Östlin P, editors. Engendering international health: the challenge of equity. Cambridge MA: MIT Press; 2002. p. 1-33.
  12. Tsuchiya A, Dolan P, Shaw R. Measuring people's preferences regarding ageism in health: some methodological issues and some fresh evidence. Soc Sci Med. 2003 Aug;57(4):687-96.
  13. Dolan P. A note on QALYs versus HYEs. Health states versus health profiles. Int J Technol Assess Health Care. 2000 Autumn;16(4):1220-4.
  14. Ried W. QALYs versus HYEs--what's right and what's wrong. A review of the controversy. J Health Econ. 1998 Oct;17(5):607-25.
  15. Torrance G. Designing and conducting cost-utility analysis. In: Spilker B, editor. Quality of life and pharmacoeconomics in clinical trials. Philadelphia: Lippincott-Raven Publishers; 1996. p. 1105-21.
  16. [database on the Internet]. 2004 [cited.



Last Updated: Thursday 08 October 2009


  • Acknowledgements

    The EuroCoDe project received financial support from the European Commission. Neither the European Commission nor any person acting on its behalf is responsible for any use that might be made of the following information. Alzheimer Europe also gratefully acknowledges the support it received from Fondation Médéric Alzheimer for this project.
  • European Union
  • Fondation Médéric Alzheimer