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Cost Effectiveness of Dialysis for ESRD Patients

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Published: 11th Feb 2020

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From 2002-2009 diabetic nephropathies represented 41% of all end-stage renal (ESRD) patients in St. Lucia, which is significantly higher when compared with global distribution. Renal replacement therapy for ESRD is resource intensive, consuming a significant part of the health budget. Financial pressures on the health system continue to increase in the face of the global financial crisis, yet cost-effectiveness studies of ESRD treatment options are not only scarce but nonexistent in the Eastern Caribbean. A retrospective approach to data collection was used and a Markov model of cost, quality of life and survival will be developed to compare hemodialysis and pharmaceutical management of ESRD among diabetics. Micro-costing was used to assess the cost of hemodialysis for ESRD over the 8 year period. While preliminary findings have not identified whether or not hemodialysis for diabetic nephropathy is cost-effective the economic burden of hemodialysis for diabetic nephropathy was significant: EC$6.9 million, in St. Lucia for the 8 year period. Pre-emptive procedures need to be considered for the treatment of diabetes to delay onset or progression of ESRD. From a medical as well as fiscal perspective, prevention is the most cost-effective intervention. The health system in St. Lucia needs to focus attention on effective prevention strategies as the mean age among diabetic ESRD patients is 56 years (2.3SD). This age group is representative of a significant part of the country’s labour force and, if left unchecked, could have serious implications for economic development.

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End-stage renal disease (ESRD) and its precursor, chronic kidney disease (CKD), are globally emerging as a significant public health problem, with increasing morbidity and mortality as well as economic implications for healthcare (Szucsa et al., 2004). The World Health Organization’s 2002 estimate indicated that globally CKD contributes to over 850,000 deaths and over 15 million disability-adjusted life years, with epidemic rise of ESRD in multiple regions in the world (WHO, 2003). The report also predicted that by 2010 more than 2 million people would require maintenance dialysis worldwide, and global estimates indicate that approximately 30% of patients with ESRD suffer as a consequence of diabetic nephropathy (Zelmer, 2007).

The economic pressures of ESRD treatment on the collective health system are well documented. Haller, et al. (2011) identifies it as resource intensive, requiring substantial amounts of finite healthcare funds to treat a small percentage of the population. In 2005 alone, care for ESRD patients in Canada represented 1.2% of all healthcare expenditure, despite a 0.092% incidence of the disease (Zelmer, 2007).

In St. Lucia, chronic renal insufficiency as a result of diabetes, hypertension, autosomal dominant polycystic kidney disease, and sickle cell disease are the main reasons for starting dialysis treatment in patients with kidney function failure. This is similar to the findings of Peroviá and Jankoviá (2009). In addition to being a chronic disease with significant morbidity impact, ESRD also involves high-cost treatment options (Zelmer, 2007), which are often limited in developing countries such as St. Lucia. Yet cost-effectiveness studies of the modalities of treatment are few and limited, especially in developing countries (Haller, 2011).

Previous research has been conducted to identify the economic impact of the estimated health-care costs for ESRD, as well as the cost-effectiveness of various alternatives for renal replacement therapies; however, similar studies have not been replicated in the Eastern Caribbean. The findings are especially relevant to the health system in St. Lucia, as the incidence of diabetes continues to increase in the Caribbean Region (Henry, 2004). Additionally, the recent decision to expand the dialysis service to two new facilities without understanding the scope and magnitude of the total economic burden of ESRD could prove to be challenging.

Cost-effectiveness is the fastest growing field in health research and it embodies a form of full economic evaluation that looks at cost and consequence of health programmes or treatment (Muennig, 2008). Cost-effectiveness analysis (CEA) of intervention programmes as a valuable tool employed by decision-makers can be used to appraise as well as possibly improve how the health system operates. Its application allows policy makers to identify which interventions provide the highest “value for money” and assist in helping to select interventions and programmes that maximize health for the available resources. Health economists are able to purchase the most health under a fixed budget, prioritizing services within the health sector. CEA therefore requires information to indicate the extent to which current and potential interventions are effective for improving population health, and which resources are required to implement the interventions, i.e., costs (Muennig, 2008).

Referring to Palmer’s 2005 definition that states “cost-effectiveness studies compare costs with clinical outcomes measured in natural units, like life expectancy or years of diseases avoided”, Glassock (2010) noted that the totality of costs may not necessarily be captured. The inclusion of cost means that the design of the study will incorporate cost-unit analysis as a tool to examine the economic impact of dialysis for ESRD patients with diabetes and cost effectiveness to determine the quality adjusted life year (QALYs) or health related quality of life (HRQoL) for that population. The main outcome measure will focus on costs per quality-adjusted life years ($/QALYs), similar to a study conducted in Austria (Haller et al., 2011). Glassock (2010) notes that community willingness-to-pay is the threshold value used to determine cost effectiveness. He goes on to note that these values vary globally, and are estimated at £30,000/QALY in the United Kingdom, 40,000/QALY in Europe, Aus $50,000/QALY in Australia, and US $90,000/QALY in the United States (Glassock, 2010). In the absence of a national threshold value, one can be established using GDP as an objective economic benchmark, (Eichler, et al., 2004).

Cost will be viewed from the perspective of direct spending on health care for dialysis, coupled with the indirect costs of productivity losses due to premature death and short- and long-term disability. The impact of mortality costs as the sum of the discounted present value of current and future productivity losses from premature deaths will be measured from an incident-based human capital approach, drawing from a similar study conducted in Canada in 2000 (Zelmer, 2007). Muennig (2008) posits that because it is often difficult to account for all cost, and the time and resource constraints associated with micro-costing, certain assumptions related to costs are often made during cost-effectiveness analysis.

This paper serves to examine the cost-effectiveness of hemodialysis among type 2 diabetics in St. Lucia over an 8 year period (2002-2008). Employing the use of CEA, it aims at comparing the cost and effects or outcomes (cost-effectiveness) of hemodialysis for diabetic nephropathy using the comparator of doing nothing, which in this case is the pharmaceutical management of patients with diabetic nephropathy to delay progression of ESRD. The findings will also help to inform those making policy decisions, and may be useful in establishing a set of priorities for further research, prevention programs, and in the planning of alternative treatments to help alleviate that burden.

Perspective of the Study

Cost effectiveness of dialysis for ESRD patients with diabetes in St. Lucia will be analyzed from a government perspective. This requires conducting cost analysis that measures the recurring direct and indirect cost of providing the service. In the region, specifically in the country under study, health care organizations rarely know the cost of the service provided and rarely employ the tools needed to assess that cost on a regular basis. In a globally operating economic society, economic trends have made it imperative for both profit and non-profit organizations that provide services, including government agencies, to assess the cost of clinical services provided. Finance for health is not infinite and with substantial budget cuts in the health service industry, there is increasing pressure for health care facilities to become more accountable and efficient with the funds allocated to health care (Basch, 1999). Health economics recognises the need for health services to be provided in a manner that is not only efficient but sustainable. Measuring, understanding and documenting the cost of services makes it easier to improve cost-efficiency of these services; it also highlights the funding needs of the sector and by extension, the government. It also provides an opportunity to establish fees for clients that are based on realistic site costs.

Previous studies on cost-effectiveness of treatment options for ESRD have compared different modalities of dialysis or transplantation (Haller et al.; Gonzalez-Perez et al., 2005, Yang et al., 2001). Treatment modalities for ESRD patients in St. Lucia are either hemodialysis or pharmaceutical management. The analysis of hemodialysis versus pharmaceutical management to delay ESRD progression hinges on the fact that the current capacity of the Renal Unit in St. Lucia cannot provide dialysis for all ESRD patients. In an interview dated December 14, 2010 with the head of the Nephrology Unit, Victoria Hospital, Saint Lucia, it was indicated that while dialysis is offered, the increasing ESRD population means that patients are placed on a waiting list if they are not able to commence treatment due to unavailability of space (Olivert & Dupree, 2010). If a patient’s prognosis requires immediate dialysis, he is treated at the private facility and the government absorbs that cost. But it is quite clear that hemodialysis, like pharmaceutical management, is not the optimal treatment option for ESRD; rather, the optimal protocol is transplantation. The health system in St. Lucia is mandated by its objectives to improve the health of the population and consequently needs to ensure that its limited resources are not devoted to expensive interventions with small effects on population health, while at the same time low cost interventions with potentially greater benefits are not fully implemented (Ministry of Health, Human Services, Family Affairs and Gender Relations, 2000).


Data Sources

The study population comprises of ESRD patients with diabetic nephropathy. Patients were considered depending on whether they received hemodialysis or whether their diabetes was being pharmaceutically managed to delay ESRD progression. Data was collected retrospectively and the study population was selected from the only public Renal Unit which forms part of the general hospital, Victoria Hospital. While there is another Renal Unit in St. Lucia that offers dialysis, it is a part of the private hospital, which did not wish to participate in this study. Of the 111 patients on dialysis, 45 were due to diabetic nephropathy and 19 were actively receiving dialysis at the time the study was being conducted. The nephrologists identified 12 ESRD patients who were not receiving dialysis but were being managed pharmaceutically.

All diabetics who are or have been on dialysis with end-stage renal disease for the period 2002-2009 and were receiving dialysis due to diabetic nephropathy were included in the study. Persons were excluded from this study if they were on dialysis prior to being diagnosed with diabetes. The comparator group differed from the hemodialysis group only in the form of treatment that they are receiving, and consisted of all patients with ESRD due to diabetic nephropathy who are not receiving dialysis but whose diabetes is aggressively managed with medication to delay ESRD progression.

Other variables were considered in the study and a standard questionnaire was administered to the study population to obtain data on the socio-economic status of individuals. A pool of eight persons from those who were on dialysis for reasons other than diabetic nephropathy served as a pilot test group for the socio-demographic questionnaire. This group was similar to the study population in terms of gender, education, socio-economic status and geographic location (Table 1). Content analysis was used to evaluate the information obtained from the socio-demographic questionnaire.

All study participants received a letter concerning anonymity and confidentiality and informed consent was obtained prior to participation. Ethical approval was obtained from the IRB at St. George’s University and the ethics committee of the Ministry of Health in St. Lucia.

A literature review conducted relied upon peer-reviewed economic evaluations of dialysis treatment modalities among diabetic patients. Ebscohost and PubMed were searched using the keywords ‘cost-effectiveness’, ‘dialysis’, ‘end-stage renal disease,’ and ‘diabetic nephropathy’ and was limited to articles published in the last 12 years (2000-2011). Some articles, if they were published outside of the selected timeframe, were accepted based on the strength and relevance of their findings. Articles were included if they had the keywords in the subject headings as well as focusing on ‘Renal Replacement Therapy/economics’, ‘Renal Dialysis/economics’, ‘Hemodialysis Units’, or ‘Kidney Failure’. If they included the term peritoneal dialysis or hemodialysis they were also selected. Exclusion criteria comprised of non-English articles and those that did not compare treatment options. A total of 379 articles were identified but 31 were selected as being relevant.

Models Used

Chronic conditions such as ESRD require continuous treatment and as a consequence, the cost-effectiveness of treatment options over a period of time for a cohort of patients employs the use of the Markov model to investigate long term costs and outcomes. The Markov model developed for this study describes the process of care noting that patients began their progression through the model in either of two states, hospital hemodialysis or pharmaceutical management of type 2 diabetes to delay ESRD progression, with death signifying the end of the cycle.

Data on health care costs, transition to other health states and quality of life were inputted into the Markov model. Data was obtained from the Renal Unit at the Victoria Hospital, the public health facility. Data on quality of life was obtained using the 15D, a multidimensional, standardised generic instrument to measure quality or health-related quality of life (Sintonen, 2001). The 15D was used since it combines the advantages of a profile and single index score measure that describes the health status by assessing 15 dimensions. The mean score value for each dimension was used to determine the health related quality of life in the study population.

The use of the 15D to measure quality of life outcome was reported in terms of QALYs, a measure of the burden of disease that included the quality and quantity of life lived against a monetary value, medical treatment or intervention. The mean score value for each dimension measured by the 15D was used to determine the health-related quality of life of the study population using the scale provided by Sintonen (2001). The findings were standardized against the burden of disease markers identified by the WHO.

Costs and Analysis

Cost-effectiveness, examined from a governmental perspective, used the clinical records of the Division of Nephrology patient registration and billing systems at the Victoria Hospital coupled with information from published studies on survival and quality of life among diabetic nephropathy patients. The model used included the direct health service costs associated with the treatment options, and an annual cost per patient was calculated for each health state in the model. Direct healthcare costs associated with dialysis use included costing regular dialysis sessions, complications of the dialysis, such as clotting of the fistula or hypotension episodes, laboratory tests and services required as a consequence of dialysis and medication use as a result of treatment. Assumptions were made on the regularity of direct healthcare cost associated with dialysis, such as that involving laboratory testing and blood transfusions. Micro-costing, collecting data on staffing, consumables, capital, and overheads were used to determine the cost of one session of hemodialysis (Table 2). Structured interviews were used to obtain details regarding staff time allocated to dialysis activities, as well as the regularity of other services used as a result of the treatment options. Capital items were identified as the building space allotted to the Unit for treatment, and equipment such as the dialysis machines and air conditioner unit. Costs have been reported in Eastern Caribbean Dollars (EC) presented at the 2008 level and an equivalent annual cost calculated using a 3 percent discount rate over the predicted life span.

Muennig (2008) argues that a governmental perspective can include some aspects of transportantion costs. Evidence from the Minstry of Communication and Works and the Transport Board implies that there is no nationally agreed-upon policy for transport costs. There are variations across St. Lucia in terms of mileage costing; therefore for the purposes of our analysis, transport costs are excluded.

The study reviewed costs over an 8 year period (2002-2009). This time frame was partly determined by the availability of the data two years after the programme was initiated and the assumptions made with reference to the analysis were tabulated (Table 3). Incremental costs per QALY gained will be calculated by using the estimates of costs and QALYs for each of the two modalities obtained from the model, and the findings were presented as incremental costs per QALY ($/QALY). The threshold value used to determine cost effectiveness of the intervention was established based on the recommendations of the Commission on Macroeconomics and Health, and CHOICE, which uses gross domestic product (GDP) as an indicator to determine cost-effectiveness. They established that an intervention was highly cost-effective if cost per QALY was less than GDP per capita, it was cost-effective if it was between 1 and 3 times the GDP per capita but was not cost-effective if it was more than 3 times GDP per capita (WHO, 2011).

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A one-way sensitivity analysis will be used to investigate variability in the data, varying the discount rate from 3% to 5%, then age weights and finally, the disability weights. A final sensitivity analysis of mortality rates will be conducted since the assumption was that the mortality rates for hemodialysis were the same as those of pharmaceutical management of ESRD diabetics. Based on that assumption it becomes important to identify whether any one of these factors, discounted rates, age weights, and disability weights independently affected the data. Multiple linear regressions will be used to identify how the variables and assumptions affected dialysis lifetime.

Preliminary Findings

Demographic Characteristics

The socio-demographic characteristics of the study population are presented in Table 4. According to the modalities compared the mean ages were 52 years (SD 10.06) for hemodialysis patients and 42 years (10.34SD) for patients who were being pharmaceutically managed. Briefly 62% of the patients were male (Figure 1), 40% had completed only primary level education and 20% had received no formal education. Married patients made up 46.7% of the study group and 26.7% were currently employed; but of these patients 80% of them received some form of family support or National Insurance Corporation (NIC) compensation. There was little variation between the groups (hemodialysis and pharmaceutically managed) in terms of employment and education.

ESRD, as a consequence of diabetic nephropathy, represents 41% of all patients who have received hemodialysis for the period 2002-2009 (Figure 2). The end of that 8 year period mortality rate among that population is 53% with the average age of death at 57 years and average dialysis lifetime of 3 years.


A list of the parameters used to determine cost is presented in Table 2 and total yearly cost for the period is presented in Table 3. The total cost of dialysis for diabetic nephropathy was EC$6.9 million. From a governmental perspective, in 2009 the total cost of dialysis for diabetic nephropathy patients with ESRD totalled EC $1,002,597.23, accounting for approximately 2.27% of all healthcare expenditure for 0.01% of the population. Secondary and tertiary care services accounted for 59% of the total health budget for 2001-2002, 60% for 2002 -2003 and 64% for 2003-2004. Primary care services accounted for 22% in 2001-2002, 22% 2002-2003 and 18% for 2003-2004 (Figure 3).


This is the first study of its kind in the region. It is able to serve as a precursor to further research and therefore is poised to help guide policies on how cost-effectiveness studies are done in the region. Additionally, there will be future application to decision-making in healthcare. While the absence of other studies that compared the treatment modalities used in this study serves as a limitation to this paper, it remains the only viable comparator that was available to the researcher, and being the first of its kind allows it to inform the existing research.

The preliminary findings of this paper have significant implications for health and the operations of the dialysis unit. The literature from other studies (Haller et al, 2011; Zelmer, 2007) indicates that the average lifetime on dialysis is 7-10 years, with survial rates lower among senior adults, aged older than 65 years. The inverse seems to be suggested by the preliminary findings, with an average lifetime of 3 years in patients less than 57 years. The deviation may be attributable to younger persons being less compliant with regular dialysis sessions and the strict dietary and lifestlye adjustments that dialysis requires. Further research would need to be conducted to validate these findings.

The economic burden of ESRD for diabetic nephropathy is significant: EC$6.9 million, in St. Lucia for the 8 year period (Table 2). While the focus of this study is on the cost-effectiveness of dialysis, the data identified that health services accounted for most of the observed costs. The governmental perspective of the research restricts the paper’s ability to adequately address the diabetic nephropathy related morbidity and premature mortality among the study population and the substantial burden that it places on society. The early indicators suggest a need for the effectiveness of the programme to be examined against its objectives and how its outcomes compare with other units within the region or the privately operated unit in St. Lucia. In 2006 Government health expenditure per person per year was EC$499.50 (Ministry of Health, Human Services, Family Affairs and Gender Relations, St. Lucia). Yet for that corresponding period, government spending for dialysis per person per year was EC$48,597.81 (Figure 5), for 0.0014% of the population. St. Lucia’s GDP for that period is estimated as $6,037.00 PPP (EC$16,299.90) and total expenditure on health is estimated as 6.3% of GPD (Table 5). While cost-effectiveness has not been conclusively established, using the threshold value of GDP as an economic estimate to determine cost-effectiveness, a cost-effective programme is one that is between 1 and 3 times the GDP per capita (WHO, 2011).

The National Strategic Health Plan 2006-2011 (2006) posits that the Ministry of Health’s actions have not been consistent with its declaration of a commitment to Primary Health Care (PHC) as part of its strategy for National Health development. Health spending continues to increase in the areas of secondary and tertiary care and less of the health budget is spent on primary care. The expansion of hemodialysis to meet the growing ESRD population, and an increased incidence of diabetic nephropathy in St. Lucia has implications for the findings of this study. It is important that focus is directed at primary and secondary interventions aimed at reducing cost of diabetic care and consequently complications from diabetes, such as diabetic nephropathy. Primary interventions are the most cost-effective and as such health promotions to reduce risk of developing diabetes, a risk factor for ESRD, needs to become part of the mandate of the Ministry of Health. A policy on chronic diseases developed within the primary healthcare plan that currently exists would help guide that focus.

The study was limited by the accuracy and quality of the data, which Basch (1999) argues is a recurring problem in developing countries. There are limitations and difficulties in any attempt to calculate the mean cost of a dialysis session, especially in public facilities where cost is subsidized, as every facet of care and cost associated with the session must be taken into consideration. Consequently, assumptions were made on cost for direct and indirect services related to treatment options compared in this study. Assumptions are justified as this is a non-funded research with time constraints and a need to reduce cost drivers. The study was also limited in its perspective as it could not present on national costs from a societal perspective such as the patient’s ability to work or opportunity costs.

Costs from the private facility could not be used as they did not wish to participate in this study. The inability to capture their costs is relevant as they are used by the government to provide dialysis for ESRD patients whose prognosis prevents them from being placed on a waiting list; this cost is incurred by the government. A patient who commenced dialysis at the private facility and transferred to the Renal Unit at the government facility is not distinguished in the patient register.

The strength of the research lies in the use of triangulation to gather and analyse data to ascertain their common conclusion, effectiveness based on costs, and QALYs. Decrop (1999) concurs that one of the main ways to avoid the contentious issue of validity and reliability is the use of triangulation. Triangulation involves the use of multiple data sources in the investigation of a research question for justification or clarification, which in this case involved utilizing primary and secondary data, as well as information from the attending physician. Denzin (1978) also claims that triangulation limits personal and methodological bias as well as enhances the study’s generalizability.

The use of the Markov model is an inherent strength of the study. Gonzalez-Perez, et al. (2005) argue that the model’s ability to prognosticate relative effectiveness and cost overtime makes it appropriate for modelling chronic treatment options such as Renal Replacement Therapy (RRT).

Cost-effectiveness to determine QALYs as well as the use of a standardized instrument to measure QALY also strengthens the findings of the research. The 15D is recognised as generally being a small measurement burden to both respondents and researchers. As an evaluation tool it is highly reliable due to its repeatability of measurements with minimized random error. The results generated are valid because of the degree of confidence that researchers can place in the inferences that are drawn from the scores. Sintonen (2001) posits that as an instrument to measure cost-effectiveness, it is particularly suitable for calculating quality-adjusted life years (QALYs).

While the majority of cost-effectiveness analysis of treatment modalities for diabetic nephropathy focuses on the disease at its latent or progressed stage, Glassock (2010) noted that a study by Gearde et al. (2008) identified that early detection of diabetic nephropathy and intensive pharmaceutical interventions are not only cost effective but significantly reduces the risk of ESRD among type 2 diabetics. These findings are replicated in two studies by Keane and Lyle (2003) and Szucs, et al. (2004) who found that Losartan reduced the incidence of ESRD among diabetics. They went on to argue that proteinuria, which is the ‘single most powerful predictor’ of CKD in type 2 diabetes, is a simple and inexpensive screening test, and early detection can lead to the early administration of drugs that have been proven to reduce ESRD incidence.

Mann, et al. (2010) argue caution against population based screening for CKD, and advocate that screening, as a secondary intervention, should focus on at-risk populations. Their study concluded that ‘targeted screening of people with diabetes is associated with an acceptable cost per QALY in publicly funded healthcare systems’. Such an approach can be adopted in the health system in St. Lucia.

Cost-effectiveness analysis is able to provide valuable insight to prioritizing within healthcare and so the findings of this research will be able to provide evidence to support efficiency in the use of limited resources. Policy-makers would be able to use these findings to review the decision to expand the number of hemodialysis centres in St. Lucia. Further research to identify more cost-effective treatment options would be the first step to improving efficiency of resource allocation.

The preliminary findings have not identified whether or not hemodialysis for diabetic nephropathy is cost-effective. The domination of hemodialysis as a treatment modality for ESRD, despite the plethora of studies that have identified it as the least cost-effective of RRTs (Haller, et al., 2011; Just, et al., 2008, Kontodimopoulos & Niakas, 2008), provides the health sector with the evidence needed to revise treatment protocols and an opportunity to improve cost-effectiveness of ESRD treatment. This can be achieved by reducing the use of hemodialysis and introducing as an alternative peritoneal dialysis, which has been cited as being the most effective of dialysis options. Just, et al. (2008) caution that the economics of dialysis in the developing world, where labour may be cheaper than the importation of equipment and solutions, may lead to the perception that peritoneal dialysis is more expensive than hemodialysis. They go on to note that this is not conclusive as there is a dearth in economic evaluations in developing countries to substantiate that view. As an alternative, a well developed CKD Care Program is able to significantly reduce the probability of developing ESRD among at risk populations, as well as significantly lower healthcare costs among ESRD patients (Wei et al., 2010). There is a need to expand the services offered by the Renal Unit as well as its coverage to help achieve that end.

Conclusion of Preliminary Findings

Despite a declared commitment to Primary Health Care (PHC) as a strategy for National Health development, the Ministry of Health’s actions have not been consistent with its declaration. Secondary and tertiary care service is posing a great financial burden on the health system, as purported by the preliminary findings of this paper. Evident in the resource allocations for health in St. Lucia, Primary Care Services are allocated a decreasing or stagnant proportion of the health budget, considered against a decreasing allocation of total public expenditure to health. A sustainable health system needs to maximize the use of health resources, creating a more efficient health system that is capable of providing quality health services in a cost-effective manner in order to maximize population coverage. Primary health care needs to become the thrust used to promote efficiency in health as it is recognized as the most cost-effective of interventions.


Basch, P. (1999). Textbook of International Health


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