October 2007

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When can IT improve medical quality and cut costs

October 31, 2007 in Academic Articles, Asymmetric Information, Healthcare IT | Permalink

Many people believe that better information technology (IT) can help improve the quality of medical care in the U.S. and around the world. For instance, if a doctor prescribes a drug which interacts harmfully with a drug the patient is already taking, a computer program could notify the doctor of this problem. If a patient has a certain disease, a computer program could help to narrow down the physician’s treatment options.

The problem with this top-down, one-size-fits-all doctoring is that every patient is unique. Of course, there are medical standards which should generally be followed, but often these standardized treatments have to be altered slightly or completely depending on patient wishes, the prevalence of multiple diseases, or economic constraints. Further, the physician typically has superior information regarding the patient’s condition than a standardized computer algorithm.

An NBER working paper by Javitt, Rebitzer and Reisman investigates a randomized trial of the implementation of a new IT system at a commercial HMO plan. The program was ‘turned on’ for some patients for each physician in the HMO and ‘turned off’ for other patients. The program would give three care consideration (CC) alerts: stop a drug, do a test, or add a drug. Each of these warnings had 3 severity levels.

The authors compare data on the CC alerts which occurred for the ‘switched on’ patients with the hypothetical CC alerts which would have occurred if the software had been running. The authors found that the IT program lead to 6% lower charges in the turned on group compared to the control. The authors interpret this to be due to lower hospitalization rates and medication complications in the treatment group.

One key aspect of the program is that the CC alerts could be ignored by doctors.

“Physicians often have better information about their patients than does the error detecting software. Actions that look like a misstep to the computer may in fact be the result of informed physician choice, informed patient choice and/or patient non-compliance. For this reason, the HMO and the software company viewed CCs as recommendations that physicians were free to ignore if they disagreed.”

Physicians seemed to heed these CC alerts more than other studies had previously thought they would. Why?

Our results, however, suggest something more: the messages in the CCs seem to have had a bigger effect on physicians than the conventional medical channels used to promote the HOPE trial findings. It seems plausible that the CCs were influential because they linked a general recommendation (“take ACE inhibitors�?) to a specific patient [my italics] and a specific cite to the medical literature.”

To me, this seems to be the most appropriate way to implement medical IT.

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Medical Tourism: Good or Bad?

October 30, 2007 in International Health Care Systems, Supply of Medical Services | 3 comments

According to the Telegraph (‘Record numbers go abroad for health‘), “More than 70,000 Britons will have treatment abroad this year – a figure that is forecast to rise to almost 200,000 by the end of the decade.”  Many of these individuals are seeking treatment in countries such as India, Hungary, Turkey, Germany, Malaysia, Poland and Spain.  Why are these individuals going abroad?  Long wait lists and shortages of qualified clinicians (such as dentists – see May 9, 2006 post).

Ezra Klein notes that 100,000 Americans travel abroad for plastic surgery.  Why do they do it?  Here, wait lists and physicians availability are not the major motivators (living in Southern California, I can tell you that there is no shortage of plastic surgeons).   In the U.S., monetary cost is the major consideration for most patients who become medical tourists.

Thus, in both countries, people are trying to find better deals abroad.  Health care is expensive in the UK; not in monetary terms, but due to a high time cost from long waiting lists. Health care is expensive in the U.S.; not due to time costs from waiting lists, but from high monetary cost.

Megan McArdle of Asymetrical Information notes that Baumol’s Cost Disease is one explanation as to why health care is so much cheaper outside the OECD.

Health care systems suffer from Baumol’s cost disease: it’s a labor-intensive service that doesn’t offer huge scope for gains in labor productivity. The number of hours it takes to manufacture a car is consistently falling, but the number of hours it takes to perform doctor’s visits is roughly the same as it has always been. As a society gets richer, in order to attract workers, the labor intensive service has to pay competitive wages with the sectors where productivity is rising rapidly; that means that costs for labor-intensive services rise faster than the general price level.

Bangkok’s doctors are so cheap because a doctor making a modest wage by British standards can have an enormous house and a flock of servants to take care of him, putting him in the very top echelon of Thai earners. Nurses too, can make an American pittance and still live very well. As Bangkok gets richer, the servants and the gigantic house will not be so affordable–and neither will the health care.

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Therapeutic non-adherence: a rational behavior revealing patient preferences?

October 29, 2007 in Academic Articles, Pharmaceuticals | Permalink

Many studies have revealed patient non-compliance with medical prescriptions (e.g.: not taking prescribed drugs, not visiting the doctor) at around 50%. Most medical researchers believe that non-adherence is either due to 1) irrationality or 2) misinformation. Yet a Health Economics article by Lamiraud and Geoffard (2007) tests the hypothesis of whether or not this behavior may in fact be rational.

Most medical treatments have costs. There are monetary costs, time costs, inconvenience costs, and physical costs from any side affects which occur. Physicians often focus on the benefits of medication without fully taking into account the discomfort patients experience from medication.

To solve this problem the authors used a data from a randomized controlled trial (RCT) of HIV-1 infected patients. The trial aimed to test the safety and efficacy of two HAART therapies. The authors use the following system of equations to estimate factors associated with compliance.

  • θ*it=x1itβ1+ε1it
  • h*it=x2itβ2+ θitγ +ε2it
  • εjit=νjt+ηjit

The variable θ* represents a latent variable as to the level of adherence (θ=1 for full adherence and 0 otherwise) and h* is a latent variable representing the health status of the individual (h=1 if the individual is an a good health status and 0 otherwise). The model is estimated using a panel non-linear simultaneous two-equation system.

The authors find that higher adherence levels are associate with higher patient welfare. Thus, if two drugs are equally effective, the authors recommend that policy-makers, insurance companies, and government should select the pharmaceutical with higher compliance levels. “To the contrary, the clinicians of the trial were tempted to support the treatment in which the adherence level was smaller, based on the rationale that a higher adherence would have pushed the efficacy to upper levels in that group.”

Realizing that adherence is an endogenous behavior made by rational individuals may change the way in which the benefits of prescription drugs are measured in the future.

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Friday afternoon Comic

October 26, 2007 in Miscellaneous | Permalink

Here’s an entertaining comic from PhD Comics.

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‘For the first time I found myself truly caught between my own needs and those of my patient.’

October 26, 2007 in Physician Compensation | Permalink

This is how a very interesting article (“P4P is changing me“) in Medical Economics begins. The essay won an award in the 2006 Doctors’ Writing Contest.

The author of the story is a physician who has been under much financial pressure of late; a divorce, med school loans, a mortgage, alimony and child support were all eating away at the author’s income. One day an 84-year old WWII vet walks into his office. He had a left renal mass, but did not want any further medical treatment for this problem. The author must contemplate how–or if–he should treat the patient.

“There’s very little I could do to improve [the patient's] life. I asked him once what I could do to help, and he requested merely that I talk with him. That’s what I’ve done, every three months, but I won’t get any extra pay for that. I could check his A1C, though—after all, he does have diabetes, and it has been more than a year since it’s been checked.“

The patient had been very diligent in maintaining the correct levels of blood pressures, heart rates, and blood sugars. The author believed that an A1C test was clinically unnecessary. But…

We talked for 30 minutes (10 minutes over the scheduled 20-minute appointment); I was then behind. How would I wrap this up? Should I make one last plea that he open himself up to counseling and antidepressants, and not suicide? Or should I tell him that I need him to go to the lab and have his blood work checked? Well, I doubted I could do much to improve his life, but I did need the $50 . . .

Should I start statins on the drooling demented to lower their LDL? Should I preach to paranoid schizophrenics that they must quit smoking? Doing so might help ease my burdens—will it ease theirs? Without a financial incentive, I treated practice guidelines as guidelines, and I treated patients as patients. With financial incentives, will the guidelines become my goal? Will I lose patience for patients who are just a means to my means?

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Social Networks and Access to Care

October 25, 2007 in Supply of Medical Services | Permalink

On the news yesterday that Microsoft purchased a 1.5% stake in Facebook for $240 million, social networking appears to  highly valued commodity.

“…[T]he strength of social networks among Mexican-Americans is positively related to access to care.”

Is this true? That is hypothesis that a recent NBER working paper by Roan Gresenz, Escarce and Rogowski attempt to test. The authors uses data from 1996-2002 MEPS, along with data from the 2000 Census, Area Resource File, the CPS and the Bureau of Primary Health Care Uniform Data System.

Methods

The econometric specification is relatively simple. A probit regression is used where the dependent variables are either (1) whether the person has a “usual source of care,â€? (2) whether or not the person has an office-based physician or non-physician visit during a year; (3) whether the individual has any prescription drug expenditures during the year; (4) whether the individual has any medical expenditures during the year.

Social networks are measured three ways. The first is the percentage of Hispanics in an individuals ZIP code of residence, the second is the percentage of the population that is foreign born and Spanish speaking, and third is the percentage of Spanish speakers in a ZIP code. Each social network measure is interacted “…with an individual-level variable indicating whether the individual was born in the U.S., is foreign-born but has lived in the U.S. for more than five years, or is foreign-born and a recent immigrant.”

Results

The authors find that Mexican-Americans who only speak Spanish have less access to care than bilingual Mexican-Americans. Insured Mexican-Americans who live in areas of dense Hispanic populations have more access to care than insured Mexican-Americans living in areas with a weaker Hispanic presence. The results for uninsured Mexican-Americans are mixed. It seems that uninsured individuals living in an area with more Hispanics or more Spanish speakers leads to more medical expenditures and office visits, but seems to decrease the percentage of the population who spend money on pharmaceuticals or have a usual source of care.

Healthcare Economist commentary

One worry is that areas with larger Hispanic populations are areas with higher economic growth or are somehow different than areas with fewer Hispanics or Spanish speakers. Since the authors use data on a ZIP code level, this may be less of a problem. Further the authors state the following:

“We find no effects of these characteristics of the local population on access to care for U.S. born Mexican-Americans, suggesting that similarities in race and language may contribute more to the formation of social ties among individuals who are less acculturated to the U.S. “

While the data seem to prove that Mexican-Americans–especially the insured– have more access to care in areas with high levels of Spanish-speakers, the mechanism of how this manifests itself is unclear. The authors claim that social networks is the cause. Social networks provide information concerning which doctors are of high quality and are Spanish-speaking. On the other hand, a supply-side story could explain this phenomenon as well. In areas with many Hispanics, there will be more Spanish-speaking doctors and Mexican-Americans will gain more utility from a physician office visit. This is likely true regardless of whether a single individual has a large or small social network.

Even though this paper uses a large data set and has an intuitive result, since their is no measure of an individual’s social network the results can not prove that social networks–rather than other features of heavily Hispanic areas–are causing changes in access to care.

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Cavalcade of Risk #37

October 24, 2007 in Carnivals | Permalink

The latest edition of the Cavalcade of Risk has been posted at Hill’s Personal Finance blog.

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Lifetime Benefits of Medical Technology

October 24, 2007 in Academic Articles, Hospitals, Specialists, Supply of Medical Services | Permalink

Revascularization (bypass surgery or angioplasty) have been frequently used procedures to treat patients who have experienced a myocardial infarction (MI). These procedure are expensive, but are supposed to enhance longevity. Do they?

This is the question analyzed by David Cutler in his NBER working paper titled “The Lifetime Benefits of Medical Technology.” The problem with many MI studies is that they are short term. Cutler uses data on Medicare beneficiaries who had a heart attack between 1986 and 1988. This means that Cutler can utilize 17 years of follow-up mortality data.

Another issue with non-randomized trials is that of patient selection. Very sick MI patients likely will not receive revascularization surgeries because they not be well enough to survive the surgery. Relatively healthy MI patients may not need revascularization. Thus, even the direction of the selection bias is unknown in this case. In order to account for this selection problem, the paper uses an instrumental variables approach.

The instrument is “the distance to the nearest revascularization hospital [defined as a hospital capable of preforming a revascularization] minus the distance to the nearby hospital of any type.” This instrument was used in a paper by McClellan, McNeil and Newhouse (JAMA 1994). In order for the instrument to be valid, “patients who are more likely to benefit from invasive treatments do not select their residential location based on distance to high-tech medical care.” Cutler argues that this likely true since most covariates are balance above and below the median differential distance. It is possible, however, that richer, healthier people live in more affluent areas and revascularization hospitals locate their facilities to attract these types of patients. I do not know whether or not this is the case. Also, “…if hospitals that provide revascularization are also better at providing aspirin at admission, at managing post-acute follow-up, or at treating subsequent illnesses years later, the instrumental variables estimates will overstate the importance of revascularization.”

Cutler does show that his instrument is relevant as “people who live closer to a revascularization hospital are 3 percentage points more likely to receive a revascularization procedure than those who live farther away.”

Results

The affect of revascularization on mortality is not clear.

“The marginal person receiving a revascularization is about 4 percentage points more likely to survive the first day after the MI than if the person did not receive a revascularization (although not statistically significantly). This gap narrows over time and even reverses by 1 year. At that time interval, people who received revascularization are 6 percentage points more likely to have died than people not receiving revascularization.”

After 17 years, people with MI have a mortality benefit of 5% but this result is not statistically significant. Cutler also examines the cost-effectiveness of revascularization procedures:

“…The greater survival for the marginal patients receiving revascularization translates into 1.1 years of additional life expectancy. The cost of this gain is about $38,000. Thus, the cost per year of life is $33,246.”

A year of life is generally valued at around $100,000, which might lead one to conclude that this is a worthwhile procedure. Since the mortality differential is not measured very precisely, however, one should be somewhat skeptical of this conclusions. Further, Cutler wisely notes that he is not sure whether or not the actual revascularization caused the decreased mortality. Being admitted to a revascularization hospital may simply be a proxy for the receipt of other hospital services, or it could be the case that revascularization hospitals provide superior patient management and patient care than non-revascularization hospitals. Also, due to data constraints, this paper only examines mortality effects. The impact of heart surgery on quality of life is not considered.

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King of all media

October 23, 2007 in Miscellaneous | Permalink

The Healthcare Economist has expanded to radio.  For those in the Pensacola, Florida area, you may have heard my appearance at 1:15pm Central time on Rick Outzen‘s “IN Your Head Radio” on 1620 WNRP.  During the interview, Rick and I discussed the pros and cons of S-CHIP as well as the Dutch health care system reform, which I reported on in this post.

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San Diego Wildfires from a San Diego Resident

October 23, 2007 in Current Events | Permalink

As most of you know who have been reading the news, the wildfires in San Diego, my home, have been causing much devastation. According to San Diego’s NPR station KPBS, an “estimated 245,000 acres burned and 1200 homes destroyed in San Diego County” (reported as of 10:09am Pacific time). Over 250,000 individuals have been evacuated in San Diego County alone. Yesterday the smoke and ash from the fires was so thick at my school that it would sting your eyes just to got outside. At 11am the sun only had the strength of a newly-risen sun because of the thick cloud cover. And where I was in La Jolla was not even the worst of it.

Currently I am staying at my girlfriend’s house in Irvine, CA but even here there is a fire in Portola Hills, about 4-5 miles away. Due to evacuation traffic, it took me 3 hours and 15 minutes to travel the 65-70 miles between La Jolla and Irvine. Nevertheless, I am thankful to be safe and sound.

What I would like to write about today is the well-coordinated effort of government officials, red cross workers, emergency personal, police, firefighters and volunteers. The key to a successful emergency effort is coordination between local police and firefighters who have an detailed understanding of a city’s needs, with larger state (e.g.: Cal Fire) and federal (e.g.: FEMA) workers who bring additional capital and manpower resources to the region.

Reverse 9-1-1 calls were made for individuals who had to evacuate from their homes. Police patrolled these evacuated homes to protect them from looters. Numerous shelters were set up in the safer areas of San Diego. The city/county even had a plan so that if these shelters filled up, backup shelters were prepared to come on line. After the Virginia Tech massacre, my university (UCSD) installed text message, email and phone alert system and employed these methods to inform faculty, students and staff of wildfire risks and school closure. The evacuation of over 100 sick and elderly patients from Pomerado Hospital even seemed to take place in an orderly fashion.

This is not to say that there have been no problems. Firefighters on the ground in Orange County called for more air support to put out the flames, but high winds for much of the day yesterday made the use of water and flame retardant from the air infeasible.

While Katrina was one of the greatest disasters in U.S. history, the repercussions from that disaster have made municipalities all over the U.S. have to prepare for the worst. In San Diego, these preparations are helping to save many lives.

I wish that everyone in southern California is able to stay safe.

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