November 2008

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Do drug companies suppress unfavorable results from academic journals?

November 30, 2008 in Current Events | No comments

In short: yes.  A study by Rising, Bacchetti, Bero (2008) compares mandatory trial submissions to the FDA with information on trials which appear in academic journals.  The authors find that “Discrepancies between the trial information reviewed by the FDA and information found in published trials tended to lead to more favorable presentations of the NDA drugs in the publications.  Thus, the information that is readily available in the scientific literature to health care professionals is incomplete and potentially biased.”

  • Hat Tip: The Economist.
  • Rising K, Bacchetti P, Bero L (2008) Reporting Bias in Drug Trials Submitted to the Food and Drug Administration: Review of Publication and Presentation. PLoS Med 5(11):e217  doi:10.1371/journal.pmed.0050217

Happy Thanksgiving

November 26, 2008 in Miscellaneous | No comments

I will be on vacation for a few days for the Thanksgiving holiday.  Blogging will resume on Monday.  

For each new morning with its light,
For rest and shelter of the night,
For health and food, for love and friends,
For everything Thy goodness sends.

  • ~Ralph Waldo Emerson

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Financial Risk and Medical care: U.S. vs. Canada

November 26, 2008 in International Health Care Systems | No comments

In the U.S. a much higher percentage of medical is paid for out of pocket.  Further, there are about 45 million uninsured.  In Canada, the government pays for almost all health care.  The benefits and costs of a centralized, universal health care system have been discussed previously on this blog (see Oct 2, 2007 and Apr 25, 2008).  One benefit of a government-run program is that there are no uninsured; financial risk for medical expenditures is transferred entirely away from the individual in the Canadian system.  

Two blog posts highlight the stark contrast of the two systems:

  • WSJ Health Blog: As more and more people lose their jobs with the economic downturn, the number of uninsured is increasing.  This post from the WSJ Health Blog focuses on that in the U.S. there is a “growing number of patients behind on their mortgages because they are swamped with medical debts.”
  • Health Business Blog: “A Canadian relative of mine went to the hospital for ‘minor’ surgery and ended up in the ICU …He was pretty agitated while intubated…A few days later when the tubes were out and he could speak, he said that when he saw so many doctors and American relatives around he was convinced he was in the US, running up a huge bill that he wouldn’t be able to pay.  That’s what was agitating him more than anything else.  Luckily for him he was actually in Canada.”

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What makes patients choose your hospital?

November 26, 2008 in Hospitals, Quality | No comments

Patients choose hospitals based on the quality of the medical care they receive and the hospital’s distance from their home.  But what nonclinical criteria do patients value most?  The Salud y Gestión blog reviews the findings of a study in The McKinsey Quarterly.  The study found that patients rank the following as the most important nonclinical criteria influencing their hospital choice.

  1. Keeping patients informed about treatment both during and after visit (77%)
  2. Conducting Scheduled appointments on time (75%)
  3. Room appearance (66%)
  4. Ease of scheduling appointments (64%)
  5. Food and entertainment options in room (63%)
  6. Value for the money (62%)

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An Overview of the Great Depression

November 25, 2008 in Economics - General | No comments

Randall Parker of East Carolina University has a detailed overview of how the Great Depression unfolded.

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The Underuse of Overuse Research

November 25, 2008 in Supply of Medical Services | 1 comment

Health economics, physicians and health services researchers have found that overuse, not underuse, is the major problem for many medical services.  Yet you rarely here a campaign to reduce that quantity of medical care provided.  Why is this?

An editorial in Health Services Research gives two important explanations for this.  First, measuring overuse is difficult.  ”For example, a health plan cannot easily determine whether a child receiving a tympanostomy tube for treating otitis media with effusion was ‘overuse.’ To assess appropriateness, at least one year’s worth of medical records documenting the number of episodes and duration of ear infections is necessary (Keyhani et al. 2008).”  Needless to say, this creates a significant data burden.  The RAND Appropriateness Method [Brook et al. 1990]  may provide some guidelines for which medical services are necessary, but even these methods are imperfect.

The second problem is that reducing overuse often cuts into the income of a politically powerful groups: doctors, medical device makers, and pharmaceutical companies.  

“One well-known illustration occurred when the Agency for Health Care Policy and Research (AHCPR), now known as the Agency for Healthcare Research and Quality (AHRQ), published guidelines that suggested that nonsurgical approaches were recommended in the initial management of acute back problems. The guidelines and underlying research supplying evidence led to lobbying efforts from the North American Spine Society, which felt that its scope of practice was threatened (Deyo et al. 1997). The end result was that the House of Representatives passed a resolution in 1996 for zero funding for AHCPR. The budget for the Agency was restored in the Senate after significant efforts by the research advocates. However, this experience led to the creation of a newly named Agency, with a mission that largely abandoned its role in guideline development.”

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Effective Healthcare Policymaking in Europe

November 24, 2008 in International Health Care Systems, Public Policy | No comments

Health economists and policymakers have lots of ideas of how to improve the health care system.  Yet few of these reforms are implemented.  Why?

Max Hotopf of Healthcare Europa tries to answer this question in the context of Europe’s attempts at healthcare reform.  Below are some of his arguments and my comments.

  1. Decentralization. “In most European countries healthcare policy is effectively left in the hands of regional authorities. Finland takes this to the extreme with primary and secondary care delegated to over 400 municipalities, each with 5,000 to 10,000 people.”  Mr. Hotopf claims that this decentralization makes it difficult to implement health care reform.  I wholeheartedly agree with Mr. Hotopf that decentralization makes implementing wholesale healthcare reforms more difficult.  However, I do not necessarily imply that the solution is centralization.  Generally, most economists have found that more decentralized control of government-run institutions is best.  Individuals generally have higher satisfaction with government institutions on a local level than on a national level.  Although these local bodies may suffer from diseconomies of scale, decentralized systems have better information about the needs of their local constituents.  Thus, fixing the “problem” of decentralization will likely create more problems than it solves.
  2. What the public will accept/elections.  Healthcare Europa states that the European public is often against any high profile privatization in the health care system. Further, changes in the political climate can easily derail reform efforts.  For instance, “in the Czech republic, the social democrats took power this month and are utterly opposed to any sort of private healthcare. The privatisation programme in Slovakia has been slung into reverse.”  Despite this fact, I doubt that abandoning democracy for a government of experts is a good idea [Anyone who thinks a government of experts is always good should read The Best and the Brightest about the U.S. involvement in Vietnam.]
  3. Professional bodies have a lot of political power and can overturn reforms.  ”The British Medical Association regularly scuppers government policy, such as the move towards larger polyclinics. It is two years since the Greek courts ruled that stipulations that a doctor has to own over 50% of any diagnostics lab are contrary to EU law. Yet, thanks to pressure from doctors, the Ministry of Health has constantly stalled any attempt to change the law.”  Here I completely agree with Healthcare Europa.

 
The blog post does leave us with some sage advice: “Unless you have an intimate understanding of how private healthcare operators will behave in any situation, you will fail to come up with programmes which will harness their energy and appetite for change.”

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Physician Compensation and Productive Efficiency

November 23, 2008 in Physician Compensation | No comments

How do financial arrangement between physicians within a medical group affect efficiency levels?  This is the question Gaynor and Pauly (JPE 1990) attempt to answer.

Theory

 The authors assume that the quantity of medical services is produced by the following production function:

  • qi = f(hi, ti, ki, ei, θi)
  • h: physician hours, t: non-physician hours, k: capital, e: effort level, θ: other factors.
The authors assume that physician and non-physician hours, capital, and other factors are measurable but effort is not.  What determines physician effort?  Physicians get utility from income, y, and disutility from exerting effort and working more hours.  The authors assume physicians have the following utility function, ui:
  • ui = yi – vi(ei, hi)
  • yi = α(P-C)qi + n-1(1-α)(P-C)Σ(1 to n) qi
    • The variable α represents the percentage of work that physicians receive 100% of the net profit they generate and (1-α) represents the net profit generated shared among the n physicians in the group.
  • ∂ui/∂ei = [α + n-1(1-α)](P-C)(∂fi/∂ei) – ∂vi/∂ei) = 0

So know we’ve done some math.  Who cares?  What do we get out of all these equations?   The first order equation, ∂ui/∂ei, shows that when physicians optimize their effort level, they trade off the benefit from extra effort (more money) versus the cost of more effort (they’d rather be golfing). The authors can also use comparative statics to to predict how they will affect physician effort.

  • α: An increase in the percentage of work where the physician receives 100% of the profit generated will increase effort.
  • P: An increase in the price of a medical service will increase physician effort.
  • C: An increase in the cost of a medical service will decrease physician effort
  • n: As the number of physicians increase, effort decreases.  This is because physicians will have to share more of their income with other doctors.  This results falls in line with the finding of Newhouse (1973).  This paper found evidence of “behavioral diseconomies of scale” whereby physicians shirk more as the number of physicians in the group increases.
Empirical Work
How do Pauly and Gaynor test this hypothesis.  First, they used data collected by the Mathematica Policy Research on 957 medical groups and 6353 physicians.  They have data on physician and assistant hours, capital, and other information.  They estimate effort using a maximum likelihood production frontier estimation.     
One problem is that physician compensation structure may be endogenous.  Physicians who are more active may decide to choose medical groups where α is large and n is small.  To try to correct this problem, the authors use physician tastes as an instrument.
 
Results
The authors find that “incentives affect the quanity [of medical services] produced but not measured technical efficiency…Specifically, relating compensation to productivity does increase production as theory would suggest. The number of members in a group decreases the quantity produced, and experience leads to greater productivity.”

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The Hiring of An Economist

November 21, 2008 in Economics - General | 1 comment

I am currently on the “Job Market.”  I will receive my Ph.D from UC-San Diego this spring and hope to have a job for next fall.  There are lots of advice papers on what graduate students should do to maximize their chances of getting a job.  Yet few graduate students ever learn what the labor demanders want.  What are universities thinking during the hiring process?

A paper by Jessica Holmes and David Colander examines this question.  They review their experience trying to hire a faculty member at Middlebury College in Vermont.  The complete article is available here.

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Flushed

November 21, 2008 in Books, Health Care in Developing Nations | 1 comment

I just finished reading an interesting book on plumbing.  I can just see that I lost half my readers with that last sentence.  How can plumbing be interesting?

It turns out that if you are interested in health, you must be interested in plumbing.  Disposing of human waste is one of the biggest health problems, especially for individuals living in cramped urban areas.  In Flushed: How the plumber Saved Civilization, W. Hodding Carter takes the reader on an enjoyable, not-too-serious journey through wonderful world of plumbing.  This book is not written by an expert, but what is lacking in in-depth reporting is made up for with personal experiences and lighthearted commentary.  Mr. Carter gives the reader interesting historical information, technical details on sewage, and describes his tourist trips to visit plumbing systems of the past and present from around the world.  Even included are Mr. Carter’s own attempts at fixing the plumbing system in his house and his eventual purchase of a toilet with a heated seat [I am told by my brother that this is popular in Japan].

One of the most interesting anecdotes relates Mr. Carter’s trip to India to visit Sulabh International.  India lacks the wastewater treatment infrastructure to keep its waterways clean.

“As a result, India’s produce teems with bacteria and infectious diseases.  The country has an infant mortality rate of sixty deaths in a thousand births and two million Indian children die every year of diseases due in part to poor sewage disposal.  

Sewage is the scourge of India”

Sulabh International is an NGO who’s goal is to improve the sanitation and human waste disposal across India.  The NGO has developed a flush toilet which uses little water and where human waste is organically compounded to later be used for fertilizer.

After you have a glass of wine with dinner and hear nature’s call, be thankful for modern plumbing.

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