Unbiased Analysis of Today's Healthcare Issues

Prison Readmission Penalties

Written By: Jason Shafrin - Aug• 19•15

Medicare has adopted a system where hospitals that have large number of unplanned readmissions are penalized through lower compensation.  Previously, hospitals made more money when patients were re-admitted; now, these incentives are reduced although not completely eliminated.  Stuart Butler at The Health Care Blog has an interesting idea: apply a similar approach to prisons.



Imagine if prisons faced a readmissions penalty. Let’s say that if an unusually high number of released inmates from a particular prison were convicted and sent back to prison within three years then the prison’s budget would be cut and the bonuses and salary increases of senior prison staff trimmed back. Just as with hospitals, the first reaction would be to complain at the “unfairness” of being held liable for a released inmate’s return to crime. But after that the prison management would start to do a much better job than today in preparing inmates for re-entry into the community.

Could it work?  It certainly would provide some incentive to refocus prison from a place of punishment to a place of rehabilitation.  It may be worth a try.

Mid-week Links

Written By: Jason Shafrin - Aug• 18•15

Personalized medicine is the future. What is personalized medicine?

Written By: Jason Shafrin - Aug• 17•15

An concise article from Sean Khozin and Gideon Blumenthal (2015) try to explain.

“Personalized (or precision) medicine has been broadly described as the administration of the right therapy to the right patient at the right dose and intensity.”  However, this is a fairly broad definition.  Some more concrete examples of personalized medicine include:

Modern concepts in personalized medicine are defined by their focus on utilizing advances in technology for tailoring care. Blood typing to guide transfusions, monitoring the international normalized ratio for dosing warfarin, and predicting hypersensitivity reactions to the antiretroviral drug abacavir based on the presence of the HLA-B*5701 allele are well-known examples of a biomarker-driven approach to personalizing care in modern medicine.

The importance of personalized medicine has grown such that President Obama included $215 million for a Precision Medicine Initiative in the 2016 budget. Announced at the 2015 State of the Union address, the initiate aims to “pioneer a new model of patient-powered research that promises to accelerate biomedical discoveries and provide clinicians with new tools, knowledge, and therapies to select which treatments will work best for which patients.” The funding covers:

  • National Institute of Health: $130m to develop a national research cohort of a million or more volunteers which will include data rom medical records, lifestyle, patient reported outcomes, and personal device and biometric sensor data.
  • National Cancer Institute: $70m to scale up efforts to identify genomic drives in cancer and use this information to improve treatments.
  • Food and Drug Administration: $10m to acquire additional expertise and advance the development of high-quality databases to support regulatory structure needed to advance innovation in precision medicine.
  • Office of the National Coordinator for Health: $5m to develop interoperability standards and requirements to address privacy and data security issues with respect to NIH and other precision medicine initiatives.

Many of the advances in precision medicine have occurred in cancer patients. The authors conclude by saying:

Recent technological advances in development of targeted therapies using kinase inhibitors and monoclonal antibodies have paved the way for personalization of therapy in a growing segment of cancer patients…Given that most cancers may be caused by random mutations arising from stem cell divisions of normal self-renewing cells, application of our evolving understanding of cancer genomics to secondary prevention for detection of early oncogenic events is an important strategy for reducing the burden of cancer-related deaths that can augment personalization of care in the global fight against cancer.

In short, precision medicine is coming and innovation is happening fast.

Quality Adjusted Cost of Care Analysis

Written By: Jason Shafrin - Aug• 16•15

The health care industry should take into account outcomes when weighing the cost of new treatments and technologies and make quality-adjusted life years (QALYs) part of the equation, say the authors of a study in the April issue of Health Affairs.

This is the begining of an article in Managed Care Magazine that reviews a paper I published in Health Affairs with co-authors Darius Lakdawalla, Claudio Luccarelli, Sean Nicholson, Zeba Khan and Tomas Philipson. The rest of the article is here or the original piece is here.

The Evolution of Pay for Performance

Written By: Jason Shafrin - Aug• 14•15

Interesting comments from Mitzi Wasik, PharmD, BCPS, director of Pharmacy Medicare Programs at Aetna.


Quotation of the day: Weight

Written By: Jason Shafrin - Aug• 13•15

Vergon 6 was once filled with the super-dense substance known as dark matter, each pound of which weighs over ten thousand pounds.

On that light-hearted note, enjoy your weekend!

Kidney Transplants in Iran

Written By: Jason Shafrin - Aug• 12•15

Almost ten years ago, I wrote a post on Iran’s policy of paying organ donors.  It looks like the New York Times has finally caught on.   An excerpt is below:

But [Iran’s organ donation program’s] chief advantage is this: People who need kidneys get them rapidly, rather than die on the waiting list.

In the vast majority of cases, donors know in advance what they will be paid and receive appropriate screening and good medical care before and during the operation. And by getting patients new kidneys instead of keeping them on dialysis, the society saves a lot of money and avoids much misery.

The Iranian model suffers from insufficient funding, lack of follow-up for donors and other problems. But as waiting lists for kidneys grow around the world, Iran offers an important lesson: With good design and regulation, a system that pays donors need not be exploitative or immoral. In Iran, the legal kidney market has prevented the development of the abusive black markets and kidney tourism seen in other countries. As the kidney crisis intensifies, governments should look closely at what Iran has achieved.

Health economics is the application of economic principles to inform medical decisionmaking. It is clear that Iran–not the US–has been able to apply economic principles to its organ donation program to create a more humane, efficient system.

Friday Links

Written By: Jason Shafrin - Aug• 06•15

The Healthcare Economist is on vacation for the next week, but I leave you with these posts to tide you over until my return.

ACA driving up health care spending?

Written By: Jason Shafrin - Aug• 05•15

That is the conclusion reached by John Holahan and Stacey McMorrow in a RWJ Issue Brief. They claim that “recent reports suggest such growth has returned to a more typical level of approximately 5.6 percent in 2014, considerably faster than increases in gross domestic product (GDP).” Positive excess cost growth–defined as the difference between the increase in health care cost and GDP–appears to have returned after a 5 year lull where health spending closely tracked GDP.

What was the cause of this increase?

Whereas in the past most excess cost growth has been blamed on technology adoption, the authors claim that the ACA expansion is mostly to blame. Expanding health insurance coverage clearly increases the utility of patients covered by insurance. Due to moral hazard, however, health insurance increases per capita spending.

The authors find that after removing the effects of the ACA’s expanded insurance coverage expansion, health care spending closely tracks GDP. ACA graph


Is the Ebola vaccine 100% effective?

Written By: Jason Shafrin - Aug• 03•15

Great news has come out in the fight against Ebola. A vaccine against Ebola has been shown to highly effective in trials conducted during the Ebola outbreak in Guinea. In fact, some news sources claim that the vaccine is 100% effective.

Is the vaccine truly 100% effective? Likely no.

In the original study in the Lancet, the researchers identified individuals who were diagnosed with Ebola. Then, clusters of individuals who had close contact with the person diagnosed with Ebola were identified. These were mostly family and close friends. Some individuals received the vaccine and others received the vaccine, but in a delayed manner.

Among the 4,123 people who received immediate vaccination, no one contracted Ebola. This appears to be a 0% infection rate. However, among the 3,528 people who received delayed vaccination, 16 contracted Ebola, which corresponds to a 0.5% infection rate. Because the baseline infection rate is so low, it is highly unlikely that the vaccine is in fact 100% effective. In fact, the authors claim that the true rate of efficacy of the vaccine is more likely to be around 75%. Why is this the case?

If most people out of the 4,123 were likely to get infected, then observing 0 Ebola cases is a strong results. However, based on the results of the delayed vaccination, we would only expect 18 or 19 people to be infected. Decreasing the number infected from an expected 18 or 19 to zero is a significant achievement. However, if infection rates were around 50% and about 2000 people were infected, then this would constitute a much more certain outcome.

In practice, the authors used the following approach to estimate the confidence intervals:

In case of zero cases of Ebola virus disease occurring (ie, vaccine efficacy 100%) a 95% CI was derived by fitting a β-binomial distribution to the cluster-level numerators and denominators and using an inverted likelihood ratio test to identify the lower bound for vaccine efficacy. For comparisons in which events were reported in both groups, a Cox proportional hazards model was fitted using a cluster-level frailty term to adjust for clustering within rings.

Regardless of the statistical methods used, this is certainly a key advance in the fight against Ebola.