09.22.11.Value_Spending - The Value of Medical Spending...

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The Value of Medical Spending HCMG 101 Daniel Polsky September 22, 2011
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Summary • Does the U.S. receive value for the money spent on health care? – International comparison perspective • NO – Higher expenditure without better outcome – Consumer sovereignty perspective • YES – by definition
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Valuing health • Valuing health directly is an alternative way to prioritize the use of health care spending – This is done in the United Kingdom and Canada when they place limits on medical care that will be financed – In the U.S., all medical treatments that improve health are approved for use • In the U.S. Prices for most medical technologies are determined by market forces. • Valuing health can inform us whether overall health care spending has produced sufficient value
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Question #1 Should the U.S. government estimate whether the benefits of a new medical technology are likely to exceed its costs, and keep out the losers ? http://www.polleverywhere.com/multiple_choice_polls/MjAwODUxNDU1OA
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Many Countries Use a Cost Effectiveness Threshold to Determine Which Medical Technologies to Approve Example: a Cost Per QALY Threshold $16,000 - $10,000 (5 – 4) X 0.10 = $60,000 per QALY Cost per patient Current cost w/ proposed drug per patient Expected Expected Probability QALYs QALYs drug will if drug without work works the drug Cost effectiveness ratio
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Example #1 Value of Mammograms http://www.nytimes.com/2010/09/23/health/r Based on this article, do the benefits of mammograms exceed the costs? What would be wrong with limiting the use of mammograms based on this study?
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Example #2 • Handheld Ultrasound Device http://online.wsj.com/article/SB100014240 52748704343104575033231858545798.ht ml#articleTabs%3Dvideo • Will this new technology move us along the curve or on a new curve. Where will the point be on the graph? • Will it be cost-effective?
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Flat of the curve Fuchs (Health Affairs, 2004)
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Question # 2 Would you rather have 1950 s medical care at 1950 s medical prices, or today s medical care at today s medical prices? http://www.polleverywhere.com/multiple_choice_polls/LTYxMTU5MzAyNA
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An Alternative Perspective on Health Care Spending
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Why do we spend more on medical care? • Because we can do more – Price increases are a small part of the story – Quantity and quality increases explain most of the higher spending: • Objective: Evaluate the benefits and costs of medical technologies using case studies of 4 different diseases/medical conditions: • Cardiovascular disease • Low birth weight babies • The mentally ill • First, how do we value health as a benefit
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Are benefits > Costs? • Some of the improvement in health (e.g., life
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09.22.11.Value_Spending - The Value of Medical Spending...

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