Cost Effectiveness: Good Witch or Bad?

We all remember Glinda's famous line to Dorothy when she first steps out of her windswept house into the Land of Oz; clearly possessing supernatural powers the citizens wished to know were they to be used for good or ill.

Metaphorically the parallels to health care reform could not be more direct: an enormous maelstrom of change has been unleashed on the body politic. Amid all the turbulence and noise, the central element that it will deposit into our land is a strange new creature named Cost Effectiveness. What we don't know is if this creature is ultimately a good witch or not.

A bit of background. I'll loosely define Cost Effectiveness as looking at data to assess what produces similar "results" with the lowest net cost. As a simple example, if you have prostate cancer do you have surgery, do chemo, or a seed implant? Each has their merits and their downsides; they each also have different costs. The purpose of Cost Effectiveness studies is to say, when things are essentially the same, choose the cheaper option (Ok, I'm grossly oversimplifying here, but this is a blog column not a book).

Many health care policy experts believe Cost Effectiveness to be a Good Witch. The basic argument is simple: health care costs are growing rapidly and if the rate is not reduced it will seriously constrain government spending before the end of this decade. Worse, when you strip away all the political posturing, health care cost growth largely boils down to having more older people (who have greater health care needs) and increasingly expensive ways to treat them. The theory is Cost Effectiveness will reduce the rate of growth; the policy wonks wants it to be a Good Witch because the alternative is rationing (as is happening already across most of Europe).

Having resided for many years in the 'Swamp of Outcomes Analysis' I can attest that there is plenty of room for Cost Effectiveness to be successfully applied. To protect confidentiality I'll simply cite the famed DOD study, which is public. They studied C-section rates across 85 VA hospitals, the range of C-sections was between 6% and 17% of live births. Drilling into the details the single best explanation for the higher rates was 'physician decision' meaning physician convenience. Worse, anytime C-sections went above 10% there were far more complications and costs, with no difference in results (infant mortality or days spent post birth in hospital). I can attest similar 'physician decision' variance occurs across the spectrum, even in items as simple as use of antibiotics and that some of the worst offenders are not in poor neighborhoods but in the high end suburbs.

So, health care reform is chock full of initiatives to support Cost Effectiveness: Boards are established to evaluate what is 'optimal care'; billions are allocated to support research, billions more for electronic medical records and IT systems to collect even more data. A cornucopia of offerings for the Good Witch who will save health care.

But before we all begin celebrating its worth a deeper dive. The Great and Powerful new Board of Cost Effectiveness will make their decree: protocol X is preferred. Such information is routinely published today yet a recent survey of data by Medco, a major insurer of pharmacy services, showed 30-50% of doctors were not following recognized best practices TEN YEARS AFTER endorsement by the appropriate medical Academy. With cost pressure mounting how long will it be before Board 'advise' turns into Board Mandates and the Good Witch of Cost Containment becomes the Bad Witch who says only one treatment option is allowed (unless you can afford it on your own)

So here lies the fulcrum of the debate. No one can argue that there are not serious savings to be made from gaining greater adoption of more cost effective practices yet no one would want an inflexible 'paint by the numbers' approach either. One hears many physician complaints already about 'cookbook medicine' but if there is not a more open and aggressive voluntary adoption of Cost Effectiveness information it is likely to result in more severe and involuntary means of adoption. After all, the DOD was able to implement is changes because military doctors have to follow orders.

In the Bill everything is carefully positioned as 'advisory'

Where is Joe Friday when we need him?

Those of us of a certain age know Joe Friday, the famous lead detective from the early TV era hit show, Dragnet. Joe was famous for asking all the people he interviewed to 'just provide the facts please'.

Watching this mornings CNBC show Squawk Box i was struck by how far we've come from those innocent days. (Incidentally, Squawk has been doing more informative, more balanced reporting on health care than any other network). This morning they had a segment featuring Tommy Thompson, former Wisconsin Governor and HHS Secretary in the Bush Administration, and Howard Dean, acting as psuedo-spokesman for the Obama plan. They have appeared before and had a professional dialogue about the issues but today was different: a highly heated discussion that quickly degenerated into a 'your facts are wrong, no your facts are wrong' exchange worthy of the neighborhood school playground.

Aside from the heated tonality - a signal for how intense this subject has become (and, methinks, a sudden realization on the Democrats that they are losing control of this issue) what was remarkable is that these two seasoned, distinguished gentleman can't even agree on what the facts are.

In fact, facts seem to be the least prominent participant in the entire health care debate. Both sides seem to create 'factoids' to help sell their pre-determined position - be it the 47 million 'uninsured' (only if you count almost 10 million non-citizens and over 15 million who could have/afford insurance but choose not to), Sarah Palin's 'death panels' (a gross distortion of the issue) or the 'everything will be milk and cookies with no pain' picture painted by the Obama Administration.

The news media is hardly much better. Mostly they report these factoids as news without much analysis or fact finding, or they have only a narrow focus. And the cable shows actual do a disservice - offering platforms for both sides to say whatever they want, unchallenged except by the screaming talking head from the other side.

If there could simply be a joint stipulation of fact (as in many legal proceedings) we could have a far more inteligent conversation about the real issues that we face in health care. Since its unlikely to come out of Washington or the media, let me posit a few and invite contributions:

1. It is a national disgrace that in a country as affluent as America people can not get health care because it is too expensive (this talks to folks who are too 'rich' to be eligibile for Medicaid but where insurance costs woud consume a very high percentage of take home pay; its not about the $75K/yr household who could buy insurance but values something else more highly)

2. The rate of health care cost increase is unsustainable. It is causing a decline in real take home pay in the private sector and a huge budget burden on government at all levels. It has been widely asserted that a major factor (a factor, not the only factor) that destroyed Detroit was the inbalance between their health care costs and those of competitors. Today, the u.s. spends roughly $3,000 more per person per year than other developed countries on its health care - how long before we have a Detroit problem at the National level?

3. We already ration care, if we define rationing as not being able to get anything you want paid for. Both Medicare/Medicaid and private insurers make decisions about what will and will not be 'covered' as medical care. Senator Kennedy has probably the only insurance plan in the world, the Congressional plan, that would cover his current treatment protocols; any other plan would say it is too unproven and too expensive to be justified.

4. In roughly the past decade the total spend on healthcare has doubled to over $2.3 Trillion. That means we've spent an extra $1Trillion on health care. Add up all the profit increases of the insurers, the hosptials and the drug companies and they account for only a small fraction of that one trillion dollars - the rest is being spent on care.

5. THE UNDERLYING CAUSE FOR HEALTH CARE INCREASES - despite all the posturing - is: a) we have an growing older population driving demand for health care services; b) they are a larger percent of our population - there are fewer younger healthier bodies to amortize the costs over; and c) we have increasingly expensive ways for treating the conditions of the elderly. We can do tort reform, Electronic Health records and the like, they won't make a material difference in the basic equation of more demand plus more expensive treatments equals run away cost growth.

6. We should remember that Europe rations care, especially for people with limited hope of survival, not becuase they are evil mean people but because there is not an infinite supply of money. As a single payer, all the spend is in one place; it is easier for them to see what they spend on health care, how much it grows, how much it consumes and crowds out spending on other services like education. WE need to be mindful of their experience as we wrestle with ours.

7. In simplistic form,the options we are facing from the growing demand for health care are higher taxes, rationing of care, or finding improved productivity (e.g. treat more for less because you do it smarter). I think we all would vote for productivity. So why isn't that the focus of our conversation?



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