Incentivizing Good Behavior Among Hospitals

The Johns Hopkins Bloomberg School of Public Health newsfeed yesterday carried a version of a piece from the Wall Street Journal.  The article, headlined "Return Patients Vex Hospitals" was written by Laura Landro and appeared on page A6.  The article noted that there are new policies being put in place for Medicare to penalize hospitals up to 1% if the rate of readmission for discharged patients is higher than expected.

There are many interesting questions about this from an economic perspective.

First, how is the expected rate defined and could an individuals hospital do anything to "game the system" and push the expected rate upward, making it easier to stay under the rate, without harming patients?

Second, the article comments on how part of the problem may be the transition between the hospital and care in the community.  While there is no reason to suspect that those providing care in the community would want to provide anything other than the highest quality care, does this create a need for the hospital to control care in the community better?  Does this then lead to an incentive to form an integrated network?  And even if the hospital is successful at hospital care will it then be successful at providing care in the community?  Presumably the incentives might line up better if the hospital was responsible for care to the conclusion of the episode of care but would that give the organization too much market power and, again, would the management work well.

Third, the article mentions that thirty day readmission rates may not be the right thing to measure.  What if a hospital were to lower its readmission rate but then have more patients die in the community?  Would an incentive to decrease readmission rates then, perhaps in an unintended way, lead to more deaths.

Public policy to manipulate economic incentives must be ever vigilant for unintended consequences if the target of the policy/incentive change finds a way to respond that was not anticipated.

An article published in the Journal of Sports Medicine and Physical Fitness and discussed in a Washington Post blog suggests that students who are more physically fit get better grades.  The article is quick to point out the better grades are not necessarily causally linked with physical fitness.  Let's consider why they may not be causally linked but also consider the impact on cost-effectiveness analyses of physical fitness interventions if the causal link is real.

First, why may they not be causally linked? Among adults, it is quite possible that those who are more physically fit have more "self-determination" or "drive" or a greater sense of "self-efficacy" in general. If true, that could imply that those who are more likely to take the time to become physically fit or maintain their physical fitness are also more likely to succeed in other areas.  Among students it could mean that those whose parents encourage doing well in school also encourage doing well in other things and also take the time to monitor and manage their children's physical well-being very closely.  So, there are plenty of reasons that these two concepts may be correlated but the relationship may not be causal.

But suppose for a moment, that the relationship is causal. Suppose that being more physically fit makes a person better able to concentrate and maintain their concentration.  Suppose that being more physically fit enables a person to learn better if they are also more socially and mentally healthy as well as physically healthy.  There are lots of possibilities here.  What, then, would we need to do to fully appreciate the value of physical fitness programs?

First, we would need to make sure that to the degree that improved physical fitness enhances fitness in other domains of health, this is recognized and incorporated into the results. In other words, the health related quality of life impacts of physical fitness may go well beyond making someone just more vital or decreasing obesity or the eventual risk od diabetes and other complications of a lack of fitness.

Second, we would need to establish a link as to how much fitness improves grades (or learning more generally) and how that translates into a person being more productive and what the economic value of that productivity might be.  In fact, the productivity could also have an impact on physical and mental health later in life.  So, the relationship could actually be part of a favorable feedback loop that could have a large economic value throughout life.  Failing to capture this feedback loop in any long term predictions of the impact of a childhood fitness campaign could great understate the campaign's value.

Of course, we have plenty of money being spent on fitness for kids already.  Perhaps we do not need more.  But as we continue to consider how to use the limited public dollars for both health and education, we might want to consider how these two interact and efficiencies that can be gained from thinking about the two together.  Failing to do so may lead to inefficient resource allocation.  But doing so is certainly no simple matter.  And going so will require more data and a fairly sophisticated modeling exercise to incorporate all the possible effects of fitness on education and vice versa.   

Cost-Effectiveness of Preventing Complications of Childbirth

Back on December 10, the Wall Street Journal had an article on the increasing incidence of complications at childbirth and commented on this could be related to the increase in age of the mother in many cases, obesity, and mothers having other chronic conditions.  Although the article was quick to point out that complications were not confined only to women with complicated health of their own and that otherwise perfectly healthy mothers could also have severe complications.

The article also pointed out that most safe birth initiatives in the past had focused on preventing harm to the infant.

What is interesting about this from a cost-effectiveness perspective is the question of whose benefits are counted.  In general, when it comes to birth we should count both the mother and the child.  And, not only would we want to count each of them, but we might also want to find a way to recognize that their health is closely intertwined.  For example, a mother losing a child could have a long-term effect on the mother's mental health.  And, if it affects her mental health it could also have an impact on her physical health.  The same might be said of an infant losing her mother.

When we see sophisticated cost-effectiveness analyses that calculate and use quality adjusted life years, we find that usually this focuses on a single target group.  In this case the mothers (if we are focusing on preventing or dealing with complications of birth) or the children (if we are focusing on the child's health immediately after delivery).  What we rarely see in the literature is the combination of the two.  And what we see even more rarely would be an explicit recognition of how the two are not just correlated but so closely interrelated.  A loss of health related quality of life or life years for one member of the mother-child pair is likely to have a critical impact on the other.  This is an interesting frontier to think about and to consider how acknowledging the impact on both members of a pair might make specific interventions looks like a better value as the impact is increased by considering the effects on two individuals.   

Looking at Statistics in Isolation Can Lead to the Wrong Conclusions

One aspect of public health is violence.  For example, at the Johns Hopkins Bloomberg School of Public Health we have a Center for Gun Policy and Research.  And, recently, there has been a lot of violence in the local news.  That, of course, is on top of numerous stories about gun violence nationally and internationally over the past several years.  So, it may seem like we should be looking for more ways to incentivize against violence and to find cost-effective solutions to preventing gun violence in particular and all types of violence in general.

In contrast, if we looked at the fact that the rate homicides appears to be going down, we might wonder, "Well, is there a problem with our perception of violence?  Maybe it is just lots of anecdotes and we don't need to look for more solutions or allocate more resources."

A piece in the Wall Street Journal recently entitled "In Medical Triumph, Homicides Fall Despite Soaring Gun Violence," (which is not available for free) they looked at this issue.  What the article reported on was an improvement in the survival after being shot in recent years.

Now, we could ask whether heroic treatment after gunshot wounds is cost-effective.  It is definitely expensive.  The trauma centers that have been set up to treat such patients (and that contribute to the much higher survival rate) have high fixed costs and high variable costs.  The WSJ article indicates that they deal with a great amount of uncompensated care in our current system and are reported to lead to losses for the hospitals at which they are located.  Thus, the demand for resources from society and resources that are taken away from the hospital are notable.  Importantly, I am not saying that we should not be saving lives.  Only that we need to be cognizant of the costs of saving the life and cognizant of the additional costs during any rehabilitation phase afterwards.

Then, once we are aware of the costs, we might ask whether the medical triumph is the most economically favorable way to decrease deaths from guns or whether we might be better off economically by trying to limit gun violence as a way to limit deaths rather than needing to treat those who do suffer gunshot wounds.

The contrasting inferences one might make based on different pieces of the data and even the contrasting steps one might take in structuring a cost-effectiveness analysis (e.g., comparing only prevention methods or only treatment methods or treatment with prevention) illustrate how important it is to try to assemble all relevant data before making a decision on further resource allocation and the need for and usefulness of economic evaluations.  

Pharmaceutical Cost-Effectiveness and Diet

I saw an interesting short piece in the Washington Post discussing the discovery that the number of drugs with important interactions with grapefruit has increased substantially since an initial report on the matter 20 years ago and particularly since 2008.

I will refer interested readers to the article for the details, but the short description of the issue is that grapefruit (but not all citrus fruit and not regular oranges) contain a chemical that interacts with some pharmaceutical products and substantially increases the bioavailability of the product.  In this case, more is not necessarily better.  In fact, more can be toxic, particularly to the kidneys.

This raises an interesting question that was probably not considered when any cost-effectiveness analysis related to the drugs is conducted.  Essentially, how does the cost-effectiveness change when you have this type of potential interaction.  It is not a typical drug-drug interaction.  It is not an adverse event due solely to the drug.  It is an event that is purely avoidable by properly reading the packaging or listening to a physician or pharmacist and then following up on what a person has been told.  Sounds simple enough.

I suppose if people were constantly have drug-grapefruit interactions, it would make the news and we would all become aware.  It is probably in the category of "things that sound scary but really are pretty rare" even though an article without additional information about the incidence of such events may make it sound very scary.

If this were a big issue, it would not seem too hard to provide better education at a fairly low cost and prevent events. If it is not a big issue, then while the increasing number of drugs that have this characteristic is interesting but probably not worth more than the short article that I saw.  I'd be intrigued to know more--such as whether anyone has personal knowledge of this issue for themselves or someone they know.

It does point to a larger issue of how we might evaluate the economic importance of better counseling about the interaction between drugs and diet more generally.  

Changing Medical Practice

In today's newsfeed from the Johns Hopkins Bloomberg School of Public Health there is a link to a blog entry about a study that asked medical care leaders why studies that seem to provide strong evidence of the relative effectiveness make such a small impact on the practice of medicine.  THe blog entry can be found here.

A key message from this blog entry seems to be--because the incentives don't point in the direction of adopting things that are less expensive.  The examples of studies with little impact tended to be things that would cost less money than the current approach to care.

We all hear from political leaders that we, in the United States, are spending too much on medical care.  We hear the same thing from business leaders.  We hear very similar things from insurance companies.  And, many individuals chime in with the same type of comment.

What we forget is two groups who aren't complaining--those who make the pharmaceutical products and devices on which we spend so much money and the physicians who prescribe their use.  Even with everyone else calling for reducing expenditures, the manufacturers do not have a strong incentive to save money.  The system right now pays in a way that bears at least some relationship to what is charged.  As such, companies that manufacture more expensive products that can be sold at a higher margin make more profits.

Physicians have only limited time to sort through the literature and to decide how to change their practice.  They listen to the way things are presented by manufacturers.  And they do not, at present, have to respond to incentives to provide care at a lower cost.

This is why I worry so much about the perspective of the cost-effectiveness or comparative effectiveness analyses.  The cost savings come from the societal perspective.  They may even characterize numerous other perspectives.  However, when all is said and done, if the economics don't work for the manufacturers and providers, change is unlikely to occur.  And, in a poor use of scarce resources, the manufacturer will spend money marketing (i.e., trying to convince people) that their products should continue to be used despite evidence to the contrary.

Unfortunately, that does not characterize an efficient system.  And changing the incentives in the first place may be much harder than changing practice patterns at any point.    

Flu Shots

First, an admission.  I have done research on flu shots.  I have helped a student of mine write a dissertation on the timing of flu shots.  However, neither I nor anyone in my family has ever had a flu shot.  Why was that our health economic decision?  We have never thought that the risk was all that large and we have never felt that the time costs were sufficiently low (even with minimal monetary costs) to warrant getting flu shots.

Now, to share an interesting piece of information.  In yesterday's Johns Hopkins Bloomberg School of Public Health news feed there was a link to a piece about a report on flu shot effectiveness.  The report that the blog had written about concluded that there was surprisingly little randomized trial evidence (the gold standard) of the effectiveness of flu shots--for almost any population and even for preventing excess transmission in hospital settings when hospital workers get vaccinated.  The blog points out the history of how we ended up with influenza vaccination being recommended for the older adult population and how difficult it would be to ever go back and rethink policy.  In short, the Surgeon General in 1960 made the recommendation and ever since then it has been considered unethical to withhold a recommended vaccine.  The author of the linked blog entry calls flu shots a sales job.

Here is where economics and ethics may come together.  Maybe if we could realize how many resources we may be over-utilizing, we could ask how it could be ethical to continue to use the resources without asking if it is efficient.  In other words, is a known inefficiency unethical?  Is a potential inefficiency unethical?  Is acting like a supposition is fact without high quality data on the facts unethical?  In any case, this would require some consultation with bioethicists and likely a new cost-effectiveness study based on the latest report showing the lack of data on the effectiveness of flu shots.  Then we could use that to motivate a new study.

It is not a common use of a cost-effectiveness study but it would be extremely useful in this case.