Using cardiovascular disease as a test bed, two health economists developed a model for categorizing technologies and their impact on healthcare outcomes and costs. Despite successful technologies such as beta-blockers, the overall use of expensive technologies with modest benefits contributed to rising costs, the researchers noted in a working paper published by the National Bureau of Economic Research (NBER).
Amitabh Chandra, PhD, an economist and professor of public policy at Harvard University in Cambridge, Mass., and Jonathan S. Skinner, PhD, a professor of economics at Dartmouth College in Hanover, N.H., developed a model to assess parallel growth in technology and costs in healthcare. To do so, they constructed a three-tiered system to categorize treatments ranked by their contribution to productivity. They measured productivity as improvement in outcomes per dollar increase in costs.
The first category included medical technologies and procedures that offered cost-effective care to all or most of the patient population. They noted that costs need not be low to constitute a “home run” if the technology improved outcomes to nearly everyone in the patient population. They highlighted aspirin or beta-blockers as an example of a Category I technology that offered a low cost and highly effective treatment for heart attack patients.
Category II technologies included treatments and procedures that offered a substantial benefit to some but not all patients. They selected PCI as an example of a Category II technology because it was shown to be highly effective as a treatment within 12 to 24 hours after onset of a heart attack, while benefits for others such as patients with stable coronary disease were less clear. Additionally, younger patients accrued more survival benefits than did older patients, they noted.
Typically imaging technologies also fit in Category II because they often provided great value to a subset of patients but uncertain value to marginal patients, the researchers added.
Chandra and Skinner also noted that reimbursements for PCI procedures were at times “generous,” which factors into productivity. They emphasized that some Category II technologies may offer clear advantages to some patients, but on average they may prove to be only modestly or even poorly cost-effective across all patients.
Category III encompassed technologies where the benefit was small or the benefit had not been established in a randomized controlled clinical trial. They selected arthroscopic surgery of the knee as a treatment for osteoarthritis as an example of a procedure that offered modest or uncertain benefits and poor or no cost-effectiveness.
They chose cardiovascular disease for their analysis because of improvements in survival shown over time, including a 61.2 percent decline in mortality between 1980 and 2000. A reduction in risk factors contributed to some of that decline, but they calculated that Category I treatments such as beta-blockers led to 22 percent drop and therapies such as ACE inhibitors and statins provided a 13.2 percent reduction as well.
PCI and CABG, as Category II treatments, contributed to an 11.5 percent decline. The Category I treatments led to only a modest growth in healthcare expenditures, they found, and by 2000, PCI and CABG accounted for 10 percent of total spending in cardiovascular treatments.
They pointed out the U.S. provides more cardiovascular procedures per capita than other countries (587 per 100,000 compared with Germany’s 357 per 100,000, for example). Using the cholesterol-lowering ezetimibe as an example, they argued that the U.S. also is more likely to rapidly embrace more costly pharmaceuticals.
They concluded that Category III treatments likely are the drivers behind the rapid growth in healthcare spending in the U.S. A synopsis of the research appears in the most recent NBER Bulletin on Aging and Health.