Introduction: Health Policy and Health Care Economics Observed
Article Outline
The anthology of articles for this edition of Seminars in Radiation Oncology, rather than featuring important cutting-edge basic science and clinical knowledge central to the specialty of radiation oncology, focuses on fields of study best characterized as the marriage of social science and clinical medicine including health policy and health care economics. A working understanding of the tools and concepts of these disciplines will not add to the elegance of a complex intensity-modulated radiation therapy plan for head and neck cancer or to the sophistication of the execution of an Stereotactic Body Radiation Therapy (SBRT) management plan for the treatment of early stage lung cancer, yet, as radiation oncologists and medical physicists, our practice of medicine is exposed, effected, and broadly influenced by the issues and debates associated with health policy and health care economics. For most of us, however, a sophisticated understanding of these disciplines is not within our expertise. In a “something for everyone” approach, this edition of Seminars introduces the neophyte to the basic concepts of health care policy and economics needed to understand these complex topics that affect our ability to care for patients; for the old-hand “policy wonk,” complicated and difficult concepts are elaborated and explained to further enhance expertise.
Fundamentally, the discipline of health policy addresses questions of cost, access, and quality in health care. Health care economics, as a device of health policy, deals with issues related to the allocation of often limited resources related to health care and addresses the complex notions of how people in society (both as individuals and in groups) behave and make decisions regarding expenditures for health given competing choices for the allocation of financial resources. The scope of health care economics described by Alan Williams in his essay “Health Economics: The Cheerful Face of a Dismal Science” encompasses the following: what influences health beyond health care; what is health and how is it valued; supply of health care; demand for health care; microeconomics of treatment; market equilibrium; planning, budgeting, and monitoring; and macroeconomic evaluation for the entire health care system.1
Interest in health care economics and health policy has burgeoned in the past 30 years primarily because of the enormity of the escalation in the costs of health care. In the United States, for example, health care tops $1 trillion dollars and accounts for 16% of the gross national product. The federal government is the largest payer for health care and is therefore predisposed to regulate the health care industry, sometimes in the name of quality, but usually with a primary purpose of controlling cost. Similar to the United States, health care delivery systems in developed countries around the world also struggle with economic and regulatory difficulties. However, unlike the US case, these health care models regularly adhere to polices of universal health care coverage for all citizens. In this regard, the health care delivery system for a country reflects “its underlying values, tolerances, expectations, and cultures of the societies they serve.” Therefore, because of differences in politics, history, and health care culture, the experiences of health care systems from one country are seldom immediately transferable for the purpose of policy development to another.2 From a health policy point of view, to paraphrase the cliché, “when you have seen one health care system, you have seen one health care system.”
In recent years, the US system has evolved to a free market approach while coming under ever-increasing regulatory constraint. A free market, in theory, relies on the economic notions of “perfect information” and “perfect competition.” Yet, in the current circumstance, the patient does not have “perfect information” about the provider of care including the potential outcome or quality of a particular provider nor does the circumstance allow for “perfect competition” because of the political and informational advantage held by the suppliers of care (hospitals, doctors, pharmaceutical companies, and medical technology companies) or the advantage held by the middleman brokers of care (insurance companies and government bureaucracies) who have transactional dominance over the patient and providers in the current health care delivery system.3 Additionally, the economic terms “uncertainty” and “asymmetrical knowledge” further depict the interaction. There is not only “uncertainty” in outcome and financial impact of care interventions, but there is also disparity in knowledge and comprehension of the system between the providers of care (doctor, medical group, and hospital) and the patient. This creates the benefit known in economic parlance as “asymmetrical knowledge,” in this case, by the providers of care over the patient. Economic theory applied to the provider-patient relationship addressing the mutually beneficial exchange of health care for money between patient and provider can also result in collateral positive or negative effects on external third parties not involved in the transaction. Such effects, called “externalities,” are replete in health care delivery. For example, the social costs of a delivery system that allows 16% of the population to be uninsured represents a circumstance in which those who suffer the external cost (lack of insurance) may do so involuntarily, whereas those who benefit (insurance companies who are able or control risk and increase profit by not being required to cover all members of society) may do so at no cost and, in some cases, at great profit.
Health policy using the tools of health care economics and health services research (HSR) can help to address critical issues of health care delivery including assessing quality and cost containment.4 In England and increasingly in the United States, a primary focus of health policy is to define the relative value of various health care interventions using tools of health care economics called the microeconomic evaluation of treatment delivery. This aspect of economic analysis claims to elucidate various economic complexities of health care delivery at the level of the individual patient. The British National Institute for Health and Clinical Excellence uses microeconomic methods to evaluate new and long used pharmaceuticals and devise technologies in an effort to compare alternative courses of treatment in terms of cost and outcome.5 To some, the National Institute for Health and Clinical Excellence is considered not so nice because of its evident effect of creating rationales that appear to diminish access to new and emerging treatments and its apparent overriding agenda of cost control. The tools used for these types of undertakings include cost-minimization analysis, which compares an intervention that nominally costs less to another with the apparent same outcome; cost-benefit analysis in which costs and benefits are reduced to monetary units; cost-effectiveness analysis, which measures cost in terms of so-called natural units such as symptom-free time or life years gained; and cost-utility analysis, which measures outcome in terms of time and quality of life such as the metric called quality adjusted life years.
Although most health care economic initiatives focus on efficient functioning of the medical market place and cost control, HSR gives health care providers tools that address the clinical implications of changes in the delivery system, how to measure quality, and how to make the cost containment clinically rational. HSR has shown that variation in practice (the process of care) by physicians and hospitals is common and results in dramatic differences in the quality and cost of care. In this regard, numerous medical interventions are known not to be necessary or have little significant chance to improve the health status of the patient. Recently, HSR methodology established that mistakes and medical errors occur many thousands of times per year, resulting in untold monetary cost to the system and the incalculable toll of patient suffering and death.6
HSR offers language and tools for clinical medicine to define the necessity of care and the measurement of the quality of care. The discipline notes that care is necessary when the benefits of care exceed the risks and that associated benefits are not small. Furthermore, the efficacy of a treatment (outcome under ideal circumstance) may or may not predict the effectiveness of the treatment (outcome under usual circumstance). The appropriateness of care or that the patient receives interventions that work and does not receive ones that do not work is a measure of quality of care. Furthermore, quality care occurs when a medical intervention is done in a manner that reasonably maximizes the probability of beneficial outcome for the patient, while minimizing the risk. Quality of care and health status constructs can be measured by methods that are as reliable as the common clinical exercises of taking a medical history, auscultation of the heart, or interpretation of an x-ray image.
The application of so-called evidenced-based medicine is proposed as a solution to many problems facing health care, including the questions of quality of care and cost containment. However, the use of evidence, even the “gold standard” randomized clinical trial (RCT), is mournfully complex and fraught with difficulties of interpretation and general applicability. The efficacy of a particular treatment may not predict its effectiveness under usual circumstance such as treatment in a community setting or in its application to a particular patient group not studied in the controlled trial. Furthermore, clinical trials powered to show differences for specific clinical endpoints are not typically powered or designed to show differences in economic endpoints or clinical processes of care that may be indicators of quality.7 In the difficult task of measuring quality of care, clinical trials typically may not address important process of care factors that are crucial to understanding the components of care that show quality. The development of such information is lacking for multiple reasons including inadequate funds to implement the necessary complex design and data requirements required to furnish such answers or possibly a deficiency inherent to clinical trial design whose goal, by necessity, is required to be narrow so as to effectively address the clinical question at hand. Ultimately, some questions are just not applicable to an RCT because of practical or ethical constraints.8 To address this confounding problem, the use of medical decision analysis and its derivatives such as Markov modeling provide a means to perform economic and outcomes analysis on RCTs as well as lower evidence-level clinical trials information. Such analyses can address the difficult (but real) circumstance of ongoing change over time in clinical status, such as the continuing risk of cancer recurrence or the development of a complication.7
Although well-designed performance measures, based on evidence derived from the medical literature, are useful in promoting quality care when developed in a sophisticated manner and applied prudently, they also risk mandating unneeded (or possibly harmful) treatment or preclude treatment when it is necessary. Naïve reliance on summary results of clinical trials in the quest of quality assessment can lead to performance measures based merely on average results. Because individual patient status is not a “statistical mean,” multivariate risk-stratification analysis is a better guide to patient-centered medical practice.9 Therefore, the use of evidence-based policy must be done with caution. Inappropriate basic assumptions may yield incorrect conclusions with far-reaching effects on patient care. In fact, such analyses used in making policy may be yet another example of externality in the health care transaction. Those third parties to the patient-provider transaction who may benefit might include the investigator or entity (insurance company) responsible for the analysis, whereas others, such as future patients in need of the new and novel treatments, may suffer because findings of such analyses may limit access to new forms of treatment or abrogate current forms of care altogether.
Ideal health policy should ensure (1) that all patients get all necessary care; (2) that equivocal and inappropriate treatment be eliminated; (3) that cost of care be socially responsible; (4) that the variation of the quality of care be so small from a technical perspective that it does not matter which facility or physician a patient receives treatment; and (5) that competition, when it occurs, should be over the quality of the art of care, namely, how patient centered it is and how well staff and physicians communicate with patients.
To accomplish this, traditional medical science in conjunction with health policy and health care economics disciplines will enhance our ability to eliminate waste and equivocal care while making it a reality that needed care is available to everyone. The beginning of this commentary described health policy as dealing with issues of cost, access, and quality in the delivery of health care. To manage health care cost within a fiscally responsible budget, can all citizens have access to quality care? Or must the delivery of quality care to all drive costs beyond the economic breaking point? Cost, access, and quality
…maybe within our health care delivery system you can only get 2 out of 3? You be the judge.
References
- . Health Economics: The Cheerful Face of a Dismal Science. In: Williams A editors. Health and Economics. 1987;London, Macmillan
- . A cultural and global perspective of United States health care economics. Semin Radiat Oncol. 2008;18:175–185
- Prostate Cancer Patient Outcomes and Choice of Providers: Development of an Infrastructure for Quality Assessment. Santa Monica, CA: RAND Corporation; 2000;
- . Health services research. Semin Radiat Onocol. 2008;18:152–160
- . Methods for the Economic Evaluation of Healthcare Programmes. United Kingdom: Oxford University Press; 2005;
- . To Err Is Human: Building a Safer Health System. Washington, DC: National Academy Press; 2000;
- . Economic analysis of healthcare interventions. Semin Radiat Oncol. 2008;18:168–174
- . Don't be so quick to indict. Community Oncol. 2006;3:3–4
- . Limitations of applying summary results of clinical trials to individual patients. JAMA. 2007;298:1209–1212
PII: S1053-4296(08)00013-1
doi:10.1016/j.semradonc.2008.01.001
© 2008 Elsevier Inc. All rights reserved.
