Economic considerations in technology assessment: the case of genetic disease.

This paper describes economic issues pertinent to health care technology assessment. Of interest are the allocation of resources between health and other sectors of the economy, between alternative services within the health sectors, and the costs of producing the services that are selected. These issues are discussed and then illustrated by reference to a specific area of health care technology: screening for and intervention against genetic diseases. It is concluded that investments in screening programs for Tay Sachs disease and Down Syndrome are allocatively efficient. Indications are that such investments are also efficient for interventions against Neural Tube Defects; however, there are complex ethical issues involved. There are many genetic diseases for which screening tests have yet to be developed. As such tests become available, each will have to be evaluated on its own merits relative to alternative health sector investments.     

Physician response to the United Mine Workers'' cost-sharing program: the other side of the coin.

The effect of cost sharing on health services utilization is analyzed from a new perspective, that is, its effects on physician response to cost sharing. A primary data set was constructed using medical records and billing files from a large multispecialty group practice during the three-year period surrounding the introduction of cost sharing to the United Mine Workers Health and Retirement Fund. This same group practice also served an equally large number of patients covered by United Steelworkers'' health benefit plans, for which similar utilization data were available. The questions addressed in this interinsurer study are: (1) to what extent does a physician''s treatment of medically similar cases vary, following a drop in patient visits as a result of cost sharing? and (2) what is the impact, if any, on costs of care for other patients in the practice (e.g., "spillover effects" such as cost shifting)? Answers to these kinds of questions are necessary to predict the effects of cost sharing on overall health care costs. A fixed-effects model of physician service use was applied to data on episodes of treatment for all patients in a private group practice. This shows that the introduction of cost sharing to some patients in a practice does, in fact, increase the treatment costs to other patients in the same practice who remain under stable insurance plans. The analysis demonstrates that when the economic effects of cost sharing on physician service use are analyzed for all patients within a physician practice, the findings are remarkably different from those of an analysis limited to those patients directly affected by cost sharing.     

Gesundheit und Gerechtigkeit

The paper discusses issues of justice related to health and illness. The special normative status of health is justified based on Norman Daniels' theory of just health. As the health status of individuals is not only determined by access to health care services, the relationship between social inequalities and health status is described empirically and evaluated from an ethical perspective. There are good ethical and conomical reasons against a purely market driven organization of the health care system. As a result we have to answer the question how we can deal with the increasing scarcity of health care resources. Three strategies are presented and ethically evaluated: (1) Increase efficiency ("rationalization"), (2) increase available resources and (3) limit access to services ("rationing"). Especially the pros and cons of implicit vs. explicit ways to limit services are discussed. Finally, the procedural and material ethical criteria for the just distribution of scarce health care resources are presented.     

Recruitment of Physicians To Rural America: A View Through the Lens of Transaction Cost Theory

CONTEXT: Many rural hospitals in the United States continue to have difficulties recruiting physicians. While several studies have examined some of the factors affecting the nature of this problem, we know far less about the role of economic incentives between rural providers and physicians. PURPOSE: This conceptual article describes an economic theory of organization called Transaction Cost Theory (TCT) and applies it to rural hospital-physician relationships to highlight how transaction costs affect the type of contractual arrangement used by rural hospitals when recruiting physicians. METHODS: The literature is reviewed to introduce TCT, describe current trends in hospital contracting with physicians, and develop a TCT contracting model for analysis of rural hospital-physician recruitment. FINDINGS: The TCT model predicts that hospitals tend to favor contractual arrangements in which physicians are full-time employees if investments in physical or other assets made by hospitals cannot be easily redeployed for other services in the health care system. Transaction costs related to motivation and coordination of physician services are the key factors in understanding the unique contractual difficulties faced by rural providers. CONCLUSIONS: The TCT model can be used by rural hospital administrators to assess economic incentives for physician recruitment.     

Ethical issues arising from variation in health services utilization at the end of life

Research on health services delivery, particularly at the end of life, has demonstrated that more care does not necessarily lead to better technical quality, patient satisfaction, or outcomes. These findings raise three ethical issues: (1) justice in the allocation of scarce resources across health service areas; (2) nonmaleficence in the provision of appropriate amounts of care to patients; and (3) transparency about local healthcare practice so patients can make enlightened decisions about healthcare choices. We conclude that in this era of healthcare accountability, managers and clinicians can use these ethical principles to drive change in the process of providing more efficient, more effective, and more patient-centered care, especially at the end of life.     

Cost-effectiveness: the case of home health care physician services in New Brunswick, Canada

Home health care programs have direct and indirect effects within a health care system. A complete cost-benefit evaluation would include all such effects. A study of New Brunswick's Extra-Mural Hospital (EMH) home health care program used population-based administrative data on physician services utilization to examine whether home care services act indirectly as substitutes for physician services. Evidence suggests that the introduction and expansion of New Brunswick's EMH home health care program had unanticipated substitution effects, which reduced health system costs by reducing the rate of growth of per-capita utilization of physician services.     

Practice efficiency and physician compensation: a case study

One of the major challenges facing today's health care executive is that of achieving maximum efficiency. The public also requires an efficient health care system. However, a problem occurs when the health care executive defines "efficiency" in a manner that is diametrically opposed to the public's definition. Maximum efficiency in the physician practice is defined by productivity equal to capacity. Maximum efficiency of the health care system is defined by lower health care costs. If the physician practice is achieving its goal of maximum efficiency, the market economy will likely force a failure in achieving the public's goal of a lower cost health care system! The following case study provides an opportunity to review this health care management conundrum and offers insights into a possible approach for some solution through attention to physician compensation.     

Kostenmessung in der ökonomischen Evaluation von Gesundheitsleistungen: die Kosten stationärer Akutversorgung am Universitätsklinikum Ulm

A core element in economic evaluation studies is the patient-based measurement of costs. As the University Hospital of Ulm is not endowed with a patient-based cost accounting system, it was necessary to develop a concept for the measurement of the cost of acute inpatient care for economic evaluation purposes. For accounting, a partial cost accounting system is available. The measurement concept aimed at was supposed to be consistent, to adequately attribute costs to resource consumption and to be precise enough in order to identify differences between health care alternatives in an incremental economic evaluation study. Both prospective and retrospective uses were aimed at, and it was hoped to be able to transfer the approach to other hospitals, for example in the context of multicentre studies. The cost accounting concept used specifies unit costs according to direct patient cost centres and uses a simple mark-up percentage to account for the overhead costs of infrastructure services. The collection of service data is based upon routine documentation. Monetary figures used for the pricing of services are derived from the cost accounting system of the hospital. Diagnostic and therapeutic services which are rendered by cost centres not directly caring for patients are priced using the fee-for-services schedule of the Deutsche Krankenhausgesellschaft (DKG-NT). In the basic approach, medical care is determined for each individual patient in the areas of diagnostic and therapeutic services, operations and standard care in a normal ward. In terms of lump sums, the cost of care is measured for drugs, for basic physician services in the ward, and for nursing care in intensive wards. The standard approach can be developed into a more detailed approach in which higher effort of calculation would render more precise cost measurement. In general, the measurement concept is believed to be precise and consistent, and to be transferable to other hospitals as well. In addition, the approach can be considered a contribution to the development of costing methods in acute inpatient care. The concept is suited for all economic evaluation studies which intend to measure costs from a societal perspective or from the perspective of a hospital.     

The morality of efficiency in health care--some uncomfortable implications.

There are some general considerations which have implications for the delivery and finance of health care in all countries, not only Canada and the USA. Beginning with two propositions: that access to health care is a right of citizenship, which should not depend on individual income and wealth; and that the objective of health services is to maximise the impact on the nation's health of the resources available; the paper examines the ethical justification for pursuing efficiency in health care provision. The different meanings of efficiency are discussed in detail, and the use of quantitative indicators of health benefit, such as the QALY, placed in context. It is argued that the determination of health care resource allocations should take account of costs at both the macro planning level and the micro level of the individual doctor-patient relationship. Given the starting points the overall conclusion is that it is ethical to be efficient, since to be inefficient implies failure to achieve the ethical objective of maximising health benefits from available resources.     

The priorities of the health care system vs. its financing: political realities vs. financial realities

The impact of technology and the emphasis on tertiary specialty care have no inherent limits of cost escalation. Likewise, they dislocate health care resources since general and secondary care become more expensive as the impact of the high cost emphasis of health care trickles down to the costs of primary and secondary care. The change areas will involve: the principle of regionalization of specialty care and resident training, a uniform system of costs and reimbursements for all specialized medical and hospital care, the rationing of high technology specialty care and the application of prospective systems of payment to all institutional and physician specialty services.     

Health policy and occupational health: tools and methods to assure quality and appropriateness of interventions

BACKGROUND: Although all health care organizations and professionals are encouraged to follow the explicit aim of reducing the burden of illness, accidents and disability, there is increasing pressure on health professionals to ensure that the practice be based on a quality standard and on evidence of appropriateness. OBJECTIVES AND METHODS: The paper aims to focus on both the concept and dimensions of appropriateness (a complex issue with various dimensions and definitions) and on the different research and practice models aimed at search, analysis and synthesis of the best available evidence to be applied in the decision process of health and medical practice. Literature analysis has been carried out to find available tools and methods to identify, implement and monitor the evidence of efficacy in health care systems and services. RESULTS: Most definitions of appropriateness address a number of requirements. An appropriate practice should be effective (based on sound evidence); efficient (providing that cost is considered) and consistent with the ethical principles and preferences of the relevant individual, community or society. Appropriateness is considered as the next frontier in the development of health care research: there is still limited knowledge, awareness, or research on this aspect. Health Technology Assessment consists of a multidisciplinary activity based on the systematic examination of technical performance, safety, clinical effectiveness and efficiency, including socio-economic, legal and ethical aspects. Evidence Based Medicine originates from an individual perspective and aims at using rigorous criteria to obtain the best available evidence in order to provide efficient interventions. The Clinical Practice Guidelines, based on both evidence and opinions of experts, are intended to assist clinical decisions for health professional and providers for the improvement of professional practices and system efficiency, taking into account local customers, health needs and preferences. CONCLUSIONS: Several models exist for measuring and evaluating the efficacy of health systems and health services. They can be adapted for evaluating and measuring public and occupational health practices. These tools support good practice through quality-standardized interventions aiming at the health protection of communities and individuals. These models, which are presented in a specific framework in which their outcomes and critical factors are evaluated, should be adapted to public and occupational health interventions to satisfy implicit and explicit needs of individuals and populations at risk thus assuring their quality and appropriateness.     

The financial and nonfinancial costs of implementing electronic health records in primary care practices

The incentives in the American Recovery and Reinvestment Act to expand the "meaningful use" of electronic health record systems have many health care professionals searching for information about the cost and staff resources that such systems require. We report the cost of implementing an electronic health record system in twenty-six primary care practices in a physician network in north Texas, taking into account hardware and software costs, as well as the time and effort invested in implementation. For an average five-physician practice, implementation cost an estimated $162,000, with $85,500 in maintenance expenses during the first year. We also estimate that the HealthTexas network implementation team and the practice implementation team needed 611 hours, on average, to prepare for and implement the electronic health record system, and that "end users"-physicians, other clinical staff, and nonclinical staff-needed 134 hours per physician, on average, to prepare for use of the record system in clinical encounters.     

Connecting healthcare providers. An effective computer network can create durable relationships

Physician networks are computerized systems that link primary care physicians and specialists to one another and to hospitals and other providers. The networks have four key components: communication, practice management, practice marketing, and diagnostic testing capabilities. Advantages of physician networks for hospitals include increased physician loyalty and increased market share through additional admissions and outpatient registrations. From physicians' perspective, networks can help them expand their patient bases and increase revenue, provide additional services for existing patients, automate their offices, and improve their administrative efficiency. Networks also affect the way physicians practice medicine. Changes in practice patterns improve patient care, speed test results, and improve physicians' relationships with each other and their patients. They also save time for physicians and their staff. In deciding whether to develop a network, executives must examine the architectural framework and components they need, their commitment to physician relations, how reliant they are on primary care referrals, the competitive environment, the resources they are willing to commit, legal issues, and the physicians' role in planning.     

Physician assistants: current status of the profession

In the two decades since the inception of the physician assistant concept in the United States, 52 physician assistant training programs have been established. Currently, approximately 16,000 physician assistants are employed by physicians and institutions throughout the country. Established to fill a perceived gap in primary health care delivery in the 1960s, the profession continues to serve mainly in primary care settings, with 43 percent of all physician assistants in family practice clinics. There is a trend, however, for physician assistants to fill health care gaps in other settings, such as long-term care institutions and correctional facilities. The clinical effectiveness of physician assistants has been demonstrated in terms of both quality of care and patient acceptance, and they are adept at adjusting to shifts in the health care marketplace. However, the real determinant of the future of the profession will be economic advantage. Recent changes in Medicare legislation now permit reimbursement for physician assistant services in nursing homes and hospitals, and payment under Medicaid has been approved in one half of the states. Given the cost effectiveness of physician assistants, their demonstrated competence and acceptability, and their adaptability to a variety of settings, the demand for their services is likely to continue.     

An Ethical Analysis of International Health Priority-Setting

Health care systems throughout the developed world face ‘crises’ of quality, financing and sustainability. These pressures have led governments to look for more efficient and equitable ways to allocate public resources. Prioritisation of health care services for public funding has been one of the strategies used by decision makers to reconcile growing health care demands with limited resources. Priority setting at the macro level has yet to demonstrate real successes. This paper describes international approaches to explicit prioritisation at the macro-governmental level in the six experiences most published in the English literature; analyzes the ways in which values, principles and other normative concepts were presented in these international priority setting experiences; and identifies key elements of a more robust framework for ethical analysis which could promote meaningful and effective health priority setting.     

Who will provide preventive services? The changing relationships between medical care systems and public health agencies in health care reform.

Health care reform in the United States will likely attempt to expand the health insurance coverage to uninsured groups, control costs, enhance quality, and expand access to care. Preventive services will be assigned to the medical care system, while new roles and responsibilities will be defined for public health agencies. The clinical preventive services likely required are examined in a population of 44,565 persons residing in Otsego County, New York. Expansion of preventive services to Medicaid requests and the uninsured will require considerable resource expenditure to correct the current deficit in preventive services received by these groups. Moreover, the uninsured and Medicaid recipients have high levels of risk behaviors, identifying a need for health education services effective to that population subgroup. The transfer of responsibilities for clinical preventive services to the medical care system may free up resources for public health agencies to focus on other initiatives such as disease surveillance, health education, and quality assurance. New interrelationships, some cooperative and some adversarial, are likely to emerge, due to a closer working relationship between the medical care system and public health agencies than previously seen in American health care.     

Cost accounting for end-of-life care: recommendations to the field by the Cost Accounting Workgroup

Accurate measurement of economic costs is prerequisite to progress in improving the care delivered to Americans during the last stage of life. The Robert Wood Johnson Excellence in End-of-Life Care national program assembled a Cost Accounting Workgroup to identify accurate and meaningful methods to measure palliative and end-of-life health care use and costs. Eight key issues were identified: (1) planning the cost analysis; (2) identifying the perspective for cost analysis; (3) describing the end-of-life care program; (4) identifying the appropriate comparison group; (5) defining the period of care to be studied; (6) identifying the units of health care services; (7) assigning monetary values to health care service units; and (8) calculating costs. Economic principles of cost measurement and cost measurement issues encountered by practitioners were reviewed and incorporated into a set of recommendations.     

Quality of the physician-patient relation and results of clinical encounters in primary care in Alicante: a study with focal groups

BACKGROUND: The relationship between the quality of the physician-patient relationship and the outcomes of the clinical encounters in primary care are examined. METHOD: Focus groups of physicians and patients. A total of 24 professionals and 22 patients took part. RESULTS: The physicians perceived a relationship to exist between the scarcity of healthcare resources (short length of time with each patient, care-providing overload, lack of specific resources, lack of training), conflicts with "difficult" patients and the influence of the psychosocial factors in the clinical encounter and error, burnout, defensive medicine and the low quality of the services. Communication/examination-related problems during the clinical interview and by negative feelings acted as intermediary factors in this relationship. The patients perceived a relationship to exist between an operating pattern characterized by short office visits scheduled at an overloaded pace and physician, patient communications problems and error and conflict in the clinical encounter. There is also a relationship between the physician's humanist attitude and a better outcome of the health problems. The objectives and priorities of the health care system, out of touch with the needs of the community, are seen as being key determining factors as regards the lacks considered to exist. CONCLUSIONS: The physician-patient relationship processes play a mediating role between the health care resources and the outcomes of the clinical encounters. Improving the care provided and the physician-patient relationship in primary care requires a multi-dimensional approach and view which goes beyond the measures taken regarding individual physician and patient-related factors.     

Canadian federalism and the Canadian health care program: a comparison of Ontario and Quebec

The Quebec and Ontario health insurance and health service delivery systems, developed within the parameters of federal regulations and national financial subsidies, provide generally universal and comprehensive basic hospital and medical benefits and increasingly provide for the delivery of long-term care services. Within a framework of cooperative federalism, the health care systems of Ontario and Quebec have developed uniquely. In terms of vital statistics, the health of Ontario and Quebec residents generally is comparable. In viewing expenditures, Quebec has a more clearly articulated plan for providing accessible services to low-income persons and for integrating health and social services, although it has faced some difficulties in seeking to achieve the latter goal. Its plans for decentralized services are counter-balanced by a strong provincial role in health policy decision-making. Quebec's political culture also allows the province to play a stronger role in hospital planning and in the regulation of physician income than one finds in Ontario. These political dynamics allow Quebec an advantage in control of costs. In Ontario, in spite of some recent setbacks, physician interests and hospital sector interests play a more active role in health system bargaining and are usually able to influence remuneration and resource allocation decisions more than physician interests and hospital sector interests in Quebec.     

Costing maternal health services in South Tanzania

The following paper presents the methodology and results of a costing exercise of maternal health services in Tanzania. The main objective of this study was to determine the actual costs of antenatal and obstetric care in different health institutions in a district in Tanzania as a basis of more efficient resource allocation. A costing tool was developed that allows the calculation of costs of service units, such as deliveries and antenatal care, and separates these costs from the costs of other services. Time consumed by each activity was used as an allocation key. For that purpose, we recorded the personnel consumption with different time-study methodologies. This approach was tested and implemented in Mtwara Urban District, South Tanzania. The results were analyzed by a spreadsheet program. The paper presents average costs for different costing units of maternal care. Among other findings, we found that the cost of a normal vaginal delivery is US $12.30 in a dispensary and US $6.30 in the hospital—a result that needs explanation, as usually one would expect that hospitals are more cost-intensive than first-line facilities. However, dispensaries are grossly underutilized so that the costs per service unit are rather high. The cost for surgical delivery (only in hospitals) was found to be US $69.26 and the average cost per antenatal care consultation (only at dispensaries) was US $2.50. We conclude that improved planning of elective services is a prerequisite for more effective and efficient use of personnel resources. In addition, the definition of medically and economically sound standards, in particular staffing standards, is critical to make cost analysis an effective management tool to guide rational resource allocation.