Payment systems vs. prices in health care

Payment Methods: How They Work

The problem in health care is not that prices play a role—that is unavoidable. The problem is that prices are distorted in ways that result in inefficient allocation of health care resources. Patients and physicians use too much of health care services that are of low value and not enough of services that are of high value.

This statement refers to US private health care. It may refer to any private health system. The JAMA article reflects an interesting and forgotten issue: The Importance of Relative Prices in Health Care Spending. Data is usually unavailable, and few studies are able to show the implications of relative prices on outcomes.
My impression is that we should review the role of prices in health care and understand better that we do need payment systems, that beyond the standard Hayek signal for producers and consumers, there is a signal of appropriate acces that sends the regulator. This is what some health systems try to apply in public settings, and what we did in Catalonia long ago.
Therefore, the key issue is not to define the method as this report does, though it is necessary. The most important focus should be devoted to the environment and the process that finally will guarantee access and quality of outcomes.

PS. By the way, does anybody know where current payment system in Catalonia stands? Glups!

Paying for high intensity inpatient activities

How should hospital reimbursement be refined to support concentration of complex care services?

Concentration of certain inpatient activities is absolutely necessary to guarantee the right efficiency and outcomes that can only be achieved under a large scale. However, how to pay for this is a different and difficult issue. Usually these activities result from a blending of costs of care, teaching costs, and sometimes with research costs. Therefore, the first step is to try to split them as far as possible.
A new paper tries to disentangle in part the issue of how to pay for complex services, and says:

There is no universally agreed definition of what constitutes complex care hospital care, but in England attempts have been made to define complex care according to the  presence of specific diagnoses and procedures in each patient’s medical record. We have applied these complex care definitions to determine whether the receipt of complex care is associated with higher costs relative to patients allocated to the same HRG who did not receive complex care. To do this, we estimate random effects models using patient-level activity and cost data for all patients admitted to English hospitals during the 2013/14 financial year. Compared to otherwise equivalent patients allocated to the same HRG, costs were more than 10% higher for patients receiving 26 (out of 69) types of complex care delivered in hospitals.

And the reason behind these higher costs, maybe severity within the classification or ...

 Irving Penn, maintenant au Grand Palais

Pharmaceutical research, Wall Street and financial crime

 Black Edge_ Inside Information, Dirty Money, and the Quest to Bring Down the Most Wanted Man on Wall Street

Today I would like to recommend a book on finance, on one of the largest financial crimes up to now. It is the case of insider trading at SAC, where they plead guilty and a settlement was achieved after paying $1.8 billion. In Black Edge you'll understand better how some hedge funds have been trading on private information rather than with stocks. You'll know how research-physicians received more money from Wall Street rather than from their own salary. And specially you'll understand how the case of bapi by Elan-Wyeth evolved with plenty of details.
I have insisted in this blog that short selling strategies should be banned. This book provides an excellent argument for it. The incentive for insider trading in pharmaceutical research is huge, and those that are able to get short earlier when there are bad news, get the most!
Some statements from the epilogue:

The financial industry has evolved to be so complex that large parts of it are almost  completely beyond the reach of regulators and law enforcement. Wall Street’s most  successful enterprises are constantly pushing into the frontier; every time the law looks like it’s catching up, they move farther away. There is a perception that in the years after the Milken era, and especially since the financial crisis of 2008, it has become almost impossible, due to a lack of will or expertise, to prosecute corporate criminals who operate at the highest levels. The fear of suffering embarrassing losses after long,  expensive trials has led to a kind of paralysis in law enforcement. The Justice Department was unable, or unwilling, to bring any senior Wall Street figures to face criminal charges for the widespread fraud that swept the financial system prior to 2008. Instead, it extracted billions of dollars in fines from the world’s largest banks.

The hedge fund industry created unprecedented fortunes for a new generation of Wall Street traders whose primary innovation was to find ways to make more aggressive bets in the stock market. Cohen was a pioneer, the creator of a trading empire designed to gain an edge over less sophisticated investors. Years later, after paying the largest fines in the history of financial crime—and seeing a dozen of his employees implicated in insider trading—Cohen emerged from the crisis that engulfed his company as one of the world’s wealthiest men.

 

October 1st, in Catalonia, a documentary

Alcohol regulation as a public policy issue

Alcohol, Power and Public Health: A Comparative Study of Alcohol Policy

Nowadays, I would say that Alcohol Policy this is one of the most difficult and curcial issues in public health. Our societies have internalised its consumption without addressing its risks and the power between industry and regulators is absolutely unbalanced.
A new book that compares the situation in 5 countries is really welcome. Our country is leaving this policy for tomorrow. I would suggest a close look, just for inspiration. Maybe someday it will be the right time.

In particular, change to the alcohol policy status quo requires the convergence of various factors:

1. For alcohol harm to emerge as a significant, and visible, social problem. This means not only a raised public and political awareness of alcohol harms, but a degree of consensus in framing those harms as a particular type of problem. This, as we have seen, is often driven by concrete social change – especially increases in the amount of alcohol consumed in a given society. However, it also implies the successful framing of a problem by advocacy coalitions, often relying on the development of a more or less compelling body of scientific evidence, as well as external sociopolitical factors (such as, for instance, the crisis of the First World War in Europe) that force the political issue and place the public spotlight on alcohol as a social problem in need of tailored political solutions.
2. For proponents of change to convince sufficient relevant stakeholders of the validity of their solutions to the putative problem. These include the scientific community, key policymaking networks, influential sections of the media, and so on. As we have seen, for alcohol policy advocates, this means not only winning the argument that alcohol harms exists on a continuum, but also that the line of justifiable intervention is some distance below that commonly understood as ‘dependency’ or limited to those who behave badly when drunk.
3. For the proposed policy actions to chime sufficiently with the prevailing political context. That is, for policymakers not only to accept the diagnostic and political arguments but, crucially, to decide that implementation of the proposed solutions is politically viable, realistic, consonant with both the ‘national mood’ and internal party politics, and – of course – capable of withstanding resistance from opposing interest groups.

Sounds obvious, but first steps should be well grounded. Current hypocritical attitude should be overcome.

Marc Figueras

Regulatory uncertainty in "home-brew" lab testing

Laboratory-Developed Tests: A Legislative and Regulatory Review

In vitro diagnostics regulation requires continuous adaptation to technologic innovation. Unfortunately, there is a lack of understanding that such a crucial task should be performed efficiently. Europe has waited 23 years for a new regulation!. Anyway, US is under the same trend. Laboratory developed tests were initially regulated 25 years ago and there are still pending issues in the new draft legislation. If you want to know the details, an article in Clinical Chemistry explains the whole issue.

A quarter of a century after the FDA first asserted regulatory authority over LDTs in a draft guidance document, rules and/or guidance regarding LDT oversight have not been implemented. As such, legal questions regarding MDA authority over LDTs and the FDA draft guidance approach have neither been escalated to nor resolved by the judiciary. In addition, many questions central to this debate have not been answered. Are clinical laboratories manufacturers? Should laboratory devices and procedures be regulated similarly? Are there always clear limits between laboratory operations and the practice of laboratory medicine? Any future LDTregulatory or legislative efforts will need to balance and address these concerns if they are to be successful. It is unlikely that interpretation of current statutes and regulations can fully resolve these issues.

 Josep Moscardó, Barcelona landscape

The cost of a year of life gained

Four years ago in my post: How much does healthcare cost during your life? I said  that it was 111.936 € for women and 81.566 € for men (on average and without any additional assumption about changes in unit costs or quality of life). Now you can find in Health Economics, an estimation of the cost of one additional year of life adjusted by quality.

 The mean cost of an additional Quality-Adjusted Life Year (QALY) within a National Health Service (NHS) reveals how much health is lost, on average, when services currently provided by the NHS are displaced. This value has been suggested as a proxy of the average opportunity cost required to set a cost-effectiveness threshold when facing fixed budget constraints. The aim of this paper is to generate information on the marginal cost per QALY in the Spanish NHS that can be used to inform a cost-effectiveness threshold

And the answer is:

A cost per QALY of between 21,000€ and 24,000€ in Spain, depending on whether we take an average across different age groups or the value derived from the whole population model, respectively.

Conclusion: A cost-effectiveness threshold based on the estimated opportunity cost derived from this study is below the figure of 30,000€ commonly cited in Spain. Further work on societal values of health gains is needed to provide decision makers with the relevant information required in different decision-making contexts.

Interesting result, though expenditures are not necessary "social preferences". Cost-effectiveness threshold literature sometimes try to focus on a normative decision for the society society from a technical point of view. I'm interested in the political one.

Au Grand Palais, maintenant

Evidence of what

Evidence-Based Health Policy

Evidence as a topic suggests a common shared framework of values. We all know that this is far from current health policy across countries and within countries. Evidence is difficult to assess without taking into account the underlying values of a community. However, health economists and epidemiologists insist on it. In my opinion we have to know better what works according to social expectations. However we have to avoid the confusion between any descriptive and normative framework. Evidence sounds that any desparture from it may sound unacceptable.
Anyway, NEJM provides a perspective on the issue, and these are key statements in a figure:

The constraints to genomic editing

CRISPR… ¿debemos poner límites a la edición genética?

A new publication by Fundació Grifols highlights the potential constraints to genomic editing. It is a good moment to have a look at it. Savador Macip says:

Los peligros, pues, son muchos, tantos como las cosas buenas que la edición genética nos puede aportar. De alguna forma, recuerda la energía nuclear. Descubrir los secretos del átomo nos ha permitido acceder a una cantidad inimaginable de energía, que usamos diariamente, pero que se debe regular de una forma muy precisa para evitar accidentes terribles y contaminaciones no deseadas. Y, lo que es más peligroso aún, la misma información sirve para fabricar una de las armas más mortíferas que conocemos, capaz incluso de destruir el planeta. A otra escala, CRISPR/Cas9 podría tener efectos parecidos.

La ciencia no se detiene, siempre continúa avanzando, y la sociedad corre el peligro de quedarse atrás. Por ello es importante que los debates sobre hacia dónde queremos ir empiecen cuanto antes mejor y que en ellos participe una muestra amplia de la población, no solo los científicos. Para conseguirlo es necesario que el máximo número posible de gente esté bien informada acerca de los avances más recientes, que entienda su alcance y sus implicaciones y que haga el esfuerzo de contribuir en los debates. A la vez, los científicos deben salir a explicar qué está pasando en sus laboratorios y los políticos deben proporcionar plataformas necesarias para estas discusiones. Solo así nos aseguraremos de que estos descubrimientos son usados

A must read.

Side effects, a good film to watch

Diagnostic testing and outcomes

When diagnostic testing leads to harm: a new outcomes-based approach for laboratory medicine

There are five causes of testing-related diagnostic error:

• An inappropriate test is ordered
• An appropriate test is not ordered
• An appropriate test result is misapplied
• An appropriate test is ordered, but a delay occurs somewhere in the total testing process
• The result of an appropriately ordered test is inaccurate

If we know that that these are the causes, are there any measures available?

In Lundberg’s model, the value of laboratory results is influenced by events
that occur before the sample reaches the laboratory and after the results are released
from it. His model encompasses the physician’s cognitive involvement at the start of
the process and at the end.

The weirdest financing of a health system in the world

Alternative Financing Strategies for Universal Health Coverage

This article from WHO by Joe Kutzin provides a deep analysis of the implications of financing universal coverage. Today I would like to highlight this statement:

There is a general trend toward greater diversification of revenue sources, including a diminishing role for payroll tax funding. This is a practical consequence of the “ideology” of UHC. With the move toward UHC, entitlement to health coverage is being delinked from employment, and from direct contributions more generally. On the practical side, wage-linked contributions cannot generate a sufficient revenue base, both in high-income countries (because of aging populations and macroeconomic concerns regarding increasing wage-based taxation) and also in low- and middle-income countries (LMICs) (because of low participation rates in formal sector employment).

Spain has decided exactly the opposite. Coverage entitlement comes from social security membership, while funds come from taxes. The weirdest financing of a health system in the world.

La capsa entròpica

Now is the time for artificial intelligence in healthcare

Artificial intelligence in health care: within touching distance

Medical practice has so far been largely unchanged by the digital revolution that has disrupted so many other industries, but perhaps artificial intelligence (AI) will provide the improvements in medical care and research promised for so long.

A short editorial in Lancet highlights the importance of deep learning in healthcare.

In 2017, successful use of deep neural networks was reported for the analysis of skin cancer images with greater accuracy than a dermatologist and the diagnosis of diabetic retinopathy from retinal images. The inherent requirement for large-scale, high-quality, well structured data might ultimately limit the areas in which AI can bring benefits to health care.

 Jordi Parramon exhibition

The urgent need to define delivery models for genetic testing

Identification of Delivery Models for the Provision of Predictive Genetic testing in Europe: Protocol for a Multicentre Qualitative study and a systematic review of the literature

The increasing role of genomics in medical decision making requires a review on how services should be organised. Unless this effort is taken promptly, it will be much more difficult to adapt the messy organization to an efficient model for the delivery of services. This issues are explained in a recent article. The ten questions:

 The transfer of genomic technologies from research to clinical application is influenced not only by several factors inherent to research goals and delivery of healthcare but also by external and commercial interests that may cause the premature introduction of genetic tests in the public or private sector (i.e., introduction of a test despite insufficient evidence regarding its analytical validity, clinical validity, and utility). Furthermore, current genetic services are delivered without a standardized set of process and outcome measures, which are essential for the evaluation of healthcare services. It is important that only genetic/genomic applications with proven efficacy and effectiveness are delivered to populations, and particularly that technologies have favorable cost-effectiveness ratios

Why we must not let the tech and drug industry forge the future alone

On the tech industry by Martin Wolf in FT

Selected statements on 7 reasons

What are the economics of these extraordinary valuations? The answer must be monopoly. As of September 30, the book value of Apple’s equity was $134bn, while its market valuation was close to $900bn. The difference has to reflect the expectation of enduring “super-normal” profits. This may not be the product of malign behaviour, but of innovation and economies of scale and scope, including the network externalities that lock in customers. Yet only monopoly could deliver such super-normal profits

How should we think about competition policy for businesses that benefit from such powerful monopoly positions? A question is whether these positions are temporary — as the great Austrian economist, Joseph Schumpeter, with his idea of “creative destruction”, would argue — or lasting. This suggests a host of responses, but one at least seems straightforward. Schumpeter would argue that new entries are a necessary condition for eroding such temporary monopolies. If so, the technology giants should be strongly deterred from buying up their potential competitors. That must be anti-competitive

Yet these enormously profitable businesses are parasitic on the investments in collecting information made by others. At the limit, they will become highly efficient disseminators of non-information. This links to a further point: they can, as we now know, be used by people of ill will for the deliberate dissemination of dangerous falsehoods. These facts raise huge issues.

Finally, the activities in which the technology industry is now engaged — what Andrew McAfee and Erik Brynjolfsson call “machine, platform, crowd” — are going to have a huge impact on our labour markets and, if artificial intelligence continues to advance, on our very place in the world.

What are the implications? They are that our futures are too important to be left to the mercies of the technology industry alone. It has done magical things. Yet nobody elected it master of the universe. Policymakers must get an intellectual grip on what is happening. The time to begin such an effort is now

On a particular drug company, in Project Syndicate:  The Opiate of the Bosses

Business ethics are again making headlines. This time, the focus is on the rapidly escalating opioid crisis that is destroying lives across the United States. While there is plenty of blame to go around, the largest share of the guilt belongs squarely on the shoulders of the major drug companies – Big Pharma.

The cynicism with which pharmaceutical firms have encouraged opioid drug use is appalling. Providing far too little analysis and oversight, they distribute opiates widely, alongside misinformation about how addictive the drugs truly are. Then they entice doctors with inducements and giveaways – including trips, toys, fishing hats, and, in one case, a music CD called “Get in the Swing with OxyContin” (one of the most popular opioids) – to prescribe them.

In 2007, several executives of the parent company of Purdue Pharma, which markets OxyContin, pleaded guilty to misleading doctors, regulators, and patients about the risk of addiction associated with the drug. The company was hit with some $600 million in fines and penalties.

Estimating individual life expectancy for alzheimer patients

Personalized predictive modeling for patients with Alzheimer's disease using an extension of Sullivan’s life table model

Alzheimer's disease is the most common type of dementia. Ageing is boosting its spread over populations. Eric Stallard et al. asked wether it was posible to estimate the residual total life expectancy (TLE) and its decomposition into disability-free life expectancy (DFLE) and disabled life
expectancy (DLE) for individual patients. It sounds really of interest, though it may seem unattainable.
Fortunately you may find succesful results in this article, it says:

Methods: We estimated a new SLT/L-GoM model of the natural history of AD over 10 years in the Predictors 2 Study cohort: N = 229 with 6 fixed and 73 time-varying covariates over 21 examinations covering 11 measurement domains including cognitive, functional, behavioral, psychiatric, and other symptoms/signs. Total remaining life
expectancy was censored at 10 years. Disability was defined as need for full-time care (FTC), the outcome most strongly associated with AD progression. All parameters were estimated via weighted maximum likelihood using data-dependent weights designed to ensure that the estimates of the prognostic subtypes were of high quality.
Goodness of fit was tested/confirmed for survival and FTC disability for five relatively homogeneous subgroups defined to cover the range of patient outcomes over the 21 examinations.

Results: The substantial heterogeneity in initial patient presentation and AD progression was captured using three clinically meaningful prognostic subtypes and one terminal subtype exhibiting highly differentiated symptom severity on 7 of the 11 measurement domains. Comparisons of the observed and estimated survival and FTC disability probabilities demonstrated that the estimates were accurate for all five subgroups, supporting their use in AD life expectancy calculations. Mean 10-year TLE differed widely across subgroups: range 3.6–8.0 years, average 6.1 years. Mean 10-year DFLE differed relatively even more widely across subgroups: range 1.2–6.5 years, average 4.0 years. Mean 10-year DLE was relatively much closer: range 1.5–2.3 years, average 2.1 years.

Excellent, good job from Duke University, where I did part of my PhD, using the same methodology Grade of Membership.

PS. My speech at the Economist's day.

Anders Zorn au Petit Palais