Death, taxes and fiscal deficit

Benjamin Franklin said: "The only things certain in life are death and taxes.". If he had lived here, he would have added "fiscal deficit" in its quote. And this is a constant since 1986, 8,1% of our GDP disappears and doesn't returns in services or infrastructures. And somebody is still interested in this money to use it for their preferences, and not for the tax-payers.
Yesterday we knew again that fiscal deficit was 16,543 million euros, a 8,5% of GDP of 2011. After 25 years, the accumulated amount of fiscal deficit is 306.267 million euros!!!. Can you imagine what represents this figure for a country of 7,5 million inhabitants?
Every year the fiscal deficit is equal to the sum of health, education and welfare expenditures. As far as a country can't survive with such bleeding, I'm convinced that we'll not discuss it again. Let's put it simply, time to say goodbye has arrived because it is socially unacceptable such discrimination and unfair relationship. Only one fourth of the fiscal deficit in one year would stop recent public budget cuts. The answer is only one: Goodbye.

Healthcare value chain, again

Redefining global health-care delivery

A remake of what you may already know has been published as article in The Lancet. It could be good as a reminder but something else is needed. The authors recognise:

Many individual elements we have described will be familiar to global health scholars and practitioners. Many lessons have been learned in discrete areas. What we lack is a true field. We need a clearing-house for information about programme design, best practices, lessons learned, synergies, policy constraints, environmental determinants, and other elements of global health-care delivery. In an age of information, the collection of data can run seamlessly from bedside to seminar room and back to the field.

 I'm uncertain about the outcome of such proposal. The details are so important and difficult to capture that the challenge is huge. On the other hand, I suggest to have a look at this Mckinsey Quarterly article that focus on the opposite: against benchmarking. After reading it, you'll notice that competition pressure in IT may not fit exactly with health care industry, and the message may not apply as straightforwarding.
Anyway, we need an evaluation effort to understand those strategies that are able to deliver more value. Now it's time.

PS. I wrote an earlier post about Porter et al.

Aprés tout (4)

An updated release of public health expenditure data has just been published. In 2011, the expenditure on health was 1,330 € per capita, you can check p.9 of the report. Total decentralised public expenditure: 10,120 m €, percentage of GDP: 5.1%. Why are these figures so different from my previous post with official data?
Now it seems that the deficit in 2011 was 932 m€ - a 10.1% budget deviation-, while formerly a lower figure was announced:586 m€. If it is a mistake, somebody has to fix it, otherwise it will remain in the statistics for the future. If it is true, then we have to ask why it was published incorrectly. Was it misinterpretation, negligence or making -up?

PS. Beware, this data comes from outside. Anyway, somebody has to confirm or dismiss it.

PS. Is it sustainable a public health expenditure variation from 4.4% of GDP to 9.9% of GDP between geographic areas with the same tax regime?

Wired Health

Eric Topol information into action, Wired Health conference


Eric Topol: Information into Action at Wired Health from WIRED on FORA.tv

Economics of genomics

The Economics of Genomic Medicine - Workshop Summary

Just imagine for a while that you are concerned about economic implications of genomics and you invite a distinguished professor of genetic medicine - James Evans- to the introduction of a workshop at IOM. Instead of more is better, he sends a cautious message to the audience. And beyond the potential and valuable applications for those that are already ill,  he openly critizises the current trend towards the use of genetic tests for the healthy:

Assessing the risk of common diseases through whole genome analysis of a healthy person has received the most attention, but this attention “is somewhat misplaced,” Evans said. Currently, assessment of genetic risk alleles has “rather feeble predictive power” because the increased risks tend to be small. “From a clinical standpoint I don’t know what to do with patients who are at a 1.3 relative risk for colon cancer,” said Evans. “Am I going to hurt them by doing more intensive screening, or am I going to help them?”

"I know what almost everybody in this room is going to die of,” said Evans. “We are going to die of heart disease or cancer. . . . We are all at high risk for these maladies regardless of our [genomically determined] risk. And many at decreased risk for heart disease will still die of heart disease. So we are all going to benefit from interventions that lower heart disease. We don’t really need to target people. It doesn’t do anyone much good to tweak our estimation of an individual’s relative risk for common diseases which we are all at high absolute risk of developing anyway."

 “The old adage that an elephant for a nickel is only a bargain if you have a nickel and you need an elephant applies here. I am not sure most of us need that elephant. Even if free, perceived low cost is an illusion, because the misapplication of medical tests—and make no mistake, whole genome sequencing is a medical test—is very expensive,”

A clear message for geneto-enthusiasts and marketeers. Cost-effectiveness of genetic testing starts with assessing if they are effective. If not, any economic analysis is useless . This is obvious, but we do need to repeat it, just in case.

PS. Must read, Reinhardt's blog.

PS. A report to understand the financial markets' mess and why recovery is far by now.

The right rate

International Variations in a Selected Number of Surgical Procedures

If you want to be astonished by the huge variation on the rate of surgical procedures in OECD countries, have a look at this report. It is difficult to find arguments for such a huge differences in health care. The key statement:

The data presented here provide contemporary assessments of the size of the clinical margins of uncertainty for the procedures studied. These may also in part be a consequence of varying legal constraints, methods of payment, availability of cover and patient preferences. They therefore provide basic evidence for research priorities in an increasingly evidence-based medicine paradigm. The only way to make proper judgements on the optimal level for a particular procedure is to have national longitudinal data linking individuals’ treatment (and deliberate withholding of treatment) to outcomes. Such data do not exist in most countries. This is a critical deficiency in health service delivery, which means current policy on which procedures to fund, for whom, is formulated in circumstances based more upon local custom and scientific tradition than empirical effectiveness data.

Meanwhile you can add this report to the folders with the Atlas VPM that you may already know.

Tackling obesity

Integrating Educational, Environmental, and Behavioral Economic Strategies May Improve the  Effectiveness of Obesity Interventions

On top of the priorities for the improvement of public health, obesity deserves a place. However, the tools and decisions to slice its impact on health are still dubious. A recent article may help to put together different approaches:

Obesity is a multifactorial problem impacted by access to foods (supply) and food choices (demand). Neighborhood environments constrain the food choices available to individuals, while complex dietary decisions are driven by taste, cost, nutrition, convenience, and weight concerns. The complex nature of dietary choices therefore requires informed educational approaches that are strategically combined with guided nudges, and environmental interventions that improve access to promote healthier eating. Moreover, multi-institutional  collaborations will likely be necessary to address the obesity epidemic.

Since a multi-institutional approach is needed, somebody has to lead this effort. Is the government able to do it?. If so, don't delay it.

PS. Let me suggest also this Lancet article, my key reference up to now with the OECD one and its update.

The stratified approach

How Health Systems Could Avert 'Triple Fail' Events That Are Harmful, Are Costly,And Result In Poor Patient Satisfaction 

While reading the latest HA, I've picked this article that intends to focus on implementation issues: how to improve health. A short statement:

 The stratified approach to the Triple Aim described in this article includes three phases. A planning phase would involve conducting an opportunity analysis, developing predictive models and impactibility (also known as intervenability) models.

More details in the article. Formerly in this blog, I've explained more or less the same. For instance, have a look at a post of last year on risk prediction in a population . We do need to focus on the basics using the most appropriate tools. This is what the article does, and what we have to do.

Aprés tout (3)

Publicly funded health expenditure reached 9,162m € in 2012, although the initial budget was 8,756m €. Therefore, the size of the budget deviation was  406m €(10% of total public deficit, health care is 38% of total public budget), and we have to remember that in 2011 the deviation was 582m€ .
Let's say it differently, in 2012 we have roughly accomplished the budget of 2011 (!) , or being more precise we have reduced the 2011 budget in 26 million .
The most interesting figure is always the per capita expenditure, in 2012 the final number is 1,205 € per inhabitant. A reduction of 2 € if we compare to 2011 budget (p. 45), or 77€ per capita of cutbacks in current terms.
The level of expenditure is right now close to what we were spending 5 years ago. Surprisingly, the size of population also went back to the figure of 5 years ago.(!)
Meanwhile, citizens wonder if there is a limit in the shrinking trend. The rumor these days is that the 2013 budget may be reduced by 9%. I can't imagine that this is possible to accomplish in 6 months, given that we have reduced 12% in two years(!!!).
And finally, don't forget that we are in a country that only 43% of our taxes come back, the remaining amount we'll retrieve it the day that we all agree in the creation of a new state. Then we'll not discuss again about cutbacks in the health budget, because we'll decide how much to devote to health services with our taxes.

PS. Video: Our politicians in the Parliament, a review of health policy in 2012.

PS. Today at 19:30 h. free broadcast of GET2013:  Genomics in the Practice of Medicine

PS. Otherwise at 22:00 h you may be interested in:  Genetics in Hollywood: Inspiring Writers and Producers to Create Storylines that Improve Health Worldwide 

PS. Recovery room from cutbacks: Must listen to Ben l'Oncle

Against patents

The case against patents

Some months ago, a WP blog hightlighted a paper by Boldrin and Levine with a straightforward title. Now you can read it at the Journal of Economic Perspectives. The summary is in the first paragraph:

The case against patents can be summarized briefly: there is no empirical evidence that they serve to increase innovation and productivity, unless productivity is identified with the number of patents awarded—which, as evidence shows, has no correlation with measured productivity. This disconnect is at the root of what is called the “patent puzzle”: in spite of the enormous increase in the number of patents and in the strength of their legal protection, the US economy has seen neither a dramatic acceleration in the rate of technological progress nor a major increase in the levels of research and development expenditure.

A risky statement unless there is a clear support from research. However, once you continue reading you'll have arguments to be convinced about it. The impact on pharmaceutical industry is analysed in detail:

There are four things that should be born in mind in thinking about the role of patents in the pharmaceutical industry. First, patents are just one piece of a set of complicated regulations that include requirements for clinical testing and disclosure, along with grants of market exclusivity that function alongside patents. Second, it is widely believed that in the absence of legal protections, generics would hit the market side by side with the originals. This  assumption is presumably based on the observation that when patents expire, generics enter immediately. However, this overlooks the fact that the generic manufacturers have had more  than a decade to reverse-engineer the product, study the market, and set up production lines. Lanjouw’s (1998) study of India prior to the recent introduction of pharmaceutical patents there indicates that it takes closer to four years to bring a product to market after the original is introduced—in other words, the fifi rst-mover advantage in  pharmaceuticals is larger than is ordinarily imagined. Third, much development of pharmaceutical products is done outside the private sector; in Boldrin and Levine (2008b), we provide some details. Finally, the current system is not working well: as Grootendorst, Hollis, Levine, Pogge, and Edwards (2011) point out, the most notable current feature of pharmaceutical innovation is the huge “drought” in the development of new products.

And the proposal is a controversial one:

we could either treat Stage II and III clinical trials as public goods (where the task would be financed by National Institutes of Health, who would accept bids from firms to carry out this work) or by allowing the commercialization of new drugs—at regulated prices equal to the economic costs of drugs—if they satisfy the Food and Drug Administration requirements for safety even if they do not yet satisfy the current (overly demanding) requisites for proving efficacy.

The last sentence sounds far from what should be a "fair" regulatory process in pharmaceuticals. Anyway, it seems that we have entered in a new perspective on patents and more scholars will be supporting it in the future.  I'm close to this perspective, but the details are important, as usual.

Full overhaul needed

A full-fledged overhaul is needed for a risk and value-based regulation of medical devices in Europe


This is exacty what medical devices regulation in EU needs: a full overhaul. The weaknesess of current process have been on the press for the case of breast implants. But this is only an extreme case that has shown the failures and conflicts of interest.
Carlos Campillo article in Health Policy shows clearly the details and examples of the current mess.

In Europe, the first step should be to understand thefull extent of the problem and bring it to public attention.Comprehensive, reliable and constantly updated registriescould play an important role in this endeavor. Secondly,all the improvement measures described in connectionwith both sides of the problem (assessment, appraisal andapproval, on the one hand, and postmarketing on the other)should be urgently implemented. The fact that we already know what these measures are would delegitimize any delay in implementation.

A clear alert for any politician with eyes to read.

PS. On non-profit boards

Paving the way

Default Options In Advance Directives Influence How Patients Set Goals For End-Of-Life Care

The end of life is obviously a difficult period. In such context, health care decisions have to be taken and our brain may not be able to perform as it should.

Most seriously ill patients value comfort and dignity over life extension, but routine care often leads to treatment oriented toward extending life. Deviating from this life-extending norm requires that someone actively request or suggest doing so.Specifying one’s goals of care in the living will component of an advance directive provides patients with an opportunity to counter this tendency. However, the text and structure of commonly used advance directives carry some of the same implicit biases that tend to favor life extension in the absence of advance directives.

Halpern et al. show that people are strongly influenced by default options in advanced directives. Without default, 66% prefer confort over life extension. With a default option, 77%  prefer not to extend life, even after reconsideration and being informed over the default.
Food for thought. Behavioral economics is paving the way for new understanding of choices that involve large amount of resources.

Evergreening (2)

The case of Tecfidera deserves a short comment. Imagine a drug for psoriasis, its active ingredient -dimethyl fumarate- modulates the immune system. The drug has been on the german market since the 90's. Right now you can buy this active ingredient at a reasonable price: $56.20 per 1000 grams. Imagine a company that "buys a license" to extend the indication of this active ingredient into multiple sclerosis. The result is a drug recently approved by FDA and sold at a "fair"  price of $54,900 per patient per year (!). With this amount of money we can buy roughly a tonne of dimethyl fumarate per patient per year. Does this make any sense? Is there anybody stopping this madness?

PS. Don't forget my previous post on the same topic.

PS. Why is this information false?. The answer in this post.

Countdown

I'm strongly convinced that strong patent rights spur innovation. In the case of genetics and biomarkers, the impact is even stronger. The Supreme Court has to decide over the Myriad case next April 15th and it is really crucial to follow what will be the definite resolution about genetic patents (at least in US). You'll find a good summary at FT.
The verdict is relevant for society as a whole. The access to new biotech benefits will be cheaper if resolution is finally against patenting. Of course, biotech industry has great concerns about it. But the problem is not on biotech, is on expectations that Wall Street has created. It is again, Wall Street vs. Society, a well known fight. Don't forget, the issue is not about patents. It is about ownership rights that spureously create and distort the economy.

PS. You'll find more previous posts on the same topic, here, there and everywhere.

PS. Uwe Reinhardt on healthcare prices, must read, as usual.

Evergreening

To evergreen or not to evergreen, that is the question. The lawsuit in India against Novartis has ended with a verdict that imatinib failed in the tests of invention and patentability.  A serious verdict, because it is an alert for any potential company interested in evergreening as strategy for patent extension.In this specific case, the costs of evergreening have outweighted the benefits.
I'll avoid any discussion about  the ruling, I'll take it as given. I would only suggest to have a look at the remarkable history of gleevec. Unfortunately, the size of public funds involved in the research doesn't appear. It would be great to know it.
Right now I am not able to disentangle the rationale about the threats of the pharmaceutical firm about cancelling the supply of new drugs into this market. It's a mistake, in my opinion. I'll check how they explain it as a CSR strategy.in the next annual report.

The economists' capture

Luigi Zingales has written a salient chapter on a book on preventing regulatory capture. His focus is not on the regulator, he describes the capture of economists by business interests. A reading of the whole article is required. I highlight this statement:

Most academic economists are very honest people, who chose their career because they were motivated by noble goals, like the quest for the truth and “making the world a better place”. Yet, the same can be said for the regulators. So why academic economists think that the regulators are generally captured, while they cannot stand even the thought that this might happen to one of them? This time we are different?

Those that have seen "Inside Job" may remember quite well good examples of such situations: academics serving on boards close to the revolving door and forgetting the theory and its implications for a while.

PS. From Marginal Revolution: firms with academics on board of directors are associated with higher performance.

PS. NYT on Kaiser Permanente: The face of future healthcare

Choice architecture

A Nudge Too Far? A Nudge at All? On Paying People to Be Healthy

Is there a need to change "choice architecture" to adopt healthy behaviours?. From behavioral economics perspective, the answer is yes. However, the doubt is over how it should be done.  The lead article on HealthcarePapers is about pushing healthy behaviours. I'm not a fan of financial incentives for these issues. The article hightlights pros and cons, a good review for any newcomer to the field.
From all the comments, Pierre-Gerlier Forest poses a difficult trade-off between the role of the democracy and "nudging" by experts. Unfortunately, he gives no answer and waits for pragmatic improvements.Meanwhile, have a look at this article: beyond nudges, "tools for a choice architecture".

PS. Check "I nudge you".

A country in a desperate situation

Early this morning on the radio this was the statement: "We live in a country in a desperate situation". The reason is that the rule for public expenditure is tied to a fiscal deficit of 0.7% and unless this figure is relaxed this means a cutback of 4,500 million euros. (1,800 million in health expenditure).
This is nonsense, a threat to citizens health. A country that only receives 57 euros out of 100 of taxes, can't cut its health expenditure again. As citizens, we are currently subject to threats and blackmailing with our money. The first thing to do is not to accept such rules. It's an issue of dignity.
Enough is enough, the day to say goodbye is closer.

PS. Now the neighbouring government is threatening us with no subsidies for transplants while retains our taxes.
PS. You can listen to the radio to confirm what I'm saying.

A market that grows

This is the case of voluntary health insurance. Amid the current downturn, in 2012 there was an increase in the number of members (2.04%) and premiums (6.09%). This data confirms previous trends although it reduces its strength. The market serves 1.9 m members and generates €1,300 m  in premiums (close to 8% of health expenditure). The trend towards collectivization is consolidating again. Right  now close to 45% of premiums come from group insurance due to tax-breaks that only to apply to such policies.
The key question then is not regarding the growth of that market, we have to ask ourselves if such growth is in the right direction towards a more competitive and efficient market. My impression is that information asymmetries and current incentives (tax rebates) need to be rebuilt. 
Let's leave it here for today.

PS. Gary Becker on the Breakup of Countries: No Economic Disaster

PS. Carles Boix, on the role of elites.

PS. Yesterday I attended at the conference on economic and legal dimensions of independence:



PS. Extracted from Vilaweb: Message to the elites: independence is viable and inevitable
 
The Wilson Initiative at Cercle d'Economia explains the arguments for a own state
 
'The independence movement goes from bottom to top, from the street to the Circle. And the role of the elite is to provide what is inevitable. There is vibration, there is anxiety ... But we have to make an effort to allow this to happen. " This is the message that Professor Boix has sent on behalf of the Wilson Initiative to representatives of the country's economic and political elites that assembled at the Economic Circle to hear the arguments of this group of distinguished academics . They have appeared amid great excitement and deploying all arguments to show an audience traditionally reluctant to independence process, that is feasible and necessary. 
Savings of 1,800 euros per person per year
The own state is an opportunity, said Jaume Ventura, who presented figures on the balance between the cost and expense to have a state and maintain their structure.
'He says that if we want exactly replicate the structure in Spain that would cost us 383 euros per person per year. And that, assuming we want to maintain the same embassy as many guns and so on. ' This would be the cost per head, said Ventura. But, eliminating the annual fiscal deficit of Catalonia would provide € 16,000 million. 'The Catalans pay 2,251 euros per person per year in excess of contribution to Spain. After paying 100 euros in taxes, only 57 are spent in Catalonia. Why do we pay that extra money? Not because lower pensions than in Spain. The unemployment benefit is also the same. The explanation is that the deficit is not reversed in Catalonia infrastructure. We have the lowest public capital stock '
What could we do with this after saving 1,868 euros? "With a third of the money we could stop the budget cuts, with 1,868 of these would spend $ 500 to be the sixth country with more investment in education, and 550 euros per person per year, we would be the third country in Europe in investment in research and development.

Listen to Lizz Right while waiting for the next concert in Barcelona. 

The lyrics apply to the former text

P4P: Ethics and effectiveness

Ethical Physician Incentives — From Carrots and Sticks to Shared Purpose

The strict focus on carrots and sticks in the design of physician incentives may contribute to unintended results. Have a look at NEJM and you'll find an outstanding article that puts the stuff in the right place:

Using incentives both effectively and ethically requires a shift away from a simple, one-lever model that relies on tradition, self-interest, or emotional responses to reward participants for a desired action (or punish them with financial loss or shame for an undesired one). Such an approach risks alienating physicians and other personnel. Rather, the challenge is to cultivate consensus on an organization’s shared purpose and put that orientation into action through performance measurement and use of the other types of incentives.

 However, having said that, we know that the introduction of performance measures may be easier than to create a shared-purpose orientation on the organization (i.e. "an organizational commitment to the triple aim of improved patient outcomes, better population health and efficient costs"). Therefore, there is a need to guarantee "ethical conditions" under any pay-for-performance (P4P) scheme. Although I agree absolutely in this approach, the precondition is a consensus in the whole organization, from the top (board of directors) to the bottom (employees) and I'm uncertain about how to build and create such consensus in the current environment. Anyway, such uncertainty should not prevent efforts in this direction.

PS. On the HA blog you'll find the same topic and the same conclusion, by Dan Arieli and Stephie Woolhandler:

None can doubt health care’s grave quality deficits and cost excesses.  As remedy, P4P suggests manipulating greed, a fuel that’s powered exponential growth in productivity in the overall economy.  But Adam Smith, who first recognized greed’s awesome power, was also a moral philosopher who believed that commodity production required a parallel public service economy driven by social duty.

Sadly, greed has caused many of the worst abuses within the current system.  Injecting different monetary incentives into health care can certainly change it, but not necessarily in the ways that policy makers would plan, much less hope for.

The size of the pie

From the WEF  report last year on non communicable diseases, I retrieve the size of worlwide health expenditure in 2009:

World expenditure on health in 2009 totalled US$ 5.1 trillion (US$ 754 per capita)13, of
which 61% was spent by public entities. The vast majority of this expenditure (US$ 4.4 trillion) took place in high-income countries, where spending per capita was US$ 3,971 and the share of public spending was 62% of the total. At the other end of the spectrum, low-income countries spent an average of US$ 21 per capita, of which 42% was supplied by public entities.

As far as we need to know the value created from such resources devoted to health care, the European Commission said recently in this document Investing in Health. Accompanying the documentCOMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS:

Increasing the return on health investments requires a solid assessment of the efficiency and effectiveness of spending. Such an assessment faces three main methodological challenges.
The first is to verify that the evidence of efficiency gains and improvements in health obtained through better use of healthcare budgets remains valid when different definitions of health outcomes are used. A major problem is that much of the evidence focuses on crude measurements such as life expectancy, failing to consider the quality of the years of life gained. This is more clearly brought out by concepts such as Disability Adjusted Life Years (DALY), or Healthy Life Years (HLY).
The second challenge is to disentangle the relative influence of health systems on health outcomes from the impact of other determinants of population health, especially living and working conditions, income, education and the most common lifestyle-related risk factors
The third is the time lags between policy changes and their impact on health outcomes, a problem that may involve ‘false savings’ because they may lead to increased costs or other unintended consequences in the long term.
Further assessment of the efficiency of health systems therefore requires a refined analytical framework, structured along three axes:
(1) the definition of sound, reliable indicator(s) of health outcomes, building on the existing European Community Health Indicators,
(2) a better understanding of the effects of health systems on health outcomes, as distinct from the impacts on health of other factors such as health determinants and lifestyles, and
(3) a better understanding of the mechanisms, and therefore the timing, of how health policies affect health outcomes.

Sounds familiar.

The ownership of drugs data

Starting in 2014, clinical trials data of drugs approved by European agency will have to be released publicly. This has been a major claim by researchers and some regulators that are "concerned that too many drugs are approved based on selective evidence that exaggerates benefits and plays down the risks" as FT explains.
However, the news is that several companies are suing European Union to avoid such release of data, saying that this will harm their "competitive advantage". We are at a crucial moment. If these companies achieve what they want in the courts, it will be extremely difficult in the future to apply what it is expected for next January, the release of data to check safety and efficacy of drugs.
My understanding is that once you ask for authorisation you have to follow what the regulator has established, otherwise you should avoid such process and go to another market. Breaking the rules through the courts may be a successful strategy in corporate terms, but the firms can't forget that the final buyer and payer of pharmaceuticals is mostly the government, and it is the government who has considered that ownership of data is public once the drug is authorised. This is the cost of playing this game.

Back to essentials (2)

In many cases, delay is not feasible. Decisions need to be made, even if the environment is one of limited attention, information, and processing capacity, so shortcuts, or heuristics, are necessary. A heuristic is a decision rule that utilizes a subset of the information set. Since in virtually all cases people must  economize and cannot analyze all contingencies, we use heuristics without even realizing it. Medical decision making is plagued with heuristics and biases. Sometimes may be helpful and others may distort and have serious consequences for health and costs.
Once a government has set up a program to identify low-value medical interventions (Essencial), a list of what should be avoided, the most difficult part is how to translate it into practice. Of course, right now there are only 9 interventions and it is quite easy, but with larger complexity it would require a new framework for medical decision making. We need to understand deviations from what should be expected, and what to do about it: a "behavioral" medical decision making framework. Information and rules are not enough. Unfortunately, we still don't have a universal toolkit to fix such issue, only some pieces that may help. Anyway, this is not a rationale to fold the arms.

PS. The opposite of bad can be worse, by the Incidental Economist.

Back to essentials

Fortunately, we have started a new paradigm.A little bit late, but last Friday the government announced what I call clever budget cuts. The readers of this blog are familiar with the concept, here you'll find an example. The Essencial program of the government will focus on:

• Promoure una pràctica clínica que eviti la realització de pràctiques que no aporten valor a la ciutadania i que, en conseqüència, millori la qualitat de l'atenció sanitària.

• Informar la comunitat professional i la ciutadania sobre procediments que, segons l'evidència científica i el consens d'experts, no aporten beneficis per a la salut.
• Fomentar la participació dels professionals sanitaris en la identificació de pràctiques de poc valor.
• Avaluar l'impacte de les recomanacions en el sistema sanitari, tant des del punt de vista de procés com de resultats finals

Congratulations! Hope this will bend the expenditure curve and improve quality of care.

PS. Mediterranean diet, interesting comment at GCS blog.

It's all about economies of scale

Last week I participated in a round table on pharmacy. The biggest concern right now is when the government will pay the bill. The pharmacists are waiting four months but things suggest that may worsen. In such situation the pharmaceutical dispensing problems are so immediate that the challenges for the pharmaceutical distribution will be delayed for another day.
Beyond the issue of payment, I focused my speech on the need to make the most of economies of scale in dispensing drugs. The current situation is unsustainable, and unless there is a reform led by proposals from the professional side, the market and the state will decide the future. The excess of capacity is around us, you can see pharmacies with practically no stocks and daily distribution from more than 4 wholesalers in each pharmacy. The number of wholesalers is beyond what should be expected in this sector.
The time for a new structure of pharmaceutical distribution has arrived. Has anybody heard about it?

Still waiting after all these months

Waiting lists may be considered the most prominent consequence of a publicly funded health system. Without price barriers, the queue for an operation may take months. Data to compare the situation of waiting lists between countries is not that easy to find. However, in the last report by OECD you can get the indicator of how many patients were waiting for more than 4 months in several countries. Take a look at this OECD report (p.42). Only one country in its worst year achieved 41% (UK).
Right now data show that we have the record.  The latest information (p.7) highlights that 100% of interventions for elective surgery required waiting for more than 4 months during 2012. This represents 1,63 more months than in 2011. That's a lot. The number of persons waiting is 93,2 per 10.000 inhabitants (70.814), but 5.000 patients that were on the list and tired of waiting declined the intervention once they were allocated them to a hospital (unfortunately, there is no information about the impact or how they have solved it).
Definitely, waiting lists is a hot topic. they should be fixed and indicators should be close to international standards. Right now we are far, too far away.

The patent cliff is not over

Imagine for a while that the size of a market drops by 290 billion between 2012 and 2018. This is the case of pharmaceuticals. This is not new. Now we can start to check the strategies to cope with this cliff and wether the companies are succesfull or not. Nature RDD explains details, must read. A picture is worth one thousand words:

A startling achievement

INFORME MENSUAL DE SEGUIMENT DE LA PRESTACIÓ FARMACÈUTICA

Pharmaceutical expenditure in 2012 has dropped 14,27%, double of last year. That's unusual, a confirmation of trend reversal started in 2011. The total expenditure was €1.450 m, the decrease in prices 8,2% and on prescriptions 6,5%. The exact reasons behind such a fall are known: the introduction of copayments, the reduction of prices and benefits, and the changes in prescription. We still don't know the size of the impact for each factor.
The question is only one: Has this change affected the population health?. If not, why have we had to wait until now to do it? Unfortunately we can't aswer properly right now. I expect we'll show results in some months time.
Anyway, on one hand my congratulations to the regulator -he has finished vacation at least in pharmaceuticals-, and on the other hand I would like to remind everyone that the expected decrease in the pharmaceutical budget was 27%, therefore the deviation is 13%. I said in this post that it was very difficult to acomplish. The facts confirm my prediction.

PS. January data confirm the trend, on interannual basis a decrease of 15,95%

PS. A non-democratic failed state, yesterday voted to block any potential self-determination referendum, although 78% of its deputees were asking for that. This is a clear message for the international community. Next steps are closer to unilateral declaration.

PS. The beloved princess of the king (not the queen) and lobbyist of the failed state in the press. NTA.

The collapse of managed competition

The colombian Health Minister has just announced the end of competition between insurers under a mandatory health insurance scheme. This is an important announcement, two decades after Ley 100, managed competition will be removed from health policy scene.
We still have to wait for the details, but the application of what Alain Enthoven considered the best efficient option to ensure competition and mandatory coverage is ending in Colombia. The reasons are multiple and difficult to summarise in a post. The explanation deserves a whole book. The breaking point has been the scandals, corruption and fraud in EPS, the insurers side. About 50 companies were intervened and the amounts of embezeled money are impressive. Crime has entered into health care arena.
In my opinion, the most important lesson is that the introduction of social experiments and innovations are not appropriate if regulators don't understand the concept and the tools to manage the system. The policy dynamics and short-term views act against any regulatory stability, unless the country is committed to preserve the underlying principles of the health system. Therefore, be careful on experiments, it can be extremely costly in social terms.

The greater good vs shopping

Engaged Patients Will Need Comparative Physician-Level Quality Data And Information About Their Out-Of-Pocket Costs

Access to quality and cost information for citizens is increasing in certain environments. Right now you can find for example the prevalence of nosocomial infection in acute care hospitals in Catalonia with a simple click (p.69). You can assess in advance the probability of being infected during your hospital stay and if you check the indicator you'll find wide variations. Unfortunately this information is not structured to take decisions.
A recent paper in HA groups two potential approaches, information for greater good vs. information for shopping.

The health care quality and cost reporting programs that fall under the “transparency for the greater good” model tend to be nonprofit and government initiatives focused on improving quality and efficiency, engaging consumers, and increasing awareness of variation in quality and cost. In contrast, the programs that fall under the “one-stop shopping” model tend to be private-sector initiatives that aim to provide personalized, integrated information on cost and quality to support consumers’ decision making regarding care providers and services.

Personnally, I'm not so convinced about the dissemination and use of such information to patients. I'm not so sure about the role of choice in general. I suggest you have a look at the book the Paradox of choice before entering into a dubious land. Anyway, I'm in favour for greater transparency, and initiatives like Central de Resultats are a good example, but I remain uncertain about its usefulness for " doctor shopping".

I should go to Viladecans exhibition on Espriu

The pieces of the puzzle

Charter for healthy living

Since we all agree that in developed world, non-communicable diseases are the greatest challenge for health, we are more and more convinced that the solution lies partly beyond the health care system. The issue is not to be convinced about this, the big question is how. And the answers may be different according to the approach. The World Economic Forum has just released a very interesting report and a toolkit on his topic. Though it is necessary to put together all the pieces of the puzzle, and there is a clear emphasis on a multistakeholder approach, I have the impression of some missing pieces. At least two: incentives and cognitive biases in behaviour and decision making. In this blog, I have pointed out the importance of it - remember Nudge or Mindspace- and I can't see it well reflected in the reports. Although there is a minor reference in the annex, you get the flavour of rational patients and governments, as rational consumers and regulators. The context and our departures from rationality are so important that we have to beware of them. Anyway, the most important is to have a look at the toolkit, not only to the report. The intention is clear, focus on the application.

Cristina Iglesias at Reina Sofia Museum

Patient focused episodes

We all know that no measurement means no management. In health care the measurement of the burden of disease is not that easy. Fortunately at a global level there is the recent study published at Lancet and quoted in this post. If we need to be precise in the measurement with consequences for health care management then we need better tools. Diseases finally appear around episodes, and we may have three type of episodes: event based, disease cohort and population based. The definition of episode needs to be patient-focused rather than disease centered. If you want to know the details of the newest approach to morbidity measurement have a look at this document. It is the evolution of former Clinical Risk Groups towards a new model that will be extremely helpful for management decision making and the definition of appropriate incentives.

PS. Some months ago I explained that new payment systems were in train of being defined. An impact analysis may be found here. My post was titled: A retrofuturist payment system. Now, I would like to change the title once I've seen the details, my proposal is: A complete MESS that needs to be rebuilt from scratch. (to be continued)

PS. Yesterday I attended a book presentation: "I am not Sidney Poitier", by Percival Everett. It was at La Central bookstore. Percival explained the rationale of the book and its subliminal messages.  This is not the kind of novel I'll read.

An active life ruled by reason

The humble economist

The works by Tony Culyer are so familiar for every health economist that we couldn't live without them. Those that have arrived a little bit late, now have the opportunity to read all his contributions in one book. My impression is that any university professor could create a syllabus following only this reader: Social Scientists and Social Science, Extra-Welfarism, Ethics, Need and Equity,Health Policy,Health Technology Assessment.
The introduction highlights his academic life, 250 articles, more than two dozens of books and a strong public impact of his works.
I still remember the first time I was reading about the extra-welfarist approach. In those days, the individual utility paradigm was the basis for any article you could read. I was feeling uncomfortable on the assumptions, Culyer gave the opportunity to open the windows for fresh air. Unfortunately his message has not always been understood and applied. Let me reproduce some paragraphs from the introduction:

Culyer’s concept of “extra-welfarism” helps to liberate health economists from the confines of the traditional “Paretian” or “welfarist” approach to evaluating alternative policies and institutions that dominated economic thinking in the nineteenth and twentieth centuries. Traditional “welfarist” economic analysis assumes that subjective individual preferences or “utilities” (understood either as the desires that motivate individual decisions or the feelings of happiness that may or may not follow those decisions) are the be all and end all of the social good when it comes to doing “economic” analysis properly. Culyer’s “extrawelfarist” approach allows economists to use additional sources of information about individual wellbeing or lourishing – i.e. additional to subjective desires and feelings – for evaluating alternative policies and institutions. In keeping with his professional humility, of course, he does not endorse any specific view of what constitutes a flourishing life: “Flourishing may mean different things to different people; all I require is that it be a high goal whose accomplishment gives a deep satisfaction to the one living it, and perhaps others too, as when it is said of someone who has died ‘that was a life well-lived’.

The concept of “extra-welfarism” builds upon the work of Amartya Sen, who first coined the term “welfarism” and wrote of the need to use “non-welfare” or “non-utility” information when assessing individual wellbeing. Culyer developed and refined this idea in the specific context of health care, showing in particular how non-welfare information about people’s health – and not merely people’s health-related preferences or desires – could be fruitfully used in the health care field. The three essays in turn set out the basic idea; develop and refine the distinction between “welfarist” and “extra-welfarist” approaches to health economics, in a multiauthor essay originally lead authored by the eminent Dutch health economist, Werner Brouwer; and then explore a range of different practical applications of both “welfarist” and “extra-welfarist” approaches in the health sector, showing how both can be fruitful in different contexts.

In this post I made some reviews of his recent work and here you'll find an interesting article that it is pending to be read and commented in this blog. 
Right now I only would like to share with all of you the opportunity to read the whole book again, some articles are not easy to find. Definitely, it is a reference book for any person interested in Health, Health Care and Social Decision Making, as it says the subtitle.
Congratulations!

PS. Check the extra-welfarist approach in p.59 of this excellent book of Vicente Ortún.

A new quality measurement paradigm

Quality Measure, Based On Health Outcomes, That Compares Current Care To A Target Level Of Care

The works by David Eddy et al. are a must read always. The latest one at HA February is specially relevant because it represents the introduction of new tools for measuring quality. The abstract says:

The quality of health care is measured today using performance measures that calculate the percentage of people whose health conditions are managed according to specified processes or who meet specified treatment goals. This approach has several limitations. For instance, each measure looks at a particular process, risk factor, or biomarker one by one, and each uses sharp thresholds for defining “success” versus “failure.” We describe a new measure of quality called the Global Outcomes Score (GO Score), which represents the proportion of adverse outcomes expected to be prevented in a population under current levels of care compared to a target level of care, such as 100 percent performance on certain clinical guidelines.

The tool-kit of this Global Outcomes Score is the Archimedes Model. Some months ago I devoted several posts to it. I'm absolutely sure that this approach has wide implications for our health system and I don't understand why we should delay its application. Eddy explains that in several specific situations -mostly population based- more quality represents less costs (-38%!!! p.2446). This is another excellent example of clever budget cuts. Are there any intelligent readers able to apply it? How long will we have to wait for it?

PS. If you don't have access to HA, go through Archimedes webpage.

Fresh data

Recently we have known that politicians were spotted while having lunch at a well known Barcelona restaurant. Our crazy world is becoming more unpleasant. At least two options for a politician: no lunch at a restaurant, or silent eating, unless somebody (justice) introduces more costs than benefits on spying. Up to now, spying has been profitable.
In health care, these days is appearing fresh information about hospitals, no spies needed to know P&L data. Data on 2011 hospital costs can be found at Central de Balanços. Those that want to know how money is spent in a consolidated way, can check the latest report. You  can find that outpatient pharmaceutical expenditure in hospitals decreased 5.19%. This is a historical achievement, and pharmaceutical inpatient expenditure lowered 12 % !!!. You may remember my last comment on such data in this post.
Besides a general improvement, hospital deficit in 2011 was 90 m euro, however on p. 36 there is a detailed explanation. Some hospitals account for most of the deficit (5 hospitals - out of 51- represent 64% of the amount of hospitals losses). These details are very important because these are the hospitals where budget cuts have not been effective. May be we can call them free riders? We can't confirm with data available on the report.
If you want to understand recent hospital expenditure, definitely you need to check this report (or mental health report and LTC report) and you'll reassure that the effort to trim costs has been very important, a substantial change in the former trend. Costs are lower, what about efficiency?

PS. ¿Why are there so many wicked  people in politics?. One answer to this question is given by Adolf  Tobeña connecting neurobiology, behaviour and economics. Yesterday I attended a very interesting speach. You may listen Adof Tobeña here in a similar speach (1 hour), or you can go straigth to minute 30 - and get the key messsage-, otherwise you can have a look at this pdf.

PS. A sound criticism towards ACOs, by Mark Pauly. Must read.

The great François Gabart, winner of Vendée Globe 2012

Clever budget cuts

Disinvestment in the age of cost-cutting sound and fury. Tools for the Spanish National Health System

The government has anounced that it is difficult to apply  new budget cuts again because it would harm citizen's health. However, a close look at this interesting article can provide light to take decisions that would reduce inappropriate care. The authors say:
Articulating the proposed approach to “value for money”, would require 3 basic elements:
(A) The mandate to do it: Regulatory framework
(B) The capacity to identify “low value” interventions and produce guidance on best practice
(C) The capacity to monitor compliance to and effects of “enforced” guidance.
My impression is that light is not enough. Government needs courage for clever reforms, and this means to surpass the existing hurdles. The article explains how. However, I'm uncertain about how many politicians will read this article, and still more uncertain about how many will take the suggested approach.


PS. I should read "Behavioral foundations of public policy".

Why are there high variation rates in procedures?

The Atlas of variations in health care describes what's going on in the real world. Once we know that there are large differences in hospitalization rates between geographic areas, we need to ask about the causes behind them. This is much more complicated.
Have a look at this article and you'll become convinced that it is possible to reduce potential inappropriate care, and hence reduce costs, without harming health. A key paragraph:

Si un área tuviese el comportamiento de las áreas con tasa en el percentil 25 como referencia, el exceso de coste anual oscilaría entre los 89 millones de euros en el caso de proctología hasta los 12 millones en el caso de revisión de artroplastia. En el caso de usar como umbral deseable la tasa del percentil 5, el exceso oscilaría entre los 22 millones atribuibles a revisiones de artroplastia y los 129 millones a procedimientos proctológicos.

This is a clear message for those at the helm of  budget cuts. It's the kind of message that a politician wants to avoid tackling. Anyway, handle with care, this is only a description. There is no clue about causes and consequences.

Why are we waiting?

Waiting Time Policies in the Health Sector What Works?

One could say quickly, waiting lists exist in NHS because prices are mostly absent and insurance plays a role. In consumer markets, waiting lists appear when there are creators of scarcity as Brandenburger-Nalebuff explained in his book as a specific strategy, or when there is a temporary mismatch between supply and demand. Since the solution in health care is not to introduce prices and forget insurance, we have to ask about the best practices on tackling such issue. The report by OECD says:

Supply-side waiting time policies, by themselves, are usually not successful. In the earlier OECD study on waiting time policies, the most common policy was to provide increased funding to health providers to decrease waiting times, and this type of policy continues to be a common approach. It has almost invariably been unsuccessful in bringing down waiting times over the long term. Generally, there is a short-term burst of funding that initially reduces waiting times, but then waiting times increase, and occasionally return to even higher levels when the temporary funding runs out. The other main supply-side policy is increasing hospital productivity, by introducing new payment methods such as activitybased financing (ABF) using diagnosis-related groups. This increases hospital productivity, but does not necessarily decrease waiting times.

The most promising tool is prioritisation within a waiting list. The cases of Norway and Australia are interesting examples to check. Nearer here we started with research, and finally a decree was prepared to be released. Unfortunately last April we received a phone call saying it was not possible to rule on waiting lists, that somebody would do it for us. At that moment I said that the intervention of health policy started. The answer today to the initial question - why are we waiting- is at least this one: we have made unnecessary political concessions and we should apply our legislation, we don't need the intervention from outside. That's it.

PS. Data on waiting lists at December 2012.

Dutch crossroads

EVALUATING REFORMS IN THE NETHERLANDS’ COMPETITIVE HEALTH INSURANCE SYSTEM

The quest for introducing systemic competition in health care is plagued with difficulties. This blog has explained its causes several times. There are at least two levels of competition: on the funding side and on the providers side. In my opinion the big issue is on the funding side. Under mandatory insurance, what is the outcome of managed competition (when insurers compete on quality rather than price)?. Although we don't have a case-control assessment, we can have a look at the Netherlands. Latest data confirm that costs are still rising although choice is greater than before. This article says:

Preliminary evidence shows that over the last six years health care costs have kept growing, quality information has become readily available, hospital efficiency has improved, and consumers have had greater choice

It is just a confirmation of my former post. I'm uncertain about the long term acceptance of dutch population for being the country that spends the most  on health in the EU. Can they afford the cost of choice? . Another wave of reform is approaching.

On corruption

These are days with one headline in the journal's front page: corruption. The anomalous funding of parties has created opportunities for "funding" opportunists in those parties. The case of Health Minister may be followed in this police report. The fight against corruption is not that easy. You may check recent proposals by World Bank in this book. I'm not so sure about the effectiveness of Income asset and disclosure as a tool, since we have had this for last 20 years and current news corroborate its failure.

PS. Acemoglu on innovation and growth. And the world of our grandchildren.

Overvaluing expensive drugs

A research from University of York has concluded that NICE is overvaluing expensive treatments because its cost threshold - the price at which a treatment is deemed good value for the NHS - is set too high. The threshold value per quality-adjusted life year (QALY) - a measure of the health benefits of a treatment - should be lowered from £30,000 to just £18,317, their analysis found. It suggests the NHS may be wasting money on treatments that are not as good value as first thought. Professor Sculped said:

It is crucial that the cost effectiveness threshold is seen as representing health forgone as the additional costs of new technologies are imposed on the fixed budgets of local commissioners. For decisions made by NICE and many policy options considered by the NHS and DH, this is the key to establishing the value for money of new services.

This is a strong criticism against QALYs, let's see if it has some impact in the near future. Fortunately, the British have the opportunity to debate on it. Nearer here, the press is saying now that 30% of drugs requested for approval were rejected (7 out of 24). No details available, no website, no transparent process. That's alleged democracy, southern style. NTA=Nothing to add.

PS. If you don't want to read the article, have a look at this presentation. I suggest you save it, it may be useful for the future.

PS. As you can see from my blog, in one week, two officials have said different numbers of rejected drugs for public funding (2 vs 7). Does this make any sense? Is there anybody asking for an explanation in Parliament?

PS. Follow the controversy on DSM-5 at BBC News.

PS. Check here how our drug prices have converged to the european average.

PS. Must read: Uwe Reinhardt blog.

PS. Interesting article on 20 years of economic evaluations of cancer.

Questions without answers

EESRI. Estadística dels centres hospitalaris de Catalunya, 2010

Statistics reflect facts, decision and behaviour of individuals and teams. Every year the hospital statistics might seem slightly similar to the previous one. The 2010 report, just released, splits results between publicly funded hospitals (public and private) and privately funded ones. Since the outlook is so different, I'm still asking some questions:

• Why private hospitals have a cesarean rate of 36% and public hospitals 22.7%? p.15
• Why discharges in private hospitals  are 10.5% of total if voluntary insurance is 24% of the population? p.18
•  Why "productivity" is double in private than in public hospitals? p.19 (31 vs 62 UMA/personal sanitari) p.19
• Why hospital discharge rate per 1.000 inhabitants in 2010 returns to 1995 data? (p.30)
• Does size matter for efficiency? Public hospitals average income 85m€ , private ones 19m €.

I have my own hypothesis, however the confirmation has to come from fresh research that I haven't found to date.

There is always a first time

It was not until yesterday that we knew that for the first time two drugs were not included in the publicly funded package because its low cost-effectiveness. This is a historical achievement. The news is so unique that deserves explanation. For decades, health economists have been asking for the economic evaluation of new benefits. Surprisingly, yesterday there was anounced in the press that two cancer drugs with limited effectiveness and high costs were not entering into public funding. My question is, how the regulator has come to such a decision if the committees set up by the law have not been nominated?. The answer is in the journal. Up to now, the institution that rules cost-effectiveness are the officials in the Ministry, that's all. NTA: Nothing to add.

Plausible stories about the future

Sustainable Health Systems - Visions, Strategies, Critical Uncertainties and Scenarios

Last week the "health output" of the Davos World Economic Forum was a report on Sustainable Health Systems - Visions, Strategies, Critical Uncertainties and Scenarios. A quick look at the document will show you that the future could lie only in three scenarios. This is an easy way to limit what may happen. A reduccionist perspective I would say. Anyway, you may agree or disagree after reading it. The three options would be:

• In Health Incorporated, the boundaries of the health industry are redefined. Corporations provide new products and services as markets liberalize, governments cut back on public services and a new sense of conditional solidarity emerges.
• In New Social Contract, governments are responsible for driving health system efficiency and for regulating organizations and individuals to pursue healthy living.
• In Super-empowered Individuals, citizens use an array of products and services to manage their own health. Meanwhile, corporations compete for this lucrative market and governments try to address the consequences.

Fortunately the future will be more complex, an organized chaos at best, evolving from what we already see right now.

PS. Horrendous stories about the past.