Session: Treating Disease
Room: Hollister 306
Time: Tue 13:15-14:45

Presenter: Nilay Shah (Mayo Clinic. Health Care Policy and Research)

Discussant: Charles RoehrigAltarum Institute

Abstract

Developing methods for assessing the productivity of medical treatment for chronic disease is of increasing importance. This paper follows the same “cost-of-living” empirical methodology of Eggleston, Shah and colleagues (Annals of Internal Medicine 2009) to assess the net benefit of increased spending on health care for patients living with one important chronic disease, diabetes mellitus.

Using a larger and more recent sample (N=902 employees and dependents in a self-funded health plan between 1999 and 2007) with an even richer set of variables, we estimate the net value of changes in the technology of diabetes management between 1999 and 2007. To measure quality we use clinically relevant metrics such as “modifiable cardiovascular risk” based on the UKPDS (United Kingdom Prevention of Diabetes Study) risk equation for predicting cardiovascular complications. A reduction in modifiable risk indicates a quality improvement. To isolate the impact of technological change while allowing for differences across cohorts diagnosed in earlier or later years, we estimate net benefit (1) separately based on the average values for five different diagnosis cohorts, (2) using the weighted average across diagnosis cohorts; and (3) at the individual patient level by simulating quality-adjusted life years (QALYs) in the UKPDS Outcomes Model based on patient-specific trajectories of diabetes risk factors and complications.

We find that total real annual health care spending of patients with diabetes increased 43.8% between 1999 and 2007, for an average annual increase in spending of 4.8% based on the weighted average across diagnosis cohorts. All diagnosis cohorts except the most recent (2001-04) saw a statistically and economically significant reduction in modifiable risk of developing coronary heart disease (CHD), ranging from -38% for the pre-1985 diagnosis cohort to -20% for the 1999-2001 diagnosis cohort. Trends for the other clinical measures were more mixed, generally showing declines in modifiable risk for earlier diagnosis cohorts and little change or an increase for the patients diagnosed most recently.

Focusing on changes in cardiovascular risk for each cohort, we find that the value of reduced mortality and avoided treatment spending, net of the increase in annual spending, was $14,608 for the average patient (although 3 of the 5 diagnosis cohorts experienced a decline in net value). The estimates based on the UKPDS Outcomes Model are similar, suggesting that the average patient gained 0.037 QALYs between 1999 and 2007, and a net value of US$12,921 assuming a value of $200,000 per life year. The estimated net value increases to $16,398 when adding the present discounted value of avoided CHD treatments costs, and an even higher value when including a broader range of complications and the social value of less absenteeism.

These results suggest that despite significant expenditure increases, the quality-adjusted cost of living associated with a prominent chronic disease has fallen. Metrics for productivity of chronic disease management as developed in this line of research may prove useful for aligning payment incentives with the goal of enhanced “value for money.”

Key Terms

diabetes, productivity, value

Authors:

Nilay Shah (Mayo Clinic. Health Care Policy and Research) , Joseph Newhouse (Harvard University. Department of Health Care Policy) , Karen Eggleston (Stanford University. Shorenstein Asia-Pacific Research Center) , Steven Smith (Mayo Clinic. Medicine) and Ernst Bernst (MIT. Sloan School of Management)