Alan M. Garber, M.D., Ph.D. Center for Primary Care and Outcomes Research Center for Health Policy...
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Alan M. Garber, M.D., Ph.D.Center for Primary Care and Outcomes ResearchCenter for Health PolicyStanford University
VA Palo Alto Health Care System
PCOR/CHP 10th Anniversary CelebrationSeptember 16, 2008
CENTER FOR HEALTH POLICYCENTER FOR PRIMARY CARE AND OUTCOMES RESEARCH
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CENTER FOR HEALTH POLICYCENTER FOR PRIMARY CARE AND OUTCOMES RESEARCH
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Alan M. Garber, M.D., Ph.D.Center for Primary Care and Outcomes ResearchCenter for Health PolicyStanford University
VA Palo Alto Health Care System
PCOR/CHP 10th Anniversary CelebrationSeptember 16, 2008
![Page 4: Alan M. Garber, M.D., Ph.D. Center for Primary Care and Outcomes Research Center for Health Policy Stanford University VA Palo Alto Health Care System.](https://reader036.fdocuments.us/reader036/viewer/2022062516/56649d455503460f94a225f2/html5/thumbnails/4.jpg)
Alan M. Garber, M.D., Ph.D.Center for Primary Care and Outcomes ResearchCenter for Health PolicyStanford University
VA Palo Alto Health Care System
PCOR/CHP 10th Anniversary CelebrationSeptember 16, 2008
![Page 5: Alan M. Garber, M.D., Ph.D. Center for Primary Care and Outcomes Research Center for Health Policy Stanford University VA Palo Alto Health Care System.](https://reader036.fdocuments.us/reader036/viewer/2022062516/56649d455503460f94a225f2/html5/thumbnails/5.jpg)
Alan M. Garber, M.D., Ph.D.Center for Primary Care and Outcomes ResearchCenter for Health PolicyStanford University
VA Palo Alto Health Care System
PCOR/CHP 10th Anniversary CelebrationSeptember 16, 2008
![Page 6: Alan M. Garber, M.D., Ph.D. Center for Primary Care and Outcomes Research Center for Health Policy Stanford University VA Palo Alto Health Care System.](https://reader036.fdocuments.us/reader036/viewer/2022062516/56649d455503460f94a225f2/html5/thumbnails/6.jpg)
Alan M. Garber, M.D., Ph.D.Center for Primary Care and Outcomes ResearchCenter for Health PolicyStanford University
VA Palo Alto Health Care System
PCOR/CHP 10th Anniversary CelebrationSeptember 16, 2008
![Page 7: Alan M. Garber, M.D., Ph.D. Center for Primary Care and Outcomes Research Center for Health Policy Stanford University VA Palo Alto Health Care System.](https://reader036.fdocuments.us/reader036/viewer/2022062516/56649d455503460f94a225f2/html5/thumbnails/7.jpg)
Should we be concerned about rising health expenditures?
It’s about value
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Should we be concerned about rising health expenditures?
According to economists, Increased longevity since 1970 worth
$95 trillion (3x health spending) Improvements in health and physical
function highly cost-effective
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Citizens of other nations are also living longer
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0
5
10
15
20
25
30
35
Jan Feb Mar Apr May Jun
Food
Gas
Motel
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It’s also about the money
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Medicare sources of non-interest income and expendituresas a percentage of Gross Domestic Product
Source: Office of the Actuary, CMS; 2008 Medicare Trustees Report
Unfunded liability $7600 per
working age adult*
*In constant 2008 dollars
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Why we spend more: the usual suspects
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High pricesHigh Prices
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High pricesHigh Prices
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Misaligned incentives
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Cutting costs
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Cutting costs with little political pain
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Promote electronic health records
$77 billion annual savings (Obama advisers)
$88 billion 10-year savings (Lewin group)
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Reduce administrative costs
$ 43 billion annual savings (Obama advisers)
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Prevention and disease management: $81 billion annually (Obama health advisers); more than $493 billion over 10 years (Lewin Group)
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Additional opportunities for savings
INITIATIVE 10-YEAR SAVINGS
“Comparative effectiveness”
(Center for Medical Effectiveness)
Align payment incentives
Improved health insurance markets
Limit health insurance tax exclusion
$368 billion*
$457 billion
????
????
*Lewin Associates calculations, in Bending the Curve, Commonwealth Fund Commission on a High Performance Health System, Dec. 2007
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Cost control efforts must cut growth rate to have lasting effects
The key to sustained savings: better incentives based on better information
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Medical interventions will need to be judged by the value they provide
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COX-2 Inhibitors vs NSAIDS
Cha
nge
in c
osts
Gain in health benefit (QALYs)
Comparator: Naproxen
0 0.100.05
$12k
$6k
$0
Source: Spiegel et al., The Cost-Effectiveness of Cyclooxygenase-2 Selective Inhibitors in the Management of Chronic Arthritis, Ann Intern Med. 2003;138:795-806.
$100k per
QALY
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COX-2 Inhibitors vs NSAIDS
Cha
nge
in c
osts
Gain in health benefit (QALYs)
Comparator: Naproxen
Assumption: Excludes effects on heart
Change in cost: $11,600
Change in benefit: 0.04 QALYs
Incremental CER: $290,000/QALY 0 0.100.05
$12k
$6k
$0
Source: Spiegel et al., The Cost-Effectiveness of Cyclooxygenase-2 Selective Inhibitors in the Management of Chronic Arthritis, Ann Intern Med. 2003;138:795-806.
$100k per
QALY
Basecase
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COX-2 Inhibitors vs NSAIDS
Cha
nge
in c
osts
Gain in health benefit (QALYs)
Comparator: Naproxen
Assumption: INCLUDES effects on heart
Change in cost: $11,600
Change in benefit: 0.03 QALYs
Incremental CER: $395,000/QALY 0 0.100.05
$12k
$6k
$0
Source: Spiegel et al., The Cost-Effectiveness of Cyclooxygenase-2 Selective Inhibitors in the Management of Chronic Arthritis, Ann Intern Med. 2003;138:795-806.
$100k per
QALY
Basecasew/ heart
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COX-2 Inhibitors vs NSAIDS
Cha
nge
in c
osts
Gain in health benefit (QALYs)
Comparator: Naproxen
Assumption: High-risk patients
Change in cost: $4,720
Change in benefit: 0.08 QALYs
Incremental CER: $56,000/QALY 0 0.100.05
$12k
$6k
$0
Source: Spiegel et al., The Cost-Effectiveness of Cyclooxygenase-2 Selective Inhibitors in the Management of Chronic Arthritis, Ann Intern Med. 2003;138:795-806.
$100k per
QALY
Basecasew/ heart
High risk
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Moving to a cost-effectiveness criterion shifts both expenditures and outcomes
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Reducing expenditure growth in 2 steps
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1. Better financing and payment
Payment incentives for more effective and efficient care-will almost certainly require major IT investments-remove barriers to more effective payment mechanisms
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2. Better information
Produce comparative effectiveness and cost-effectiveness information
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Value-enhancing innovation will be rewarded