The Value of The Value of Investment in Health Investment in Health

CareCare

Better Care, Better Lives

The increase in health spending is a frequent topic of debate…

$2,207

$3,541

$4,461

1980 1990 2000

U.S. Health Care Expenditures per Person (2000 U.S. $)

Source: Health United States 2002, Consumer Price Index (All Items)

…but the value of this investment is seldom part of the discussion.

                           

CBO Issues Warning on Rising Health Care Costs

Senate Republicans in Albany Eye Big Medicaid Cuts

                                                

Medicare Revamp Fails to Cure Angst Over Costs

New evidence finds our nation’s health care dollars are well spent.

Overall, each additional health dollar spent produced a return of $2.40-$3.00 in: Deaths avoided Increased longevity

Advances in care have improved outcomes and quality of life in common diseases Heart attack Type-2 Diabetes

Stroke Breast cancer

Experienced Research Team

MEDTAP International – global health services research firm Bryan R. Luce, Ph.D., M.B.A

Founder, Chairman, MEDTAP International Former Director, Office of Research and Demonstrations,

US Health Care Financing Administration

Frank Sloan, Ph.D. Director, Center for Health Policy, Law and Management,

Duke University

Josephine Mauskopf, Ph.D. Global Director of Health Economics, RTI Health

Solutions

Multi-faceted Research Approach

Overall value of investment 1980 to 2000 Dollar value of gains in annual population health

outcomes versus… …the increase in annual health care expenditures

Focus on four common diseases: Heart attack, type 2 diabetes, stroke, and breast cancer Advances in care Improvements in outcomes Overall value of investment for the Medicare

population Value of specific medical breakthroughs

Conservative Estimates

Estimates of value: Value of gain of 1 year of life = $100,000* Value of less disability and increased

productivity not in overall estimate Benefits and harms of non-health care

changes even out**

*Source: Nordhaus (2002), Blomquist (2001)**e.g. smoking, obesity, exercise, environment

Overall Value of Investment: Findings

Since 1980, per capita expenses are up $2,254, but:

Overall death rate is down 16% Life expectancy from birth is up by 3.2 years Disability rates are down 25% for people

over 65* 56% fewer days are spent in the hospital

Health gains of $2.40 to $3.00 per dollar invested

*Value of this improvement not quantified.

Overall Value of Investment: Findings

$2254 per $2254 per capitacapita

ininsavings savings

470,000470,000moremore

deathsdeaths

2.32.3millionmillionmoremore

disableddisabledpersonspersons

206206millionmillionmoremore

days indays inhospitalhospital

Where would we be in 2000 without healthcare advances?

Findings: Four Common Diseases

Heart attack Type 2 Diabetes Stroke Breast Cancer

Why these four?

Common conditions High disability and

death rates Nearly all at risk for

one of these diseases

Medical breakthroughs have improved outcomes

Value of investment not documented

17

2.2

4.7

7.6

HeartAttack

Type 2Diabetes

Stroke BreastCancer

U.S. Population Affected by Conditions Studied, in millions, 2003

Source: American Heart Association; www.diabetes.org; www.cdc.gov/nchs

Heart Attack

Heart Attack:Advances in Care

Improvements in drug therapy Blood flow restored more quickly (clot-busters) Blockages better prevented (anti-platelets,

cholesterol lowering drugs) Advances in surgical techniques

PTCA reopens arteries—more effective, less invasive

Stents keep blood vessels open Advances in diagnostic technologies

Electrocardiograms and diagnostic imaging provide more rapid, precise diagnoses

Heart Attack:Advances in Care

In the 1970s… 5-7 days in critical

care; 3-4 weeks in general ward

Complete bed rest for several weeks

Minimal understanding of risk factors/ preventive measures

Today… Total hospital stay

of 5-7 days

People up and around within days

Key risk factors like cholesterol and hypertension are routinely managed

Heart Attack:Improvement in Outcomes

Mortality cut nearly in half

Death within 30 days cut from 1 in 4 to 1 in 8

345.2

186.9

1980 2000

Death Rate Due to Heart Attack(Age-adjusted, per 100,000)

Source: www.cdc.gov/nchs

Costs and Outcomes for Medicare Heart Attack Patients

*Five-year costs 1985-1989 versus 1995-1999, Medicare plus out-of-pocketSource: Analysis of Medicare Part A and Part B and National Long-Term Care Survey data (1982-2000)

Value of improved outcomes:

(12% gain in life expectancy)

--minus--

Increase in treatment costs*:

(Medicare plus out-of-pocket)

Net benefit in dollars:

$28,632

$26,093

$2539Value of $1.10 per dollar invested

Heart Attack: Value of Specific Medical Breakthroughs

Beta-blockers Mobile coronary care

units Statin therapy Angiography Rt-PA Angioplasty w/stenting

Breakthroughs vs. Current Standard Treatment

Range in Value per Dollar Invested

$1.42

At Least As Much As

$38.44

Source: Published literature

Type 2 Diabetes

Type 2 Diabetes:Advances in Care

Improvements in drug therapy Insulin therapy lasts longer and is more convenient New classes of drugs with fewer side effects

Advances in diagnostic technologies Hemoglobin A1c testing and glucose monitoring kits

allow more accurate, less invasive readings Advances in surgical techniques

Laser surgery and vitrectomy procedures treat eye disease

Dialysis and transplant surgery lengthen and improve life

Type 2 Diabetes:Advances in Care

In the 1970s… Insulin agents short-

acting; inconvenient dosing schedules

Frequent needles sticks to test glucose levels

Limited understanding of need to control blood pressure and cholesterol

Limited treatment options for complications

Today… More effective options for

insulin; long acting and more convenient

Glucose tests without puncturing the skin

Better management of all aspects of disease reduces chances of complications

Surgical options for diabetic eye and kidney disease improve quality of life

Type 2 Diabetes:Improvement in Outcomes

Advances support tight management of disease; better outcomes** Tight glucose control decreases mortality

by 10%, complications** by 25% Tight blood pressure control decreases

mortality by 32%, heart failure by 56%, stroke by 44%

Gains in employment and productivity with drug therapy to manage disease

*Higher incidence—linked to increased rates of obesity—has led to increased mortality rates (up 39%)**eye, kidney, and nerve disease

Costs and Outcomes for Medicare Type 2 Diabetes Patients

*Five-year costs 1985-1989 versus 1995-1999, Medicare plus out-of-pocketSource: Analysis of Medicare Part A and Part B and National Long-Term Care Survey data (1982-2000)

Value of improved outcomes:

(7% gain in life expectancy) --minus--

Increase in treatment

costs*:(Medicare plus out-of-

pocket)

Net benefit in dollars:

$16,930

$11,337

$5,593Value of $1.49 per dollar invested

Type 2 Diabetes: Value of Specific Medical Breakthroughs

Tight control of glucose, blood pressure, and cholesterol

Statins Ace inhibitors Screening and

treatment of diabetic retinopathy

Breakthroughs vs. Current Standard Treatment

Range in Value per Dollar Invested

$3.00

At Least As Much As

$36.00

Source: Published literature

Stroke

Stroke:Advances in Care

Improvements in drug therapy Blood flow restored more quickly (clot-busters) Better-tolerated, more effective drugs to control blood

pressure Advances in surgical techniques

PTCA reopens arteries—more effective, less invasive Carotid endarterectomy clears plaque in carotid

arteries Advances in diagnostic technologies

Improvements in brain imaging, such as weighted imaging, magnetic resonance angiography

Stroke:Advances in care

In the 1970s… Treatment options

limited; disability rates high

Typical discharge to nursing home

Limited diagnostic technologies

Limited surgical options for prevention

Today… With rt-PA more stroke

victims resume normal life Acute and subacute

rehabilitation widely available

New imaging technologies offer faster more precise diagnosis

Carotid endarterectomy and implanted microcoil devices can prevent stroke

Stroke:Improvement in Outcomes

Mortality cut by 37 percent

Faster diagnosis Stroke-related

disability after 3 months reduced by up to 30 percent with rt-PA

96.2

60.8

1980 2000

Death Rate Due to Stroke(Age-adjusted, per 100,000)

Source: www.cdc.gov/nchs

Costs and Outcomes for Medicare Stroke Patients

*Five-year costs 1985-1989 versus 1995-1999, Medicare plus out-of-pocketSource: Analysis of Medicare Part A and Part B and National Long-Term Care Survey data (1982-2000)

Value of improved outcomes:

(10% gain in life expectancy)

--minus--

Increase in treatment costs*:

(Medicare plus out-of-pocket)

Net benefit in dollars:

$24,903

$16,035

$8,868Value of $1.55 per dollar invested

Stroke: Value of Specific Medical Breakthroughs

Breakthroughs vs. Current Standard Treatment

Range in Value per Dollar Invested

$2.00

$6.00

At Least As Much As

Source: Published literature

Clopidogrel Ticlopidine rt-PA* Carotid

endarterectomy*

*Yields a savings in treatment costs

Breast Cancer

Breast Cancer:Advances in Care

Improvements in drug therapy Adjuvant chemotherapy – more tolerant,

less toxic Better-tolerated hormonal treatments

Advances in surgical techniques Breast-conserving surgery Less-invasive biopsy

Advances in diagnostic technologies Earlier diagnosis

Breast Cancer:Advances in Care

In the 1970s… Chemotherapy required

hospitalization Chemotherapy poorly

tolerated Mastectomies were the

norm

Few drug therapies existed

Mammography not in widespread use

Today… 90% of chemotherapy is

outpatient New drugs reduce nausea

Breast conserving surgery performed with reconstruction

New drugs offer higher cure rates and less toxicity

Routine mammography leads to earlier diagnosis

Breast Cancer:Improvement in Outcomes

Mortality cut by 21 percent

Five-year overall survival rates increased from 76.9% to 86.6%

Risk of developing metastatic disease declined from 40% to 15%

32.3

25.4

1980 2000

Death Rate Due to Breast Cancer(Age-adjusted, per 100,000)

Costs and Outcomes for Medicare Breast Cancer Patients

*Five-year costs 1985-1989 versus 1995-1999, Medicare plus out-of-pocketSource: Analysis of Medicare Part A and Part B and National Long-Term Care Survey data (1982-2000)

Value of improved outcomes:

(8% gain in life expectancy) --minus--

Increase in treatment

costs*:(Medicare plus out-of-

pocket)

Net benefit in dollars:

$22,341

$4,676

$17,665

Value of $4.80 per dollar invested

Breast Cancer: Value of Specific Medical Breakthroughs

Letrozole Breast-conserving

surgery Biennial mammography Adjuvant chemotherapy Stereotactic core biopsy

Breakthroughs vs. Current Standard Treatment

Range in Value per Dollar Invested

$3.27

At Least As Much As

$36.81

Source: Published literature

Policy Recommendations

HHS should include a measure of health benefits gained in its annual report on health care spending

Further study is needed on the role of innovation in improving health

Employers and health care providers should account for the benefits of a healthier workforce

Discussions of coverage for uninsured should consider value of investing in health care for all Americans—not just the costs