Achieving better health, and a better use of

health resources: a companion piece to the

Know Pathology Know Healthcare campaign

The economic value of pathology

Presented by Sarina Lacey

National Pathology Forum 2016

www.TheCIE.com.au

December 2016

Understanding the purpose of the report

There is a ‘rule of thumb’ saying that 70 per cent of

clinical decisions are based on pathology and

precious little else on the value of pathology

No doubt true, but even the source is unknown

Pathology is so central that it can’t be ‘taken out’ of

healthcare to see how medical decisions would be

made without it

So how do we know what it’s worth?

This work focused on contribution of pathology --

patient outcomes -- efficient healthcare spending --

where pathology is more clearly identified as the

source of economic valuewww.TheCIE.com.au2

Understanding the purpose of the report

The work does not provide an estimate of bankable

savings from spending on pathology

The evidence base for such calculations does not

exist

It is likely that there is over/under priced tests, and

over/under used tests

Ultimately aims to great a dialogue around value

based pricing for pathology by understanding how it

adds value (rather than just cost)

www.TheCIE.com.au3

High level value drivers

Economic value for individuals:

■ Maintaining good health, more productive, more present,

greater workforce opportunities, higher income

■ Managing poor health, less absent, less avoidance of higher

performing roles

Economic value for the health system

■ Helping to minimise waste (ineffective treatments)

■ Helping to reduce reducing treatment costs (earlier more

targeted intervention)

■ Providing the information/database to see who is doing

what for what — a tool for performance management, best

practice clinical care

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www.TheCIE.com.au5

Impacts

Economic gains

■ Income and employment gains

■ Improvement in productivity

■ Hospital and health system efficiency

Social wellbeing

■ Health benefits and better health status

■ Reduced risk of disengagement

■ Improved social welfare

Pathology outputs

Test

results

Analysis

of results

Advisory networks with

medical specialists

Participation in

medical management

Outcomes

Physical and

mental patient

health

Patient safety Economic gains Social and

community gains Empowerment

■ Wellness and

wellbeing

■ Mortality and

morbidity

■ Pain and suffering

■ Emergency

response

■ ↓ medication errors

■ ↓ exposure to

toxicity

■ Correct diagnosis

■ Correct treatment

■ workforce

participation

■ ↓ absenteeism,

presenteeism

■ Public health

■ Community

engagement

■ Community

participation

■ Social cohesion

■ Independence

■ Choice

■ Lifetime

options

Pathology sector capital and labour inputs

Laboratories Collection

centres

Courier

networks

Pathologists,

scientists, support,

and management

personnel

ICT

systems

Diagnostics

suppliers R&D

Innovation: new/improved

tests and procedures

What can we say in financial terms/activity?

www.TheCIE.com.au6

Inputs only: taxpayer investment is low relative to other health services and demand trends upwards

Testing rates rise as pathology becomes more

necessary with 7 tests per patient in 2014-15 up

from 5.8 10 years ago

Most services are for those aged 75+, which are

mainly the least expensive tests haematology and

chemical tests

The most common tests ordered by GPs relate to

diabetes

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Measuring outcomes: much harder task

Limited literature on the economic value of

pathology

■ cause/effect/ and attribution is fraught

■ how much prevention/better treatment is achieved because of

pathology information?

Pathology informs the doctor, who makes decisions

based on all available evidence

Patients may or may not adhere to doctors advice or

respond to treatment as expected

www.TheCIE.com.au8

A case study approach: a good first start

Pathology helps Australians with diabetes manage

their condition and minimise risks and

complications

www.TheCIE.com.au9

Economic results for diabetes

Reducing complications from diabetes reduces

costs per person by 2-to-3 fold

When prevention is achieved, people get better

quality of life and avoid co-mordities such as kidney

disease, amputation, eye disease, and myocardial

infarction, and all their avoided costs

Diabetes complications = 14% of potentially

preventable hospitalisations for chronic conditions

Diabetes prevention programs are multi-faceted,

but analysis by Department of Health indicates

they more than pay their way www.TheCIE.com.au10

Economic results for heart attack

A pathology test can inform

safe early ED discharge by

separating cases of chest

pain and heart attack

80% of patients with chest

pain in ED are not having a

heart attack. Troponin result

can discharge 40% early

Currently ~$167million is

being spent on those not

being discharged early but

could be. www.TheCIE.com.au11

Economic results for colorectal cancer

Pathology is vital to

tailored cancer

therapies, which are

achieving unprecedented

survival outcomes

5-year survival for CRC is

up from 47% to 67%

High cost cancer drugs

can be only provided

when they will work

www.TheCIE.com.au12

Improved survival for CRC patients

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2 000

2 500

3 000

3 500

4 000

4 500

5 000

10

15

20

25

30

35

1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Ra

te p

er

10

0 0

00

pe

rso

ns

Age-standardised mortality rate (LHS)

No. of deaths (RHS)

1998 Introduction of hepatic resection.

2004-2006 Introduction of EGFR inhibitors and chemotherapeutics including oxaliplatin, bevacizumab, and

cetuximab.

2006 National bowel cancer screening program introduced.

2008 Scientific evidence published on the status of the KRAS gene and the efficiency of the EGFR inhibitors

2014 Clinical trials demonstrate better health outcomes if EGFR inhibitors are restricted to patients with RAS wild type genes.

MBS funds RAS testing for Stage IV CRC.

2011-2014 EFGR inhibitors are listed on the PBS.

2012 MBS funds KRAS testing for stage IV CRC.

2014 EFGR inhibitors are listed on the PBS.

Pathology identifies those at risk and detects those with cancer early

Pathologists confirm cancer ‘typing’ to support advances in genetics and

pharmacogenomics

Pathology supports success of colonoscopy in early detection and determination of disease type.

Strengthened pathology standards improve quality of specimen collection and analysis

Pathology proves EGFR inhibitors work

Pathology monitors dose – response success of therapies

Being well is valuable!

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A person’s life not shortened by avoidable death

is worth between $1.26 million and $1.4 million

People with 3+ chronic diseases are half as likely

to be in the paid workforce compared to people

that have no chronic diseases = loss to the labour

force, with productivity losses estimated at 10%,

compared to labour participation not being

reduced by chronic disease

‘Presenteeism’ costs the Australian economy

$34.1 billion p. a. = a productivity loss of 2.6%

and a GDP loss of 2.7%

What does it mean for pathology funding

Doesn’t mean funding for pathology is a panacea

But it does mean funding access to quality

pathology information is essential

Need funding level to be ‘right’ in terms of

funding the right amount and type of testing.

Need incentives to innovate and provide better

more accurate information (currently rewards are

largely derived from scale economies)

www.TheCIE.com.au15

What does it mean for pathology funding

Need a competitive and contestable pathology

market to ensure innovation and the sharing of

efficiency gains (i.e. not overly concentrated)

Focus on how to ensure pathology maximises

value, rather than minimises costs

Increased testing activity should typically be

value creating, providing the evidence for

informed prevention, treatment, and monitoring

plans

www.TheCIE.com.au16

Sarina Lacey

Director, Health Economics and Policy

(02) 9250 0800 or 0418 245 560slacey@thecie.com.au

www.TheCIE.com.au