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Tallying up the losers and winners in healthcare spending; and some suggestions for a healthy fix

How can the $120 billion that we spend on healthcare be invested in a way that gets the best and fairest returns for our health?

The Australian Centre for Health Services Innovation (AusHSI), based at the Queensland University of Technology, will hold a forum this Thursday (August 29) to stimulate wider awareness about benefits of being more systematic in how scarce health resources are rationed.

Journalist Mardi Chapman will cover the forum for the Croakey Conference Reporting Service. To help set the scene for the discussions, Nick Graves, Professor of Health Economics and Academic Director of AusHSI, answers some questions below, which our political and other leaders also need to tackle. If only they had the fortitude.

While Graves acknowledges that “good rationing decisions are often at odds with good politics”, he does have some ideas for how to create a healthier political climate for those in search of fairer, smarter health investments.

I particularly like the suggestion for a “cost effectiveness” watchdog. Perhaps this is an area where innovative models for journalism could contribute?

***

Q: You’ve said that “the Australian public do not fully appreciate the fact that healthcare resources are scarce, and choices about their use must be made. There are groups who will get the health care they need and others who will not, because of scarcity. As a nation we need to improve the way we identify who the winners and losers are to be”Who are the winners under our current ad hoc approaches to rationing? And who are the losers?

Nick Graves: There are many examples of winners and losers from poor health decisions in Australia.

If better decisions were made obtaining and using generic drugs, then $1.8bn would be saved in health costs annually (see here and here). It’s shocking that $1.8bn of health dollars are flushed down the toilet year after year; unfortunately this happens all too easily.

There are opportunity costs from this because health budgets are finite, and others with a capacity to benefit miss out on health services. Dalziel found 91 health interventions that deliver a year of life for less than $10,000, which is good value for money.

Had the missing $1.8bn been allocated to these cost-effective services we would have gained a minimum 180,000 extra years of life annually. That’s the equivalent of losing one jumbo jet a month with 375 forty year olds on board. These people are the losers from this decision.

The winners are likely the pharmacy retailers and their cabal.

Another example is that Australian governments recently decided all hospital patients who needed blood transfusions should be given leucodepleted products; previously only high risk groups had this enhanced product.

It is supplied at considerable extra cost by the monopoly supplier of blood products in Australia, the Australian Red Cross Blood Service. A definition of a monopoly is a firm that sets the price and the quantity of a good or service. The ARCBS lobbied hard for this decision. Maybe they are the ‘winners’ from this decision?

At least $60M is spent each year for a small health benefit for Australian tax-payers. The cost per life year gained from universal leucodepltion of blood is $398,943, which is bad value for money.

Before they made a decision the Australian government commissioned research from Newcastle Public Health Institute, and the report warned against the decision on value for money grounds. (Lowe J and Bonevski B, Universal leucodepletion of fresh blood products : a report, comprising: systematic review, stakeholder interviews, economic analysis, summary and recommendations.2001, Newcastle, NSW: Hunter Area Health Service & The University of Newcastle.)

Losers from this decision are regular Australians without a strong collective voice in the health spending debate.  If $60M were invested in some other service that was cheaper per life year gained, society might be better off.

Another use of $2bn would be to change the way surgery is done for early stage endometrial cancer. Recent research showed if the next 1000 surgeries were done using laparoscopic hysterectomy rather than total abdominal hysterectomy, then total health services costs would be reduced by $3,746,221 and there would be better health outcomes following surgery.

Continuing with total abdominal hysterectomy wastes money and harms women, and allocating some resources to changing surgery would reverse this. There are no winners from total abdominal hysterectomy for early stage endometrial cancer, only losers.

*****

Q: You’ve written in The Conversation about the need to make rationing of health services more explicit and evidence-based. Who or what are the three key barriers to this happening?

Nick Graves: Australian health services are not structured to make difficult rationing decisions. Politicians and doctors are responsible for spending decisions. The problem with politicians is that they are vulnerable to media attack if they make a strong rationing decision; they would much prefer to ‘open’ rather than ‘close’ a cancer ward. Doctors tend to maximise benefits for the patients they care for, rather than maximising benefits for society as a whole. Both politicians and doctors are behaving sensibly, from their points of view.

But no-one is particularly worried about those who miss out on health services when scarce resources are allocated to very expensive therapies with very small, if any benefits. It’s seen as an advance in health services that Mrs Smith can stay alive another year thanks to the latest expensive treatment, but what if that money could have been spent to instead to vaccinate 1,000 at-risk children from a life threatening disease?

In the UK, NICE is a national decision making agency for health spending. It is able to appraise all the evidence about cost-effectiveness and make judgements about fairness and equity to inform binding policy for the NHS and the populations it serves.

NICE are able to be NASTY (albeit for the greater good), and make decisions that are politically unpalatable, and they also moderate what doctors do. NICE offers a degree of protection to politicians, and can survive quite well an occasional media beat up. Politicians could even criticise NICE publically while secretly realising their decisions are smart and efficient for the economy. NICE is able to check the clinical desire to maximise benefits for individual patients, and can instead focus on maximising benefits for society as a whole, given scarce resources.

An interesting example is the cancer drug Herceptin. It costs 45,000 – $75,000 per quality adjusted life year gained, and the original study showed improved survival in late-stage (metastatic) breast cancer of 20.3 to 25.1 months.  There are better ‘value for money’ alternatives to Herceptin available, yet Herceptin is funded by the Australian government.

Herceptin enjoyed a strong advocacy campaign managed by the Breast Cancer Network Australia. Their strategy was to focus on deserving individuals; the quotes are from their website…..

“In 2001 Jill Supree, a young mother with HER2-positive breast cancer, became the face of BCNA’s Herceptin campaign”

And the campaign includes quotes that show how politicians were involved directly…..

‘It’s great news [that Herceptin is now available]. It looks like the Prime Minister was listening and Breast Cancer Network Australia has done some great lobbying’

The campaign was smart because the opportunity cost to populations is ignored and the benefits to an individual are highlighted. And they managed to tie a senior politician to the story.

Find me a politician who would deny Herceptin to a young deserving mother who is dying from cancer. Would the same politician worry about a young obese unemployed woman who smokes and drinks too much and comes from a low socio economic group? Would they be calling for a health promotion and education intervention that costs 45,000 – $75,000 per quality adjusted life year gained in order to improve her health outcomes?

Good rationing decisions are often at odds with good politics. The key barriers are:

  • Political risk aversion
  • Not valuing or even understanding the opportunity costs of poor decisions
  • Strong lobby groups
  • Autonomous doctors who maximise individual benefits rather than societal benefits.

****

Q: Who are the key players that might be able to help dismantle these barriers?

Nick Graves: Change can only come from legislation. This would require a radical re-think of funding and supplying health services.

****

Q: Could you briefly outline a strategy for overcoming the single most important of these barriers? Whose desk should it go to?

Nick Graves: A pessimistic answer. Legislators and the AMA must both want this to happen. The AMA will not want medical power challenged and I doubt we will have a government with the resolve to achieve what is needed. Also the status quo is acceptable; the losers from poor decisions are weak and diffuse and no one gives a fluff about them.

An optimistic answer. Using information on cost-effectiveness to improve population health benefits could be a platform for a bold and reforming government, although 3 years is likely too short but a five year term might do it.  One strategy is for an independent (of politics) and effective institution to be established, like NICE. It would make difficult decisions that are rational and based on evidence. It would show leadership when required and it could take resources away from inefficient health services.

An analogy is the setting of Australian interest rates. Prior to the 1990’s, interest rates were a political decision plagued by short-term thinking, risk aversion and poor judgement.

Since the RBA has been given responsibility for setting interest rates the economy has improved: inflation has been lower, no periods of negative growth and the cash rate has been low and stable reducing uncertainty for business and household. Interest rates stopped being a political football and difficult decisions were made that benefitted society, decisions that politicians would not have been game to make.

****

Q: The online era is facilitating innovative new approaches to engaging the community in more sophisticated discussions around health (for e.g. this from Drink Tank). What are some initiatives that could help encourage more useful public engagement in discussions about healthcare rationing?

Nick Graves: If slowing the growth of health spending and using current spending more wisely became a priority for public policy, it would be debated and this would be reflected in the media.

It might be useful to publish the full costs of different health services….the public could look at what their health services were costing the country. The next step would be to publish data on whether the service generated health benefits (or not). Like this….

Adam Elshaug published a good piece that found 156 potentially ineffective and/or unsafe services currently on the MBS schedule.

****

Q: As for the mainstream media, how might researchers and Centres like yours play a more proactive role in public discussions? (Beyond events like the debate)

Nick Graves: We will continue to highlight the gross inefficiencies when they occur in publications in peer reviewed journals, but these are often formal, dense and turgid.

We need a “cost-effectiveness watch” service. Pithy, fun and updated weekly. It would speak up for the consumer and tax-payer, and pressure politicians and doctors to do things better. There could be updates and reviews of whether things have improved over time.

We could encourage established current affairs programs such as Q&A or Insight to hold annual or more regular debates where major health decisions are argued for by experts in a ‘for’ and ‘against’ format. The viewers vote on whether they should be funded with public money. This might engage and empower decision makers to make difficult, unpalatable decisions, and would help educate the public about the true costs of their healthcare, and how hard these decisions are

****

Q: You’ve said that “health services are ripe for evidence-based reform to improve productivity”. What is one achievable goal on this that you would set each of these:

• Consumer groups e.g. CHF.
Nick Graves: Acknowledge that your individual success could be costly in health outcomes to less organised members of the community.

• Community-based health services including general practices.
Nick Graves: Gather knowledge about whether commonly provided services deliver good benefits (e.g. be careful about who you send for colonoscopy – I was recently told by an gastroenterologist that most of the GP referrals for colonoscopy are pointless and provide zero health gain).

• Local Health and Hospital Networks, Medicare Locals.
Nick Graves: Seek to make changes to your services that save costs and improve health benefits and/or access.

• Hospitals.
Nick Graves: Gather data to understand areas of large waste and poor health gains. Work with your clinicians and academics to quantify this (e.g. intervene to stop futile care, why waste hundreds or thousands of dollars torturing someone to death, much better is a brave and frank discussion with them an their family prior to medical escalation)

• AMA, RACGP, RACP, RACS
Nick Graves: Replace the ‘Hippocratic Oath’ with Adam Smith’s ‘Wealth of Nations’

• Health & Medical Deans
Nick Graves: Teach economics and public health to medical students.  I used to teach doctors health economics at the LSE & LSHTM in London. Week one was furrowed brows, folded arms and grunts…..week ten was enthusiastic Stalinist centralised planning of resources to maximise health benefits; god help someone who wanted to spend money without evidence of a strong health benefit, they were evangelical by the end of the course.

• State/Territory Health Ministers, Federal Health Minister
Nick Graves: Accept that health cannot be fixed. There will always be more demand that we can afford to service. Someone will always miss out. Absolve yourself from all responsibility for health spending decisions, set up an Australian NICE and let them do the hard work for you. They will do a better job than you, and your life will be easier. You can attack them when they make a tough decision, but also realise (secretly) that they are aiming to maximise population benefits.

***

Q: You have an interest in health services research and increasing attention and funding for that important area of work. What do you think of the idea that maybe we should invest less in health services and more in other areas that affect health, e.g. equitable access to quality education, healthier living environments, anti racism programs? How do we get the balance right in our focus and spending, can your field help there?

Nick Graves: We have talked about allocating resources within the health sector. Our thinking has been to maximise life years gained from a fixed budget; the challenge with comparing the value for money of investing in ‘health’ vs. ‘education’ or ‘defence’ services is that benefits are measured on different scales.

There are good potential cross-overs between sectors that might be exploited. For example a Minister for Physical Activity, whose KPI is to get more people out of sedentary lifestyles, could have some of the budget from ‘health’, ‘education’ and ‘transport and main roads’. That feels sensible.

Getting the balance right between all sectors is the dark art practised by politicians, and they live and die politically by how well they practise it.

****

• You can hear more from Nick Graves on related matters in this interview with ABC Radio National’s Dr Norman Swan.

• To stay in touch with the Forum debate, follow Mardi Chapman on Twitter, @mardidiane  and #12Bhealthfix

 

 

 

 

 

 

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