#2915 - Topic 3 Reading Counting Health Care Costs In The United States - Accounting in the New Public Sector

Economic analysis of health care is not a new phenomena

• Cost benefit studies existed in the 1930s and 1950s (Donabedian, 1985)

Since the mid-1980s all the major players in US health care have called for expansion of measurement efforts including cost benefic analysis, and have argued that the measurement of costs and benefits should underlie the allocation of health care resources

Health Care Financing Administration (the US Federal agency overseeing Medicare):

• Desire to “purchase value, the optimal mix of high quality and reasonable cost” (Roper and Hackbarth, 1988)

Early advocates of Diagnosis Related Groupings (DRGs) argued that the introduction of DRGs would lead to better information about costs and benefits

Several accounting researchers have suggested that it is important to study accounting numbers as they appear in situ

• i.e. in real institutions and debates

• e.g. Cooper and Sherer (1984), Hopwood (1987)

Cost benefit analysis involves a particular way of informing and/or justifying resource allocations

Cost benefit studies as texts which have both a surface, “common-sense” meaning and a less apparent meaning which reflects the institutions are structures surrounding their production, content and distribution

The importance of cost benefit analysis is not just that it might be a way of co-ordinating physician behavior at a distance, or that it reflects the way physicians take up the language of economists

• But that physicians take up this technology to protect and construct authority over resources

All of the studies we examine were published in the USA during 1987-1990

Two themes emerge from discussions of health care during this period:

• 1) Provision of health care in the USA is in crisis and chaos

• 2) Perception of physicians under siege

Few individuals pay for all their health care costs directly, although many pay part of the bill for hospitalization, drugs and office visits

Frequently the term “consumer” refers to employers concerned about the costs of providing employees with health insurance benefits

“It is consumer groups and large purchasers of care who will ultimately exert the strongest pressures for cost-effective care” (Bunker, 1988)

Much of the support for President Clinton’s health care policy comes from US businesses concerned about their own share of health insurance expenditures (Arnold et al., 1994)

Health Maintenance Organizations (HMOs)

• Sometimes operate their own hospitals and hire their own physicians

The Veterans Administration runs hospitals but is also fiscally responsible for the care of US military veterans

Boundaries of health care system in the US is unclear

• Creates a system in which interests, activities and discourse become very jumbled and in which terms like “consumer”, “provider” and even “cost” and “benefit” become layered with multiple meanings

  • This jumbled system controls and distributes access to health services without a central body such as a government agency which is responsible for planning

Rising costs and limited access to health care resources is a current unifying them in the discourse of crisis and chaos

The public is also worrying over major diseases which appear to be out of control

Measurement of costs and benefits are frequently a central issue

• Approx. 400 articles in the Medline Index fro 1987 to July 1990 were on cost-benefit, cost effectiveness and quality of care issues

Issues are also widely discussed in the mainstream press

Media discussions of the US health care crisis often cite physicians as a major culprit

• Time Magazine (1988) noted that under pressure to reduce some fees “doctors find ways to protect their incomes from corporate budget cutters”

• Los Angeles Times (1989) editorial argued that physicians have incentives to do more to earn more under the current system

  • Inherent conflict of interest in fee-for-service medicine

In their own discussions, physicians describe themselves as under siege from government policy makers and third-party payers who intrude into the physician’s practice

• American Medical Association’s (AMA) own texts often pose this theme

  • “Physicians become victims of Bottom Line” (AMA, 1990)

Widespread agreement that the US health care system is in crisis, and that rising costs are central to this crisis

There is a repeated them about conflict between the parties involved in health care

• The press and the federal government blame physicians for rising costs

• The AMA chastises both the government and private insurers for interfering in medical practice

Various conflicting descriptions of the motivations driving the system

Physicians also begin to argue that they must now reconcile “social responsibilities” with clinical decisions

• They cite the efforts to monitor and measure clinical outcomes and costs as an infringement on their autonomy

  • Autonomy which they see as socially positive

AMA argues that business acumen is required if physicians are to preserve quality of care and physician autonomy

Economic analysis becomes socially responsible when it furthers these goals and when it is controlled by physicians (Mulkay et al., 1987)

The AMA describes cost benefit analysis as a useful tool for optimizing health care decisions, but underlying the AMA’s discussion of these technologies is a desire to escape further scrutiny and to avoid interference from groups outside the profession

Of the 30 articles studied, only 3 were published in policy journals rather than medical journals

• Cost benefit analysis is mixed in among efficacy studies of drugs and treatments which ignore costs

• Majority are authored by medical doctors (78%)

Found no studies published which had been conducted by people outside the existing structures of medical academia

The issue of funding for both cost benefit research and for the journals represents a conflict present in the publication of medical research in general

Due to the risks associated with surgery most doctors would prefer to treat with transfusions of IVGG “if it were not so expensive”

Authors calculate the additional cost per life saved (they call it the “marginal effectiveness ratio)

Does not calculate or even recognize the “opportunity” cost of using a bed in terms of those turned away

Presents no idea of how “efficient” the market is for gamma globulin, how much profit the company makes, what kind of rebates the company may give large purchasers

We do not know how much third-party payers and patients families will ultimately pay for the gamma globulin

Study’s purpose is to show that public spending for cancer research (and other research) is a good investment in that the medical advances generated by the research will net positive social returns

Examines whether new medical advances for the treatment of heart attack are economically justified

The authors define the benefits as the savings of the hospital costs (measured as billed amounts) and the costs of future care for those with lasting disabilities due to the disease

Authors’ estimate that the total social cost of the...