Louis L. Nguyen, MD, MBA, MPH Division of Vascular & Endovascular Surgery

1. Economic Considerations in Defining The SVS Research Priorities Louis L. Nguyen, MD, MBA, MPH Division of Vascular & Endovascular Surgery and the Center for Surgery & Public Health Brigham & Women’s Hospital Harvard Medical School

6. Rising Health Care costs

7. Hidden Costs of Health Care Time off to care for family members $363B (Deloitte Center for Health Solutions) Companies reduce workforce to decrease healthcare costs Increased deductibles and co-pays Puts families at greater financial risk

8. Potential Changes Insurance mandate Reduces adverse selection by forcing everyone to carry insurance Universal health care Single payer controls cost by dictating price Greater income equality among medical specialties Focus on prevention and cost containment Bundled payments Shifts risk on to providers and hospitals

9. Likely Consequences Greater awareness of costs and outcomes Payers and patients will want to know

10. “Cost” – the Other Four-Letter Word Medical professionals avoid dealing with costs “I do what’s best for my patient, regardless of costs” Patients believe health care is a right “I want everything done” Using costs to decide treatment is heartless “Death panels”

11. Why Use Economics Considerations? Economics is the field of study that analyzes the production, distribution, and consumption of goods and services Economics assumes that resources are constrained Economics is objective and quantitative

12. Health care economics is about asymmetric information

13. How Do We Value Health Care?How Do We Prioritize Our Research?

14. Cost Effectiveness Framework Determine analysis perspective Calculate costs Calculate outcomes (effectiveness) Standardize the unit of measure (QALY) Compare cost-effectiveness and make adjustments

15. The Societal Perspective Who benefits? Who pays for the costs? Patients Providers Insurers Society

16. Costs vs. Charges Costis the value of the inputs used to produce a product/service Charge is the price demanded by the seller Opportunity cost is the value of the next best alternative that was forgone

17. Outcomes Cost-Effectiveness Quality-adjusted life-years (QALY) Utility Cost-Benefit Monetary measures

18. Cost-Effectiveness Space Effectiveness Superior Trade-off Inferior Trade-off Costs

19. Using Cost Effectiveness Analyses Incremental Cost Effectiveness Ratio (ICER) Ratio of change in cost to change in effectiveness between one therapy and the next best therapy Cost effectiveness league tables List of increasing cost-effectiveness non-exclusive therapies Therapies are chosen until budget is met or ICER limit is reached

20. Special Considerations

21. High Impact Small improvements in large numbers of people Early improvements can prevent disease

22. Prevention Primary Prevention Strategies to avoid the development of disease Secondary Prevention Strategies to diagnose or treat disease before development of morbidity Tertiary Prevention Strategies to reduce the negative impact of established disease Quaternary Prevention Strategies to avoid consequences of unnecessary treatments

23. Real World Outcomes 59% of patients had maximum diameter less than 5.5cm 42%/69% of patients had anatomy meeting conservative/liberal criteria 41% 5-year sac enlargement rate

24. Treatment Choices Angioplasty/stenting: less costly and but effective Surgical bypass: more costly but more effective Sequential treatment Angioplasty/stenting first Bypass if angioplasty/stenting fails Depends on failure rates and impact of stenting on bypass

25. Mortality Mortality hides poor quality care Mortality ends health care spending LOS measurements in high mortality procedures can be underestimate resources

26. Health Services Research

27. Non-Randomized Trials Advantages Less cost Faster enrollment Reflects real-world patients and practice Disadvantages Treatment bias Complex mathematics to control for confounding

28. Cost Analysis of Face Transplantation vs. Conventional Reconstruction BWH pioneers of full face transplantation (4 to date) Raw results Cost modeling Technology and innovation has costs Assess costs early in the process

29. Provider Induced Demand Heath care is an agency problem with asymmetric information The principal (patient) appoints an agent (doctor) to advise them about consumption of health care The agent is also the supplier of health care The agent influences demand and supply! Current PID evidence is anecdotal or temporally controlled

30. Comparative Effectiveness and Provider Induced Demand Collaboration (EPIC): A Clinical and Economic Analysis of Variation In Health Care Collaboration with the Uniformed Services University Analysis of the TRICARE Heath System (9.3M pts) Patients receive care in two systems Military Hospitals with salaries physicians Private Hospitals with fee-for-service physicians Do physicians induce demand for health care? What are the hidden costs/benefits of treatment?

31. Summary Health care reform is already here Economic analysis is an objective tool to quantify tradeoffs between costs and benefits All large studies should consider costs HSR to look at the way we practice Economics can only show tradeoffs – society must make decisions about which tradeoffs we accept

32. “The medical profession is only one example, though in many respects an extreme one. All professions share some of the same properties. The economic importance of personal and especially family relationships, though declining, is by no means trivial in the most advanced economies; it is based on non-market relations that create guarantees of behavior which would otherwise be afflicted with excessive uncertainty.” --Kenneth J. Arrow, 1963

33. Contact information Louis L. Nguyen, MD, MBA, MPH Vascular & Endovascular Surgery Brigham & Women’s Hospital 75 Francis Street Boston, MA 02115 (857) 307-1920 llnguyen@partners.org