The Value of Investment
in Health Care
Better Care, Better Lives
The increase in health spending is a
frequent topic of debate…
U.S. Health Care Expenditures per
Person (2000 U.S. $)
$4,461
$3,541
$2,207
1980
1990
2000
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



Frank Sloan, Ph.D.


Founder, Chairman, MEDTAP International
Former Director, Office of Research and Demonstrations, US
Health Care Financing Administration
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
Where would we be in 2000
without healthcare advances?
470,000
more
deaths
2.3
million
more
disabled
persons
$2254 per
capita
in
savings
206
million
more
days in
hospital
Findings: Four Common Diseases




Heart attack
Type 2 Diabetes
Stroke
Breast Cancer
Why these four?
U.S. Population Affected by
Conditions Studied,
in millions, 2003
17



7.6

4.7
2.2

Heart
Attack
Type 2
Diabetes
Stroke
Breast
Cancer
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
Source: American Heart Association; www.diabetes.org; www.cdc.gov/nchs
Heart Attack
Heart Attack:
Advances in Care

Improvements in drug therapy



Advances in surgical techniques



Blood flow restored more quickly (clot-busters)
Blockages better prevented (anti-platelets, cholesterol
lowering drugs)
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 57 days


People up and around
within days
Key risk factors like
cholesterol and
hypertension are
routinely managed
Heart Attack:
Improvement in Outcomes
Death Rate Due to
Heart Attack
(Age-adjusted, per 100,000)
345.2

186.9
1980
2000
Source: www.cdc.gov/nchs

Mortality cut nearly in
half
Death within 30 days
cut from 1 in 4 to 1 in 8
Costs and Outcomes for Medicare Heart
Attack Patients
Value of improved outcomes: $28,632
(12% gain in life expectancy)
--minus-Increase in treatment costs*: $26,093
(Medicare plus out-of-pocket)
Net benefit in dollars:
$2539
Value of $1.10 per dollar invested
*Five-year costs 1985-1989 versus 1995-1999, Medicare plus out-of-pocket
Source: Analysis of Medicare Part A and Part B and National Long-Term Care Survey data (1982-2000)
Heart Attack:
Value of Specific Medical Breakthroughs
Breakthroughs vs. Current Standard Treatment
Range in Value per Dollar Invested
$38.44





$1.42
At Least

As Much As
Source: Published literature
Beta-blockers
Mobile coronary care units
Statin therapy
Angiography
Rt-PA
Angioplasty w/stenting
Type 2 Diabetes
Type 2 Diabetes:
Advances in Care

Improvements in drug therapy



Advances in diagnostic technologies


Insulin therapy lasts longer and is more convenient
New classes of drugs with fewer side effects
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…
Today…

Insulin agents short-acting;
inconvenient dosing
schedules

More effective options for
insulin; long acting and
more convenient

Frequent needles sticks to
test glucose levels

Glucose tests without
puncturing the skin

Limited understanding of
need to control blood
pressure and cholesterol

Better management of all
aspects of disease reduces
chances of complications

Limited treatment options
for 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
Value of improved outcomes: $16,930
(7% gain in life expectancy)
--minus-Increase in treatment costs*: $11,337
(Medicare plus out-of-pocket)
Net benefit in dollars:
$5,593
Value of $1.49 per dollar invested
*Five-year costs 1985-1989 versus 1995-1999, Medicare plus out-of-pocket
Source: Analysis of Medicare Part A and Part B and National Long-Term Care Survey data (1982-2000)
Type 2 Diabetes:
Value of Specific Medical Breakthroughs
Breakthroughs vs. Current Standard Treatment
Range in Value per Dollar Invested
$36.00


$3.00


At Least
Source: Published literature
As Much As
Tight control of glucose,
blood pressure, and
cholesterol
Statins
Ace inhibitors
Screening and treatment of
diabetic retinopathy
Stroke
Stroke:
Advances in Care

Improvements in drug therapy



Advances in surgical techniques



Blood flow restored more quickly (clot-busters)
Better-tolerated, more effective drugs to control blood
pressure
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…
Today…

Treatment options limited;
disability rates high

With rt-PA more stroke
victims resume normal life

Typical discharge to
nursing home

Acute and subacute
rehabilitation widely
available

Limited diagnostic
technologies

New imaging technologies
offer faster more precise
diagnosis

Limited surgical options for
prevention

Carotid endarterectomy
and implanted microcoil
devices can prevent stroke
Stroke:
Improvement in Outcomes
Death Rate Due to Stroke
(Age-adjusted, per 100,000)

96.2

60.8
1980
2000
Source: www.cdc.gov/nchs

Mortality cut by 37
percent
Faster diagnosis
Stroke-related disability
after 3 months reduced
by up to 30 percent with
rt-PA
Costs and Outcomes for Medicare Stroke
Patients
Value of improved outcomes: $24,903
(10% gain in life expectancy)
--minus-Increase in treatment costs*: $16,035
(Medicare plus out-of-pocket)
Net benefit in dollars:
$8,868
Value of $1.55 per dollar invested
*Five-year costs 1985-1989 versus 1995-1999, Medicare plus out-of-pocket
Source: Analysis of Medicare Part A and Part B and National Long-Term Care Survey data (1982-2000)
Stroke:
Value of Specific Medical Breakthroughs
Breakthroughs vs. Current Standard Treatment
Range in Value per Dollar Invested
$6.00




$2.00
At Least
Source: Published literature
Clopidogrel
Ticlopidine
rt-PA*
Carotid
endarterectomy*
As Much As
*Yields a savings in treatment costs
Breast Cancer
Breast Cancer:
Advances in Care

Improvements in drug therapy



Advances in surgical techniques



Adjuvant chemotherapy – more tolerant, less
toxic
Better-tolerated hormonal treatments
Breast-conserving surgery
Less-invasive biopsy
Advances in diagnostic technologies

Earlier diagnosis
Breast Cancer:
Advances in Care
In the 1970s…
Today…

Chemotherapy required
hospitalization

90% of chemotherapy is
outpatient

Chemotherapy poorly
tolerated

New drugs reduce nausea

Mastectomies were the
norm

Breast conserving surgery
performed with
reconstruction

Few drug therapies existed

New drugs offer higher
cure rates and less toxicity

Mammography not in
widespread use

Routine mammography
leads to earlier diagnosis
Breast Cancer:
Improvement in Outcomes
Death Rate Due to
Breast Cancer
(Age-adjusted, per 100,000)
32.3


25.4

1980
2000
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%
Costs and Outcomes for Medicare Breast
Cancer Patients
Value of improved outcomes: $22,341
(8% gain in life expectancy)
--minus-Increase in treatment costs*: $4,676
(Medicare plus out-of-pocket)
Net benefit in dollars: $17,665
Value of $4.80 per dollar invested
*Five-year costs 1985-1989 versus 1995-1999, Medicare plus out-of-pocket
Source: Analysis of Medicare Part A and Part B and National Long-Term Care Survey data (1982-2000)
Breast Cancer:
Value of Specific Medical Breakthroughs
Breakthroughs vs. Current Standard Treatment
Range in Value per Dollar Invested
$36.81




$3.27

At Least
As Much As
Source: Published literature
Letrozole
Breast-conserving surgery
Biennial mammography
Adjuvant chemotherapy
Stereotactic core biopsy
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