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Healthcare: Are we demanding bad goods?

November 16, 2012

Submitted by Scott Robertson, Master Program in Health Economics and Policy

Details is a trendy American style magazine showcasing movie stars and the latest in everything fashionable and chic.  So when they name a health economist as one of the 50 most influential men under 45 it should raise a well-groomed eyebrow (or two).

As if that doesn’t give him enough credibility, David Cutler is one of the most-cited minds in modern health economics with a persistent focus on driving the discussion of quality.  Modern Healthcare recently said he is one of the 30 people likely to have a significant impact on the future of healthcare.  Plus he’s a professor at MIT and was an advisor to U.S. Presidents Clinton and Obama.

In short: Cutler is a big deal.  If the UPF, and ostensibly the Barcelona GSE want to prove the profile of their economics program, attracting this star to inaugurate the academic year could be an indicator of success.  The auditorium filled to standing-room only shows the opportunity was not lost on students either.

UPF Economics Department

David Cutler delivers the UPF Economics Department opening lecture in October 2012. Photo credit: UPF

David Cutler told us something we probably already knew.  Countries continue to spend an increasing amount of money on healthcare.  This probably wasn’t news to anyone in the audience, but the reasons why were likely a surprise to many.  Despite the significant differences in funding models, philosophy, and structures, virtually all healthcare systems share a very common and disappointing characteristic: They are very effective in treating people more, but do a very poor job of treating people better.

An impromptu audience survey by show of hands revealed more half of the people in the room who have been treated for back pain received an incorrect and in fact a bad treatment.  An X-ray for back pain doesn’t change the care but it does give an unnecessary dose of radiation.  Irrelevant findings from the X-ray can compound the error, causing more tests, treatments, and surgeries that are almost always unnecessary, expensive, and sometimes harmful.  And even though clinicians agree with guidelines clearly showing X-rays should not be used in these cases, it hasn’t stopped the practice.

And why should it?  “More is better” is a fundamental concept of economics and of human behaviour.  Healthcare services are consumed as a proxy for health, so if we consume more we should be healthier – and happier.  Despite mountains of evidence about what should (and shouldn’t) be done, practitioners continue to provide – and patients continue to demand – the wrong care.  Cutler says up to 30% of services provided are unnecessary and ineffective.  So how do we provide better treatment rather than just providing more treatment?  This is a question he continues to pursue.

“Money follows the goal that you want”

– David Cutler (Harvard University)
“The Continuing Search for the Ideal Health System” – UPF Economics Department Opening Lecture 2012-13

Video: lecture recap (lecture is in English with some commentary in Catalan)

“Money follows the goal that you want” he reminds the audience, which also points to how we ended up in this situation in the first place.  Healthcare is big business –  in the U.S. alone spending is approaching $3 trillion annually.  For the most part, healthcare providers and systems are paid by the number of patients seen and treatments performed.  Whether or not the treatment was appropriate and effective is almost never considered before handing over the cheque.  In a fee-for-service model there can even be an incentive to provide poor care, because the patient will need to consume more services which in turn generates more revenue for the provider.  But changing compensation mechanisms to reward quality is no easy task, and even then, it doesn’t always work the way we would hope.

It is easy to place the blame on providers, after all, it is up to clinicians to order diagnostics and to provide access to care.  But are consumers demanding a “bad” in healthcare?  Cutler points out one of the key characteristics of high-performance organizations is to have engaged clients.  Patients put their trust in the education of physicians, nurse practitioners, pharmacists, and other clinicians to apply specialized knowledge and skill to help achieve health.  But how do consumers know when they are demanding a bad, and that consuming less may actually be good?

GSE students demonstrated their engagement by asking the majority questions from the audience, a fact the directors delightfully pointed out over the following days.  We are now left to consider not only the traditional policy questions of who will pay and how, but also how to do more of treating people better.

And that, future economists, is the multi-trillion-dollar question.

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