Roberta J. Labelle

Controlling Health Expenditures- The Canadian Reality

Abstract Canada and the United States have conducted a large-scale social experiment on the effects of alternative ways of funding expenditures for health care. Two very similar societies, with (until recently) very similar systems of providing health care, have adopted radically different systems of reimbursement. The results of this experiment are of increasing interest to Americans, because the Canadian approach has avoided or solved several of the more intractable problems facing the United States. In particular, overall health expenditures have been constrained to a stable share of national income, and universality of coverage (without user charges) eliminates the problems of uncompensated care, individual burdens of catastrophic illness, and uninsured populations. The combination of cost control with universal, comprehensive coverage has surprised some American observers, who have questioned its reality, its sustainability, or both. We present a comparison of the Canadian and American data on expend...

A re-examination of the meaning and importance of supplier-induced demand.

Despite twenty years of work on supplier-induced demand (SID) there has been little discussion or investigation of how inducement affects the health of patients. We develop a conceptual framework for SID which includes the clinical effectiveness of the health services utilized as well as the effectiveness of the agency relationship between the physician and the patient. The framework is used to identify several conceptually distinct types of utilization--each with its own policy implications--which have been intermingled in the SID literature. After examining each type of utilization, we conclude that a continued focus by health economists on the phenomenon of inducement (even within an extended conceptual framework) may be too limited for the development of policies regarding health service utilization.

Do physicians induce demand for medical services

In this paper we provide a critique of an article by Roger Feldman and Frank Sloan that appeared in the Summer 1988 issue of this journal. In that article, the authors contend that there is little evidence to support the notion of supplier-induced demand or the contention that physicians generate demand to avoid the impact on their incomes of government price controls. In this critique, we argue that the evidence on supplier-induced demand and physician responses to price controls does not support the conclusions drawn by Feldman and Sloan. We conclude with a discussion of the implications of the debate for policy formulation and future research.

Guidelines for the clinical and economic evaluation of health care technologies

The health care system is routinely confronted with promising new technologies. In the past, most new technologies have been integrated into clinical practice without a rigorous demonstration of their effectiveness or efficiency. In order to provide a more rational approach to the adoption and utilization of health technology a comprehensive set of guidelines for both clinical and economic evaluation is proposed. While conceived of as an ideal that is unlikely to be universally met in practice, it is argued that decision making can be improved by striving towards this goal. The clinical guidelines stress the advantages of subjecting major new technologies to randomized controlled trials and insisting upon a demonstration of patient benefit in the application of diagnostic technologies. The economic guidelines stress comparisons with relevant alternative uses of the resources and the assessment of the impact on the quality of life. While application of the guidelines will produce rigorous and useful evidence, the final decisions concerning the allocation of health care resources must rest fundamentally on social value judgements and not solely, or even primarily, on informed expert opinion.

Health Economics: An Introduction for Clinicians

Economic issues have had a growing importance in the health care field as the sectors share of the gross national product has risen. Clinicians are under increasing pressure to adopt more cost-effective treatment practices as a result of initiatives being taken by the major third-party payers, government, and business. However, recent publications suggest that there are some misconceptions about economics in health care and the extent to which it is in conflict with good clinical practice. To provide a foundation for the understanding of this field by clinicians, we have outlined several basic notions of health economics.

Implications of Basing Health Care Resource Allocations on Cost-utility Analysis in the Presence of Externalities

Cost-utility analysis is increasingly being advocated as a tool for helping to establish funding priorities among programs and services in the health-care sector. As currently conducted, however, cost-utility analysis is problematic as a basis for achieving allocative efficiency because it excludes externalities. The exclusion of externalities may bias program ranking in unpredictable ways, leading to a non-optimal allocation of resources. Consideration of externalities also raises a number of distributional issues for the evaluation of health services and highlights the important of developing economic evaluation methods that are consistent with the conceptual basis for allocating resources.

Cost-effectiveness in the diagnosis and treatment of carcinoma of unknown primary origin

Between 2% and 9% of patients with cancer present with metastatic nonsquamous cell carcinoma of unknown primary origin. Traditionally, a series of investigations is undertaken to locate the primary origin of the tumour, although many of these tests are often painful or distressing to patients, unsuccessful in locating the primary site and costly to the health care system. Moreover, even if a tumour is found it usually cannot be treated surgically. However, a small number of cancers of unknown primary origin can be cured, arrested or effectively palliated with systemic treatment. This study compares the costs and outcomes of the current practice of comprehensively searching for the primary tumour with those of an alternative, limited approach that identifies only the primary tumours for which relatively effective systemic therapy exists. Decision trees were constructed for the two diagnostic approaches and their associated therapeutic options. Costs and probabilities were integrated with published data on the survival of patients with each type of cancer. The results indicate that the comprehensive diagnostic strategy may increase 1-year survival rates from 11.0% to 11.5%. On the basis of Ontario cost data it is calculated that the additional costs of a comprehensive search for 1000 patients will range from approximately

The impact of recombinant human erythropoietin on medical care costs for hemodialysis patients in Canada

2 million to

Interprovincial Comparisons of Public and Private Sector Long Term Care Facilities for the Elderly in Canada

8 million, depending on the subsequent treatment strategy.

Paying physicians in Canada: minding our Ps and Qs

Recombinant human erythropoietin (r-HuEPO) is an established and effective therapy for anemia related to end stage renal disease. In addition to its clinical effects, it has been associated with significant improvements in quality of life for anemic hemodialysis patients. The therapys impact on overall medical care expenditures for these patients remains uncertain, however. In this study, we examine the costs of r-HuEPO as well as potential offsetting reductions in other medical care costs that might result from the therapy. We used data from a randomized clinical trial, a longitudinal study of hemodialysis patients and the clinical literature to estimate the impact of r-HuEPO on transfusion requirements, transfusion-related illness, hospitalization and transplant success for these patients. We estimate that for patients that otherwise would be transfused, the therapy would reduce blood requirements by nearly 10 units per patient annually and hospital use by 8 days per year. In addition, increased transplant success due to r-HuEPO might result in 150 fewer patient months of dialysis treatments each year. Comparing the dollar value of these reductions with the cost of therapy yields a base case net increase in medical care expenditures of