THE IMPACTS OF EXPERT SYSTEMS ON HEALTH CARE: ECONOMIC CONSIDERATIONS

1. THE IMPACTS OF EXPERT SYSTEMS ON HEALTH CARE:ECONOMIC CONSIDERATIONS MERUERT RAKHIMOVA HEALTH ECONOMICS

2. Telemedicine • Medicine practiced at a distance orhealthcare delivered via telecommunication channels • Includes both diagnoses and treatment

3. Telemedicine • Aids to decision-making (remote expert systems) • Remote sensing (eg. transmittal of patient info from remote site to a collaborator in a distant site, teleconferences) • Collaborative arrangements (real-time management of patients)

4. Premise to the ongoing exponential rise in low-cost computing power • Development of telecommunications  not only data can be exchanged rapidly, but complex systems can be run remotely • Development of large knowledge bases

5. Do clinicians always have the info they need to perform their tasks effectively, efficiently and accurately?

6. Answer? • - Physicians recalled only 50% of patient info 5 min after the appointment; • 60% of physicians surveyed did not know the names of their patients’ drugs; • 20% did not recall the purpose of the patients’ medication (M.J. Ball, J. Lillis, 2000) B. 180,000 patients die each year as a result of medical error (M.J. Ball, J. Lillis, 2000) C. 1.3 mln. Injuries may occur in the U.S. annually during hospitalization; of them 20-70% may be preventable (D.W. Bates et al., 1998)

7. Aids to decision-making ****************************************** Softwares designed to assist physicians with medical knowledge pertinent to patient care ****************************************** • Expert Systems • Clinical Decision Support Systems (CDSS) • Computer-based Patient Record (CPR) • Computerized Physician Order Entry systems (POE)

8. Aids to decision-making EXAMPLES of types of assistance: • diagnostic suggestions • testing prompts • therapeutic protocols • practice guidelines • alerts of potential drug-drug and drug-food reactions • treatment suggestions

9. Effects of expert systems • Impact on quality of health care • Economic impact • Impact on medical education • Other impacts

10. Impact on quality of health care • CDSS can enhance clinical performance for drug prescribing, drug dosing, preventive care (D.L. Hunt, 1998) • Using CDSS helped medication errors to decrease by 55%, from 10.7 events per 1,000 patient-days to 4.86 events per 1,000 p-d. Dose errors decreased 23%, known allergies fell 56%, drug-drug interaction errors fell 40% (D.W. Bates, 1998)

11. Economic impact:CDSS are cost-effective!!! • Issue – rising costs for health care. Prescription drug costs account for 11-14% of total medical expenses and are increasing at > than 16% annually • Solution – to manage costs while increasing quality, service, operating performance  CDSS = ideal tool for managing + structuring data

12. Economic impact (cont’d)How much does it cost to put CDSS into operation? • Scale of initiative • Size of institution *********************************** Eg. $700,000/yr. to implement+maintain CDSS. ROI? Cost savings from the intervention ~$250,000 in the 1st yr. Overall savings -$5-10 mln./yr

13. Impact on medical education: help or hinder? CDSS cannot be considered an educational tool !!! *** • Critiquing systems are more effective than reminding • High physicians compliance during CDSS trials (82.8% - 94.9%). But: Removal of CDSS  physicians revert to previous practicing behavior

14. Other impacts: Pharmacist – part of clinical team • Pharmacists are more often present on the unit and available for questions • Better communication Nursing Staff + Pharmacists

15. Actual effects of expert system on health care 1.Utilization of medical services 2.Need in labor force 3.Patient welfare 4.Price for services and hospital expenditures 5.Insurance premiums 6.Impact on welfare loss

16. 1. Decrease in utilization of med. Services (Q ) • Decrease in average length of stay Tierney et al (1993) found that implementation of a POE system on a medical service resulted in a reduction in the average length-of-stay days by 0.89 days anda 12.7% reduction in charges. • Avoidance of use of superfluous diagnostic tools due to utilization of targeted diagnostic techniques and more rational differential diagnosis

17. 2. Decrease in need in labor force • Less record keeping  less human force is required • Increased availability of physician’s time  more time to spend with a patient/ serve more patients  increased patient satisfaction

18. 3. Patients’ welfare • Increased patients’ satisfaction  • Increased utilization of medical services  • Better general health status of population  • Increased physician utility

19. 4. Prices for services + hospital expenditures Decrease in utilization of medical services, and Decrease in need in labor force Decrease in price for health services – P

20. Price S D D1 Services Figure 1. Decrease in demand of services Wage S D D1 Labor Figure 2. Decrease in demand in labor Decreased price for medical services

21. Decrease in gross hospital expenditures because: 1. Expenditure = Price x Quantity = P x Q 2. Medical malpractice  cost for it’s insurance

22. 5. Insurance premiums Short-run • Increase in cost of services due to high initial installation cost of new IT’S  • Higher insurance premiums  • Decreased willingness to pay  • Shrinkage of pool of the insured  • Even higher insurance premiums  • Further ins. plan drop-outs Long-run • Decrease in prices of medical services  • Decrease in cost of medical insurance  • Higher willingness to pay  • Higher insurance plan enrollment on the part of relatively healthy population Premium = Expected Payout (Q*P) + Adm. Fee *Adm. Fee = const.

23. 6. Impact on welfare loss • WL is a quantitative measure of economic inefficiency. • Stems from resources being used in markets or production where they are not most highly valued. • Is a violation of known equation: Marginal Cost=Marginal Value • Sources of WL in Health Care: - Lack of information/asymmetrical information; - Medical insurance; - Medical practice variations

24. Medical practice variations WL= ½ P*X*N*cov2/n Where: P – price X – quantity N – number of practicing physicians Cov2 – coefficient of variance squared, equal to variance X / (X*)2 n – elasticity or: WL= ½*total spending* cov2/n

25. Price D1 D2 D3 Dnp=mc Quantity Figure 3. High Degree of medical practice variation before introduction of CDSS’s Price D1 Dnp=mc Quantity Figure 4. Lower degree of medical practice variation after introduction of CDSS’s Medical practice variations (cont’d)

26. Decrease in WL • Decrease in medical practice variation, more standardized approach in practicing medicine (valid both for short-term and long-term effects ) • Decrease in expendituresdue to: • Decrease in Quantity of services only in the short-run or: • Decrease in both Price and Quantity in the long-term

27. Short-run WL=½ P *X *N*cov2/n Long-run WL=½ P * X *N*cov2/n Welfare Loss

28. Further implications • Barriers of entry – urban health centers vs. rural large health centers vs. small • Liability - shared or not – Software manufacturer? Hospital?