The Value of Investment in Health Care

1. The Value of Investment in Health Care Better Care, Better Lives

2. The increase in health spending is a frequent topic of debate… U.S. Health Care Expenditures per Person (2000 U.S. $) Source: Health United States 2002, Consumer Price Index (All Items)

3. …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

4. 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

5. Experienced Research Team • MEDTAP International – global health services research firm • Bryan R. Luce, Ph.D., M.B.A • Founder, Chairman, MEDTAP International • Former Director, Office of Research and Demonstrations, US Health Care Financing Administration • Frank Sloan, Ph.D. • Director, Center for Health Policy, Law and Management, Duke University • Josephine Mauskopf, Ph.D. • Global Director of Health Economics, RTI Health Solutions

6. 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

7. 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

8. 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.

9. Overall Value of Investment: Findings 470,000 more deaths Where would we be in 2000 without healthcare advances? 2.3 million more disabled persons $2254 per capita in savings 206 million more days in hospital

10. Findings: Four Common Diseases • Heart attack • Type 2 Diabetes • Stroke • Breast Cancer

11. Why these four? U.S. Population Affected by Conditions Studied, in millions, 2003 • 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

12. Heart Attack

13. Heart Attack:Advances in Care • Improvements in drug therapy • Blood flow restored more quickly (clot-busters) • Blockages better prevented (anti-platelets, cholesterol lowering drugs) • Advances in surgical techniques • 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

14. 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 5-7 days People up and around within days Key risk factors like cholesterol and hypertension are routinely managed Heart Attack:Advances in Care

15. Heart Attack:Improvement in Outcomes Death Rate Due to Heart Attack (Age-adjusted, per 100,000) • Mortality cut nearly in half • Death within 30 days cut from 1 in 4 to 1 in 8 Source: www.cdc.gov/nchs

16. Costs and Outcomes for Medicare Heart Attack Patients Value of improved outcomes: (12% gain in life expectancy) --minus-- Increase in treatment costs*: (Medicare plus out-of-pocket) Net benefit in dollars: $28,632 $26,093 $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)

17. $38.44 Heart Attack: Value of Specific Medical Breakthroughs Breakthroughs vs. Current Standard Treatment Range in Value per Dollar Invested • Beta-blockers • Mobile coronary care units • Statin therapy • Angiography • Rt-PA • Angioplasty w/stenting Source: Published literature

18. Type 2 Diabetes

19. Type 2 Diabetes:Advances in Care • Improvements in drug therapy • Insulin therapy lasts longer and is more convenient • New classes of drugs with fewer side effects • Advances in diagnostic technologies • 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

20. In the 1970s… Insulin agents short-acting; inconvenient dosing schedules Frequent needles sticks to test glucose levels Limited understanding of need to control blood pressure and cholesterol Limited treatment options for complications Today… More effective options for insulin; long acting and more convenient Glucose tests without puncturing the skin Better management of all aspects of disease reduces chances of complications Surgical options for diabetic eye and kidney disease improve quality of life Type 2 Diabetes:Advances in Care

21. 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

22. Costs and Outcomes for Medicare Type 2 Diabetes Patients Value of improved outcomes: (7% gain in life expectancy) --minus-- Increase in treatment costs*: (Medicare plus out-of-pocket) Net benefit in dollars: $16,930 $11,337 $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)

23. Type 2 Diabetes: Value of Specific Medical Breakthroughs Breakthroughs vs. Current Standard Treatment Range in Value per Dollar Invested $36.00 • Tight control of glucose, blood pressure, and cholesterol • Statins • Ace inhibitors • Screening and treatment of diabetic retinopathy Source: Published literature

24. Stroke

25. Stroke:Advances in Care • Improvements in drug therapy • Blood flow restored more quickly (clot-busters) • Better-tolerated, more effective drugs to control blood pressure • Advances in surgical techniques • 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

26. In the 1970s… Treatment options limited; disability rates high Typical discharge to nursing home Limited diagnostic technologies Limited surgical options for prevention Today… With rt-PA more stroke victims resume normal life Acute and subacute rehabilitation widely available New imaging technologies offer faster more precise diagnosis Carotid endarterectomy and implanted microcoil devices can prevent stroke Stroke:Advances in care

27. Stroke:Improvement in Outcomes Death Rate Due to Stroke (Age-adjusted, per 100,000) • Mortality cut by 37 percent • Faster diagnosis • Stroke-related disability after 3 months reduced by up to 30 percent with rt-PA Source: www.cdc.gov/nchs

28. Costs and Outcomes for Medicare Stroke Patients Value of improved outcomes: (10% gain in life expectancy) --minus-- Increase in treatment costs*: (Medicare plus out-of-pocket) Net benefit in dollars: $24,903 $16,035 $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)

29. Stroke: Value of Specific Medical Breakthroughs Breakthroughs vs. Current Standard Treatment Range in Value per Dollar Invested • Clopidogrel • Ticlopidine • rt-PA* • Carotid endarterectomy* *Yields a savings in treatment costs Source: Published literature

30. Breast Cancer

31. Breast Cancer:Advances in Care • Improvements in drug therapy • Adjuvant chemotherapy – more tolerant, less toxic • Better-tolerated hormonal treatments • Advances in surgical techniques • Breast-conserving surgery • Less-invasive biopsy • Advances in diagnostic technologies • Earlier diagnosis

32. In the 1970s… Chemotherapy required hospitalization Chemotherapy poorly tolerated Mastectomies were the norm Few drug therapies existed Mammography not in widespread use Today… 90% of chemotherapy is outpatient New drugs reduce nausea Breast conserving surgery performed with reconstruction New drugs offer higher cure rates and less toxicity Routine mammography leads to earlier diagnosis Breast Cancer:Advances in Care

33. Breast Cancer:Improvement in Outcomes Death Rate Due to Breast Cancer (Age-adjusted, per 100,000) • 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%

34. Costs and Outcomes for Medicare Breast Cancer Patients Value of improved outcomes: (8% gain in life expectancy) --minus-- Increase in treatment costs*: (Medicare plus out-of-pocket) Net benefit in dollars: $22,341 $4,676 $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)

35. Breast Cancer: Value of Specific Medical Breakthroughs Breakthroughs vs. Current Standard Treatment Range in Value per Dollar Invested $36.81 • Letrozole • Breast-conserving surgery • Biennial mammography • Adjuvant chemotherapy • Stereotactic core biopsy Source: Published literature

36. 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