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Economics and arthritis.

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Since 1970, there have been two unsuccessful
attempts on a national level to control the escalating
cost of medical care. The first was an attempt to
influence the rising cost of medical care by legislation
initiated in the 1970s, which led to the present diagnostic-related group system with regulated prices. The
second attempt was “guided competition,” exemplified by explicit support of prepaid health plans. This
support is evidenced by the encouragement of employers to offer prepaid capitated plan options to employees and by measures making prepaid plans available to
Medicare recipients. We are now entering the third
attempt, the “guideline effort.” with both insurers and
physicians turning to consensus documents for specification of the appropriate amounts and kinds of treatments to be used in specific clinical situations. The
1981 Guidelines for Rheumatic Disease Management
and the 1986 Guidelines for Reviewers of Rheumatic
Disease Care released by the Council on Kheumatologic Care of the American Rheumatism Association
(now the American College of Rheumatology) are
examples of this most recent control device.
There is early discussion of the next intervention-the
explicit rationing of medical servicespossibly because of anticipation of the inability of all
of these other techniques to significantly change the
positive slope of aggregate costs of US medical care
over time. A form of rationing through ability to pay
has been in effect for some time. The advent of modem
From the Rosalind Russell Multipurpose Arthritis Center,
Department of Medicine, University of California, San Francisco.
Wallace V. Epstein, MD: Professor of Medicine.
Address reprint requests to Wallace V. Epstein. MD.
Department of Medicine. University of California School of Medicine, 350 Parnassus Avenue, Suite 600. San Francisco, CA 941430920.
Arthritis and Rheumatism, Vol. 33, No. 5 (May 1990)
technologic medicine has made this practice the subject of much negative public comment regarding the
unequal access of all citizens to such advances.
Central to the impetus to move from one effort
to the next is the fact that “ U S health spending, the
largest in the world in both absolute and relative terms,
continues to increase more rapidly than spending in
other countries, and the gap continues to widen,” and
furthermore, “it performs relatively poorly in terms of
access and gross outcome measures” (1). The driving
force behind the cost explosion is, in large part, the
growth of high-cost, high-technology medicine in the
context of a system that encourages doing everything
that might be beneficial to the patient. We are attempting
to regulate, encourage competition, and use guidelines to
control the excess use of modem technologies (2). These
technologies include surgical procedures that were beyond imagination a few years ago, machines whose
capacities can rival the miracles of surgery (e.g., the
dissolution of renal stones), and drugs that finally do
what early advertisements promised. AU 3 of these areas
of ‘technologic advancement lead to the presence in
society of a large number of persons who are not
restored to an existence free from medical care, but who
have become our technology-dependent population,
needing continued access to costly care, which adds to
the problem of increasing costs.
Not neglected in all of this has been the role of
the physician as recipient of some of the medical care
dollars, but more vitally, as the irreplaceable decisionmaker. In the drive for classification and explication of
physicians’ roles has come recognition that evaluation
and management services may not be fully compensated. The recent report by Hsiao et a1 (3) is leading to
adjusted Medicare Part B payment schedules (3,4). This
brings us to rheumatology and economics.
Surely no clinical specialty can be further from
the cost-spiraling, high-technology procedures than
rheumatology. We refer patients for magnetic resonance imaging studies, arthroplasty, and even coronary artery surgery and cataract extraction, but we
perform none of these. Arthrocentesis is about the
only high-technology procedure we perform. How
could we be anything but “victims” of the regulation,
imposed competition, and guidelines that should properly be directed toward others? It is from this relatively innocent vantage point that we can observe
what is happening to those specialties we always
thought needed regulation or competition ( 5 ) . There
are, however, aspects of caring for persons with
chronic illness, especially the musculoskeletal illnesses that are so prevalent in our rapidly aging
population, that place us closer to the problcm than
may be immediately apparent.
One of the most striking bits of empiric data
concerning the utilization of low- and high-technology
procedures is the variability with which a particular
procedure is performed or prescribed for what appear
to be similar clinical indications. Wennberg and Gittelsohn started this line of research a number of years
ago by recording large variations in treatment patterns
within small geographic areas (6,7). Others have accumulated similar data concerning unexplained variations
in and inappropriate use of various procedures (8).
Treatment patterns for illnesses may be classified as being of a high, moderate, or low discretionary
nature. Most of the illnesses and interventions associated with rheumatology fit into the high discretionary
class. particularly those involving office visits and
basic laboratory tests (9). It is the multiplier effect of
the prevalence of these illnesses that make the small
shifts in treatment patterhs a major element in the cost
of US health care (10,ll). Most persons with arthritis
are under the care of physicians who are not rheumatologists, but we write the guidelines, endorse the
drugs, and give the postgraduate lectures.
As economists gather facts about what physicians do and examine their findings in the light of
known market forces, they reach two conclusions.
First, based on the great variability in patterns of
treatment for what appear to be similar clinical conditions, there is a considerable range of management
choices, some of which are distinctly less costly than
others. Second, econom(c considerations may be important in the selection of discretionary treatment
choices. It is the latter cqnclusion that physicians find
so contrary to their day-tolday experience in managing
their patients.
In discussing the impact of economic incentives
on clinical decisions, economists state their paradigm
clearly: “If financial incentives would reward a certain
behavior, everything else being equal, then if the
behavior is observed, the role of incentives is deemed
empirically supported” (12). Studies are available that
support such beliefs. Schroeder and Showstack
showed that a primary care internist can increase his
or her net income 3-fold by prescribing a wide but not
unreasonable set of tests (13.14). Clinical fields with
large discretionary elements such as rheumatology are
subject to economic influences on the choices made
among several widely accepted approaches to management problems.
Our contribution to the cost of national medical
care is not in performing high-unit cost procedures,
but in utilizing and encouraging others to utilize a
relatively small number of procedures and treatments
on a very large number of people. The cost generated
by the introduction of a single new drug is such an
example. In discussing new medication as an example
of high technology cost pressure, Schwartz estimates
that adding erythropoietin, at a cost of approximately
$8,000 per person per year, to the treatment of chronic
renal failure anemia for 80,000 persons receiving dialysis and those with AIDS-related anemia, adds threequarters of a billion dollars to our annual health care
bill (IS). The efficacy of recombinant human erythropoietin in the treatment of the anemia of rheumatoid
arthritis has already been shown in a multicenter study
(16). Schwartz fears that, given the finite financial
resources, demonstrably ineffective therapies that are
currently in use must be eliminated before there is
economic room for such new, effective technologic
advances. and that the number of such therapies that
could be eliminated is dwindling. The cost of nonsteroidal antiinflammatory drugs for arthritis, with or
without concomitant gastric mucosal protective
agents, may reach a range similar to that of erythropoietin (17,18), with uncertain benefit in the prophylactic use of drugs thought to prevent gastric ulceration (19). The highly informative magnetic resonance
imaging of certain joints in some clinical situations is
another example of our participation in cost expansion
that is possiU1y justified.
Persons with rheumatoid arthritis incur outpatient medical care costs 3 times as high and hospitalization costs twice as high as those of an age- and
sex-matched population. They account for 3.5 million
officevisits and more than 100.000 hospital admissions
yearly (1 1,20). As the gatekeepers for many of these
costs, we are ngw called upon to determine whether
there are equally efficacious management strategies
that are less costly. Unfortunately, the recent Rand
Corporation analysis of the literature, using both benefit-risk and benefit-cost criteria, found no studies of
the appropriateness of, and expenditures for. antiarthritic drugs for the elderly (21). What is the motivation for physicians to seek equally effective but less
costly management procedures? The economist’s national cost numbers seem far removed, and the administrative load on the practicing physician is already
more than sufficient. This brings us to opportunity
cost, and why it is so compelling to the economist and
so remote to the clinician.
The opportunity cost of any medical activity is
the value of the alternative use to which that amount of
limited resource might be applied. Presently in the
UK. the annual fixed resource allocation to a health
district allows clinicians, serving as administrators, to
decide between purchasing a new imaging device for
the hospital and instituting an enhanced care program
for homebound arthritis patients. The opportunity cost
of an imaging machine, determined at least once a
year, becomes specific and clear. In the US. we come
close to such allocative judgments when we move a
patient out of a fully occupied intensive care unit to
allow a new patient in, using precisely the same form
of relative value judgement. It is much more difficult to
assess the opportunity cost of hospitalizing an arthritis
patient when we are not involved in choosing the
alternative use of the resource saved.
In a recently reported study, Helewa et al (22)
asked two questions of central interest to controlling
medical costs in our specialty area. Interestingly, the
questions were posed in Canada, where the payment
for care, as experienced by the public, occurs at
taxpaying time rather than at the time services are
delivered. They asked whether patients with rheumatoid arthritis who received care both in and out of the
hospital had significant improvement in their conditions compared with those who received only outpatient care. The average hospital stay was estimated at
16 days for the 35-week study. They expressed cost in
Canadian dollars and asked whether the amount of
improvement experienced by the hospitalized group,
as compared with the nonhospitalized group, was
worth the additional $3,000 per patient-a
costeffectiveness question.
Despite their inability to blind the evaluators to
the type of intervention received by the patients, they
found a statistically and clinically important improvement in the hospitalized group (22). Clearly, they do
not know what it is about hospitalization that results in
an increased benefit. Every effort was made to have
the same or similar physicians and other health care
workers treat those persons who were randomly assigned to receive intensive outpatient care only. The
extra benefit was not due to the use of the bed, since
the nonhospitalized group was provided with home
services and used bed rest at home for the same
indications as used in the hospital. The only hint is
their statement that the success of the inpatient therapy group was “achieved through early intervention
by a hospital team that was readily available to solve
problems and make therapeutic adjustments to control
disease activity” (22). Naturally, “further research is
needed to address which individual treatment components produce the most benefit” (22). They posed the
question: Is it worth $3,000, multiplied by whatever
number of people would benefit by hospitalization, to
achieve that increment of improvement?
Surely this calls for an opportunity cost answer.
What other needs would the community forego for the
health benefit provided by hospitalization? Since the
health care system in Canada operates partially within
an annual budget from which hospitalization costs are
derived, what are the alternative uses for the budgeted
It is not surprising that the increased cost of
hospital care was neither perceived by the patients nor
reflected in a change in personal health insurance
premiums, as might be true in our noncapitated systems. It is surprising that the authors dealt with the
question of whether it was worth the benefit by stating
that the answer depended “in part on the funding
mechanism.” When considering an arthritis-specific
program, they believed most would opt for dollars
spent for hospitalization, but when considering a wider
range of illness, they were less certain without a costutility analysis based on quality-adjusted life years.
It seems highly probable to this reader that for
less than $3,000 per person, an outpatient substitute
for that “ready availability to solve problems and
control disease activity” can be found. Clearly, the
competition for opportunity cost dollars should be
debated on a wider societal view of health than one
limited to rheumatologic problems. Even within that
narrower domain, it is not certain that most would
choose hospitalization.
Indeed, we must reexamine all therapies we
hold traditionally justified and optimal, to see if they
are as effective as we have come to believe. We must
also seek equally effective but less costly therapeutic
substitutes. Yet, all of this may be done without our
participation in the decisions about how the resources
saved will be used for health maintenance, illness
prevention, and other disease treatment services. In
fact, we cannot b e sure they would be used for such
worthy goals. Physician attitudes toward cost containment have been described as the missing piece of the
puzzle (14.23).
At present, w e must refine our guidelines for
the management of arthritis and the rheumatic diseases. We will fight for further funds for research t o
develop effective, and probably costly, new treatments for musculoskeletal and rheumatic diseases.
Despite some eventual success in seeking ways to
spend fewer dollars for t he same or possibly more
effective services and having such services made available more equitably, I believe w e will face the rationing of medical services through allocative decisions by
physicians. This has been thought by some to be a task
that can only b e d one by the physician at the bedside.
Others consider it inappropriate or unethical for physicians to participate (24). The call is out for the
medical profession to define and assure high standards
of cost-conscious care. using health outcome as the
ultimate standard. The specialty fields such as rheumatology have unique cost control responsibilities, but
all will share in optimizing medical decisions that have
economic consequences.
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