What Really Drives Medical Treatment Decisions?
by L. Wilmshurst; www.gsb.stanford.edu; 5/22/15
It may seem like an understandable choice: two equally effective medications, where one is 40 times the price of the opposite. Yet doctors’ treatment decisions differed significantly, with each defying expectations in a very surprising way.
As as it turns out, financial incentives is going to influence doctors to advise a more expensive medicine, and not around conventional wisdom might suggest, as outlined by new information from Stanford professor Kate Bundorf. The Stanford scholar learned that patients and hospital administrators both wield more influence during these decisions that particular may think.
A Tale of Two Treatments
Bundorf, in addition to Stanford professors Suzann Pershing, Steven Asch, and Laurence Baker, health economists Christine Pal Chee and Todd Wagner, and biostatistician Derek Boothroyd, studied treatment different amounts of Medicare patients with age-related macular degeneration, the top root cause of vision reduction in adults 50, from 2005 to 2011. Two treatments proved successful for preventing, or sometimes reversing, this condition: ranibizumab (marketed as Lucentis) and also the less-expensive bevacizumab (marketed as Avastin). Together, the drugs represent a dominant 98% share of the market.
Under the Medicare system, doctors are compensated on the fee-for-service model and receive additional payments comparable to 6% of medication costs. This bonus is significantly higher when in accordance with the $2,000 expense of Lucentis compared while using $50 expense of Avastin, this comes with a potentially strong incentive for doctors to encourage usage of Lucentis.
Despite this incentive, only one-third of Medicare patients were prescribed Lucentis, suggesting an alternative plus more complicated relationship than expected. “If it were all about physician incentives,” Bundorf says,“patients would really be taking Lucentis. So clearly there is certainly something else happening.”
While this finding cast doubt with a simple cause-and-effect relationship between physician payments and treatment decisions, it wasn't yet clear whether behavior was motivated by an alternative monetary influence, for example value-minded patients. To test this, Bundorf’s team sought to watch how doctors and patients act after taking money out from the equation.
Profit seeking isn't necessarily bad inside the healthcare system — the secret is to generate incentives that align the gains of providers together with the interests of patients and taxpayers.
The team taken on the Department of Veterans Affairs, which offered an ideal possibility to study similar patients and treatment plans in the environment where decisions of patients and physicians were separate from financial influences. Subsidized costs for the government-run health system mean patients give the same amount no matter what prescription medication is prescribed. Doctor compensation is additionally fixed, without having additional incentives determined by medication choice.
“Previously, research had usually been done inside the context of Medicare,” Bundorf says, “but we knew next to nothing with what was happening while using VA, that is a unique healthcare system. We thought it might be interesting for making that comparison.”
Surprisingly, findings revealed no strong preference for either medication, with each employed by roughly 50 % of the patients. Instead, Bundorf saw another sort of influence. The VA, she says, “relies read more about what we talk about as administrative mechanisms.” The system relies with a top-down decision-making process, evidently this could be overruled regionally or by individual doctors. Upon closer examination, the researchers saw that usage patterns varied from different regions, indicating patients weren't the principle drivers behind these decisions, and providing proof local influence from regional administrators.
“Different VA sites are implementing different levels of treating physicians and patients,” Bundorf says.
Health Policy Applications
Comparing both the systems, we can easily visit a complex interaction where multiple incentives exert competing influences on doctors, patients, and policymakers. Yet, a significant follow-up question remains: Are these mechanisms achieving an appealing outcome?
At present, there is certainly significant room for improvement. For example, Medicare could save a projected $18 billion above the next decade through using the lower-cost treatment exclusively.
Another target for change requires the nature of payments to doctors. Medicare relies excessive on volume or quantity-based payment systems, Bundorf says. “We need to think of methods of Medicare to work with incentives differently, not merely rewarding doctors for doing more or settling on do the costliest thing.”
However, eliminating extra payments to doctors altogether most likely are not the most suitable choice. The key is to make certain fundamental tensions will be in balance. “Profit seeking isn't necessarily bad from the healthcare system — the trick is to make incentives that align the gains of providers using the interests of patients and taxpayers,” Bundorf says.
One mechanism which has previously been successful in other contexts is reference pricing. Under this model, an insurer would settle with a certain amount (usually lowest-cost option). If patients wanted a expensive option, they'd need to cash difference. In this example, a patient using Avastin can be fully covered, but one preferring Lucentis would have to spend the money for difference on price. This solution could offer patients greater freedom associated with preference and access to some low-cost option, while controlling aggregate costs to attenuate the complete system-wide burden.
“In many different ways, the potential of innovation will lie upon fault the insurers determine tips on how to facilitate the appropriate balance for patients and physicians,” Bundorf says.