Optimizing the Recipe for "Health Care Spending Pie": Finding the Most Effective Resource Allocation

Despite concerns about the growth of the health care spending pie, little attention has been paid to the spending upon slices within it, such as how is the money being spent, and how well?

As health care costs continue to climb, rising 5.3 percent in 2015 and approaching 18 percent of the U.S. economy, it is more essential than ever to ensure patients receive appropriate care quickly and efficiently. Unfortunately, the Institute of Medicine estimates that approximately 30 percent of health care spending could be avoided – and a significant portion of that stems from unnecessary services.

Despite concerns about the growth of the health care pie, little attention has been paid to the spending upon slices within it: Where is money being spent most efficiently? Is the spending on medications, surgery, diagnostic imaging, and hospital care optimal, or should we spend more in one area and less in another?  Can we re-allocate spending from an area of low-value care to higher-value care? And how do we assess which areas of spending are working and in what situations, and which are slipping into the realm of low-value care?

National Pharmaceutical Council Chief Science Officer and Executive Vice President Robert Dubois, MD, PhD, posed these questions in his latest “Methods to Policy” column in the Journal of Comparative Effectiveness Research, and found that using traditional research methods to find the answers may not suffice.

Comparative Effectiveness Research (CER) methods, such as randomized trials, database analyses and cohort studies, have long been the most popular option to compare diagnostic and/or therapeutic approaches with another, leaving room to draw conclusions about the most effective way to provide care. But as Dubois points out, “at perhaps U.S. $10 million per pragmatic clinical trial, the costs to compare every set of services would be prohibitive.” Although the evidence produced in these trials may be useful, traditional CER may not be ideally suited for some issues due to feasibility, affordability or efficiency.

Instead, Dubois proposes an alternative evaluation structure: 1) quantifying the historic gains in patient well-being, and 2) partitioning those gains among improvements in surgery, hospital care, devices, medications and imaging, using the comparison to determine if the gains from advancements in each area are commensurate with their cost growth. Although Dubois acknowledges that such a design is more subjective than CER, he notes: “Decision-makers might find this type of evidence useful for policies related to reducing low-value care and improving resource allocation.”

In other words: In order to slow the growing health care pie, we may have to change its recipe.