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Health Care Costs and Financing

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Cost and cost-effectiveness of clinical interventions are quite different

Low-technology interventions are not necessarily cost effective, and high-technology interventions are not necessarily cost ineffective. Applying clinical interventions for prevention, diagnosis, and treatment where they offer the most benefit is the key to the most cost-effective care, asserts Richard A. Deyo, M.D., M.P.H., of the University of Washington, in a recent commentary. He points out, for example, that coronary bypass surgery costs about $30,000 per operation. This surgery is most cost effective for the patients at highest risk of heart attack, who have the most to gain from it.

For example, use of bypass surgery instead of medication for patients with left main coronary artery disease results in a cost-effectiveness ratio of about $2,300 to $5,600 per year of life saved. At the other end of the spectrum, use of this surgery for heart disease in which only two vessels are blocked does not deliver a similar sized "bang for the buck." The cost-effectiveness ratio for bypass surgery for these patients is in the range of $28,000 to $75,000 per year of life saved, a point at which some might ask, "Is it worth it?"

American society generally accepts treatments as appropriate if they cost less than about $50,000 per quality-adjusted life-year gained. However, the notion of quality-adjusted life-years is complex, explains Dr. Deyo. One would not want to give the same credit to a lifesaving treatment that leaves somebody blind for the next 10 years as one that leaves a person with perfect vision for the next 10 years. It is not simple to measure the cost part of the ratio either, further complicating the issue of cost-effectiveness. For instance, the charge for direct medical care is not the same as the total care costs for an illness. Finally, there is the issue of opportunity costs. This refers to the fact that if we spend our money doing one thing, we cannot spend it for doing something else. For example, if an extra $500 million is spent on bypass surgery, there is $500 million less for prenatal care, cancer screening, or other services.

See "Cost-effectiveness of primary care," by Dr. Deyo, in the January 2000 Journal of the American Board of Family Practice 13(1), pp. 47-54.

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