Research and Analysis

Health Economics as a meaning application

Health economics is a component of the Research and Analysis Suite of The Grant Group. It encompasses systematic analysis of the issues and problems involving the costs and financing of health care as well as the organization and delivery of health care. The Grant Group, however, is currently focused on the evaluation of the incentives and policies necessary to foster a more cost-effective use of health care resources by providers and patients. What are the means to motivate stakeholders including insurance companies, health care providers, consumers, and public entities to provide the same or better quality of care with less? As health care costs continue to rise and absorb a growing share of Gross Domestic Product, the resulting national clamor for cost consciousness, along with the maintenance of high quality care, requires greater emphasis on strategies to use health care resources in a more cost-effective manner.

Historical Perspective

In the early 1990’s, initial efforts explored patient outcomes and medical treatment effectiveness. This has evolved into a solid core of evidence-based research and, more recently, “comparative effectiveness.” Efforts, however, to control health care costs have not been notably successful:

  • Current plans to expand health insurance coverage will generate even higher expenditures for health care unless some moderating cost containment measures are imposed.
  • Pay for performance where provider reimbursement is based on patient health outcomes or provider adherence to clinical practice guidelines in the medical treatment or diagnostic regimen that is followed as part of the national orientation to evidence-based medical care.
  • Providers, however, often feel that this amounts to “cookbook medicine,” interfering with the role of the physician as a “decision maker” for the patient.

Some resistance to clinical practice guidelines evolves from the unrealistic application of “ideal” settings, providers, and patients in the typical randomized clinical trial (RCT). Performance indicators capture aspects of care recommended in the clinical guideline. Both, however, are typically based on the results of RCTs, and these generally assume optimal levels of provider capability, resources, and treatment settings that are not usually found in the average practice.

Guidance for the Provider and the Patient

In contrast, The Grant Group recommends the use of appropriateness review to help guide the provider and patient in selecting more cost-effective health care choice:

  • Appropriateness review quantifies and evaluates the relative benefits and risks of a procedure for different clinical indications or patient scenarios in order to determine if it is “reasonable” and “acceptable” to perform the procedure or apply a technology.
  • Appropriateness criteria (the median of scores reported by a panel of experts) are based on a blend of empirical evidence and practice experience, but typically assume the average practitioner in the average clinical setting.
  • Appropriateness review also documents differences in clinical opinion, uncertainty, and acceptable practice variations, elements that are crucial in dealing with concerns about “cookbook medicine.” The criteria can be used by clinicians, health care facilities, and third party payers in the delivery of quality care.

For example, it is likely that insurers will not reimburse for indications rated inappropriate without documentation that supports an exception based on the particular patient profile. The appropriateness review provides that critical juncture for these decisions.