Tag Archives: Value (economics)

Capturing race

Is HTA like GO? (Photo credit: Wikipedia)

Increasingly widespread amongst the world’s healthcare systems is the assessment of medicines and devices using various types of cost-benefit or cost-utility analysis; this is called health technology assessment or HTA. HTA seeks to determine, using evidence of one sort or another, whether something is broadly speaking affordable, taking account of the cost of the medicine/device taken against the benefit to a particular constellation of diagnostic attributes in patients. This is usually quantified in a measure called a QALY: a quality-adjusted life year, which is a way to assess the value for money of a particular health technology. In short, it is a way of valuing lives.

HTA is a utilitarian approach to assessment. To some extent, this is not surprising as HTA is in the main a method developed by health economists, who, like economists in general, hypothesise that we make daily decisions based on the utilty of this or that, in terms of trade-offs (Pareto optimisation, for instance) and rational decision making (that people seek to maximise value, or utility in what they do). This approach is increasingly in dispute in light of the findings from neurosciences and behaviour economics: by posting that people do not always make decisions that are in their own best interests, a key assumption of traditional economics, that of the rational actor, always calculating trade-offs and maximising benefits, and so on, is questioned.

The problem with utilitarianism, though, is it doesn’t pay attention to the freedom of the individual; it positions the justification of its results on the net benefit to society, regardless of the impact on rights of individuals. Obviously, health economists don’t watch Star Trek or they would know that the needs of the one outweigh the needs of the many. But then, that, too, is a moral position.

Indeed, it is perhaps the sense that utilitarian conclusions don’t seem to correlate with many people’s moral sentiments that may explain why decisions of HTA agencies, for instance NICE in the UK (England) lead to moral outrage and a sense of, if not injustice, at least unfairness. While the results of an HTA process may lead to a quantitatively defensible conclusion, people sense that this conclusion is not morally defensible.

How are we to judge? Few would use utilitarian arguments in this way in other spheres: would we calculate who needs welfare in terms of the net benefit to society in terms of quality of life years, though perhaps we do allocate welfare on moral assumptions that some people deserve welfare while others don’t.

Do we allocate support to communities ravaged by floods based on their overall contribution, or utility, to society.  If you could donate £10 million to a university, would you pick Oxford University or Thames Valley University; which one is more worthy? But would you want to treat people this way?

HTA doesn’t even let us value lives in quite this way, since it neatly avoids deciding about the worth of any particular type of person, who just happens through misfortune to find themselves needing some medicine that fails the HTA tests. HTA keeps us from confronting the fact that HTA is a way of drawing a conclusion, without actually having to decide any allocations for any one person in particular. Bentham would approve.

There is, though, a technical problem with HTA and it has to do with whether at one level of assessment outcome, a utilitarian models can be used when the decision to be made does not have life threatening consequences for some people.

If the QALY threshold is, say £35,000, as it apparently is in the case of NICE, are the decisions below that threshold, which tend toward ‘yes’ or ‘approval’ morally different from decisions above that threshold?  I suggest that different moral criteria come into play above the threshold and this is where I think out moral outrage should be directed and where HTA fails.  Regretfully, HTA models see the results as broadly continuous, that is, decisions above and below this threshold are seen as essentially of the same type.  But I have argued elsewhere that above the threshold, HTA models fail but for reasons other their analytical soundness, because above this threshold, the conclusions may lead to a lessened quality of life, in other words, they actually crystallise the health outcome rather than avoid it.

Therefore, in valuing lives, those above the threshold experience greater injustice than those below; they are treated differently, unfairly, unjustly, perhaps less worthy, but certainly differently.  Indeed, above the threshold, we feel we are more in the realm of our moral sentiments about the value of human life, and less our moral sentiments about the allocation of scarce resources.

If this were not so, then we would be living in a society that believes that the determinant of all important moral and political decisions is affordability, and if that were so, they we could not even afford the costs of inefficiency brought on by democracy, the inconvenience of not being able to exploit people, the costs of equal rights.

Perhaps, though, on our financially contaminated world, all we can think about today is money and that is further contaminating our perception of what sort of society we are actually trying to foster.  Certainly, protests on Wall Street and elsewhere point to the view that there seems to be some unjust allocation of the benefits of government bail-outs that just doesn’t benefit those ‘at the bottom’.

John Rawls wrote that the we should distribute opportunity in a society in such a way as to ensure that the least well off benefit the most. In the context of HTA, medicines and technologies that benefit only a few, but at great cost, represent a cost worth having as the least well off, namely those who would need it most ( have the condition it treats, and in some societies can afford it least), would benefit, even if a little, as that is the price we pay for justice.

This, I suggest, is the root of our moral outrage at HTA, that is unjustly fails to serve those who need it most.

I am left with wondering about the underlying morality of HTA as a government scheme. Governments, as we know, are the last resort, when things are tough and one would hope, ensure that the least well-off in society are not penalised simply in virtue of being least well-off.  In healthcare, someone has to be the carer of last resort; using HTA as a way of avoiding this responsibility is not morally defensible.

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Sumerian contract: selling of a field and a ho...

A Department of Health contract with a private provider of healthcare

The Bureau for Investigative Journalism reports that £500 million was spent on private health clinics in the NHS that in their view represents poor value for money. No doubt commentators will point to the private aspects of these contracts as evidence that they failed. A few comments on their Report:

  1. The contracts were pre-paid block contracts, and in most cases the complement of procedures paid for were not used. Now whose fault is that? In the same way as hospitals do not go around soliciting business from GPs, these clinics need referrals. The question in my mind is was there so much capacity that the pre-paid procedures weren’t needed? How many patients did not get treated because of a failure to use these contracts? Of course the same thing can happen in the NHS, just people don’t see it as quite the same waste of money as when private contractors are involved. But they are the same.
  2. That the Department of Health is buying them back is the Department’s problem, which the taxpayer has to deal with. I’m not sure what the point of buying them is, especially since they will close and their treatment capacity lost to the doctors. Is there that much excess capacity in the NHS that they can take out that much capacity? The Report doesn’t clarify what is actually going to happen next. I don’t disagree with them about this being a poor use of money, but the decision to remove these facilities from available capacity is a bad decision, regardless of who runs them. The firms running them have excellent clinical performance track records in the main.
  3. The original contracts were commercially naive. But the UK’s NHS has a very poor track record with commercial suppliers, and so to get anyone interested at a time when there were serious shortages of capacity (and still are of course), they had to underwrite some of the risk. Of course, what might be thought of NHS facilities such as Foundation Trusts are increasingly not publicly owned as such but owned by the organisations that run them, and there are similar contracts with them. (GP premises are also private) Keep in mind, too, that pre-paid block contracts are an acknowledged (but poor) way for buying hospital services, so NHS facilities have also benefited from this — but just to be clear, many NHS facilities over-provide on these contracts, run out of money, usually 9 months into the contracts, then have to pull back in the last quarter. With payments based actual activity, you pay for what you buy, which explains in part why NHS facilities are running out of money — they cost more to run than the activity they are providing based on the income they derive from that activity. Nothing to do with being a public or private organisation, but a lot to do with how contracts are structured and of course how the hospital is managed. One hopes that more sophisticated contracting will emerge.
  4. NHS contracts are generally risk-free, that’s why there is the current fuss over competition in the NHS, as it would introduce risk. If risk were introduced, it would naturally level the playing field for private providers. But with risk-free public contracts, all the private providers wanted was the same contract conditions as NHS providers. The sensitivies around this, though, tend to favour a default assumption that the publicly owned, if that is strictly true anymore, institutions are better value-for-money than the private ones, when it comes to clinical activity.

This Report focuses on the expenditure of money without asking the next level of questions which go the heart of how and why money gets wasted in healthcare and why the NHS has so much difficulty with its contracts (let’s not get started on NPfIT).

But the Report is useful by illuminating the financial consequences of poor commercial decisions within the Department and the NHS. I just wonder whether there has been any learning as a result.

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A surgical team from Wilford Hall Medical Cent...

An Auditor of One checking on surgical performance

The UK’s coalition government’s reform agenda continues to unfold with the planned scrapping of the Audit Commission. While the Commission has good analytical capacity and did focus on issues of importance, the need to shift the audit function further into systems and out into the community was not one of its core objectives.

In healthcare, I have written and spoken of the patient as the “auditor of one”, as the patient is the only person who has a real experience of the continuum of care, and it is only through the patient that the integration or not of services is achieved. While bureaucratic processes may try to knit systems together at their edges, only users have that ‘joined up experience’, and it is by engaging with them more effectively that radical service improvement will come about (the use is really the most disruptive force for quality improvement we have).

The next test for audit in the UK will be ensuring that all these auditors of one can be effective; rather unfortunately, the government is referring to them as “armchair auditors” a term which tends to describe distant interest, rather than engaged in the critical appraisal of performance. But organised interest groups can emerge, or existing one expand their scope of interest to increase the salience of issues in the delivery of publicly funded services.

I think one auditor is really enough anyway, but the National Audit Office will need to expand its remit in at least two areas if it is to be really worthy of public expectations, to include:

  1. value-for-money retrospective audits (and not just of assessing implementation against legislative intent);
  2. prospective audits of planned legislation (similar to the US non-partisan Congressional Budget Office).

I might add a third, namely being advised by, and engaging with, the public, perhaps through regional citizen audit advisory groups who can act to bring local concerns together where national concerns, at least, are an issue. There are models for this sort of relationship which would enhance accountability, transparency and visibility with the public.