Your Money or Your Life David M. Cutler Harvard University

One of the following is true… Money spent on new medical innovations is a major drain on the economy Money spent on new medical innovations is a major drain on the economy More R&D will lower health spending. More R&D will lower health spending. Elvis is alive and haunting the Boston Red Sox Elvis is alive and haunting the Boston Red Sox

Two types of innovation Treatment innovation Treatment innovation –Extremely rapid, very expensive –Key question: is it worth it? Process innovation Process innovation –Much slower

Consequences of treatment innovation 1. As a whole, what we do is worth it. Source: Cutler et al., NEJM, 2006.

Consequences of treatment innovation 2. But we significantly overdo it. Source: Baicker and Chandra, Health Affairs

If you believe… The high value as a whole The high value as a whole –Spend more on medical innovation, and convince people it’s good We overdo it We overdo it –Think about health care cost containment.

Conceptualizing Medical Advance Should Be Done Should Be Done YesNo YesNo Is Done

Conceptualizing Medical Advance Should Be Done Should Be Done YesNo Yes ☺ No ☺ Is Done The benefits of high-tech

The matching of needs to services is haphazard Should Be Done Should Be Done YesNo Yes ☺ No ☺ Is Done Chronic disease management Acute interventions

Coordination is very important Source: Baicker and Chandra, Health Affairs

It is possible to: Cut spending by percent (in addition to admin) Cut spending by percent (in addition to admin) –Wennberg and colleagues Get people better care Get people better care –See HEDIS measurement

How To Do This? Demand side: Make health care more of a market, like other things Demand side: Make health care more of a market, like other things Supply-side: Orient payment to quality Supply-side: Orient payment to quality –Information technology –Quality-based rewards

Examples of Underdeveloped Industries 1. The personal health planning industry –The cousin of financial planning 2. The care coordination industry –Shouldn’t we all get concierge medicine? 3. The post-trial evaluation industry –What really works, and how?

In Summary Elvis may be haunting the Red Sox, but with the right medical team, maybe he could beat the Yankees. Elvis may be haunting the Red Sox, but with the right medical team, maybe he could beat the Yankees.