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Comparative Effectiveness: The Rest of the Story

May 26, 2011
by Jeffrey C. Bauer, Ph.D.
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Comparative Effectiveness Research is Key to Ensuring that Consistently Good Healthcare is Produced as Inexpensively as Possible Throughout the Enterprise

Comparative effectiveness research (CER) is definitely in the news. It may not be getting quite as much media coverage as meaningful use or insurance exchanges, but the Health Information Technology for Economic and Clinical Health (HITECH) Act and the Patient Protection and Affordable Care Act (PPACA) include more than $1 billion for future studies of different approaches to care for specific medical conditions. This level of new federal funding means that comparative effectiveness is intended to become serious business.

However, like other major initiatives of the economic stimulus and health reform laws, the evolution of CER is uncertain. Threats of Congressional defunding and judicial reversals will cast doubt over implementation for months to come. And although the Patient-Centered Outcomes Research Institute (PCORI)-the independent authority for implementing CER-is off to an impressively fast start in getting organized, it will need another year or two to develop a process for conducting research and disseminating results in a way that will create appropriate changes in clinical practice.

Should providers and their business partners adopt a wait-and-see attitude toward CER? I think not, for several reasons. The situation reminds me of “The Rest of the Story” features made famous by Paul Harvey, a legendary radio broadcaster, because headlines often mask important details that put a different spin on the news. The CER story is more complicated and more important than indicated by its coverage in the healthcare news. CER is here to stay, no matter what happens to its authorizing legislation, because it is an essential input to the performance improvement processes that will make the difference between success and failure for most providers and payers over the next few years.

ROADBLOCKS TO CER IMPLEMENTATION

As reporters and analysts rightly note, CER is not ready for widespread adoption because the foundations of valid research are not yet solid. Most of the existing scientific research on drugs and procedures compares a single intervention with a placebo. Controlled studies that compare the clinical effects of two or more approaches are rare, although they are becoming more common as researchers develop methodologies that appropriately incorporate the complexities of comparative research.

Of course, political pressures will be applied as good research begins to suggest that some clinical interventions are better than others, and many caregivers will continue traditional practices in spite of evidence that an alternative produces superior results. Ironically, the rapid and promising development of molecular medicine will give some credence to physicians who claim exemptions from evidence-based practices because “my patients are different.”

Indeed, comparative-effectiveness research is developing in parallel with a revolutionary shift from the 20th century clinical paradigm of one-size-fits-all to the more complex realm of personalized, predictive medicine that is significantly mediated by epigenetic factors. The underlying scientific challenges would be overwhelming-even if drug and device manufacturers were eager to “let the chips fall where they may” and clinicians were prepared to change practice patterns on the basis of solid new medical evidence.

THE CASE FOR CER IN SPITE OF REFORM

CER programs are solidly embedded in HITECH and PPACA because reform focused initially on reducing expenditures. Even a few Republicans joined Democrats in a quest to harness spending on medical services that did not measurably improve health. Comparative-effectiveness studies had bipartisan support as a tool for identifying and eliminating unproductive expenditures, giving clinicians the information they needed to make the best decisions. CER was also promoted as a valuable source of information that consumers could use to make intelligent choices when confronted with therapeutic options.

However, due to intense political battles that erupted in the summer of 2009-specifically, town hall meetings reacting to rumors of “federal death panels”-any cost-related applications of CER were explicitly prohibited as a price to be paid for passing the reform laws. PPACA states that the Centers for Medicare and Medicaid Services (CMS) cannot use any of PCORI's findings to make coverage decisions. If two treatments with different prices are equally effective, public health plans will not be allowed to favor the less-expensive therapy.

However, because of “the rest of the (health reform) story,” private payers and provider organizations cannot afford to ignore the cost dimensions of CER. Cost-effectiveness, the least expensive way to produce a specific outcome, will become a key to their economic survival for several reasons. Long-term Medicare and Medicaid payments will be cut dramatically in all areas except primary care, while a significant share of responsibility for payment is being shifted to patients-at a time when consumer disposable income is stagnant and strained to the limits. Other health reform programs, including accountable care organizations (ACOs) and bundled payment projects, will also limit expenditures.

Consequently, providers and payers can no longer expect healthcare to be a growing business in the future. For the first time since Medicare and Medicaid were created in 1965, historical growth in medical spending in real dollars is coming to a halt. The American economy will not support continual increases in health spending as a share of gross domestic product (GDP). Healthcare businesses are starting to face a budget constraint. The old business model won't work anymore.

A budget constraint may be new to healthcare's leaders, but it is well-known to economists. Fixed revenue means that waste must be cut out of the production process because its costs cannot be passed on to consumers and their third-party intermediaries. Finding the least-expensive way to operate across the board is a key to financial survival when pass-through is no longer possible. Providers and their business partners must take production expenses into account, going beyond comparative-effectiveness to cost-effectiveness.

HIT AS A CRITICAL SUCCESS FACTOR

Experiences in other industries show convincingly that information technology is a critical success factor (CSF) when competition or other uncontrollable events force producers to become efficient. Today's leading healthcare organizations show that pervasive IT is the key to top performance in an industry that has been spared economic pain, until now. They have implemented translational research and performance improvement programs and developed their own cost-effectiveness methodologies in the process.

Becoming a “meaningful user” might be a step in the right direction, but it doesn't ensure that consistently good healthcare is produced as inexpensively as possible throughout the enterprise. HITECH's short-term financial incentives-assuming they occur and exceed the costs of qualifying-won't come close to overcoming the long-term revenue threats of PPACA, economic stagnation, and consumer empowerment.

Meaningful use may be the big story right now, but it isn't the whole story in an unforgiving marketplace. Payers and providers need to get very serious, very fast, about making the necessary HIT investments to support robust comparative-effectiveness and cost-effectiveness studies within their organizations. Few can afford to wait for government to lead the way.

Jeffrey C. Bauer, Ph.D., an internationally recognized medical economist with 40-plus years of health industry experience, forecasts the future of healthcare and develops practical strategic approaches for improving efficiency and effectiveness of the delivery system. He can be reached at (773) 477-9339 or jeffbauer@mindspring.com. His website is www.jeffbauerphd.com. Healthcare Informatics 2011 June;28(6):73-75


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