Priority setting in medical technology and medical practice assessment

Area of Science:

• Health Economics
• Medical Technology Assessment
• Healthcare Policy

Background:

• Limited resources necessitate efficient prioritization of medical technology assessments.
• Unexplained variations in medical practice contribute to significant welfare losses.
• Objective methods are needed to guide resource allocation for health technology evaluation.

Purpose of the Study:

• To develop an objective index for prioritizing medical technology assessments based on expected gains.
• To quantify the economic welfare loss associated with variations in medical practices.
• To inform resource allocation for technology assessment in healthcare.

Main Methods:

• Utilized modified Diagnosis-Related Group (DRG)-level hospitalization data from New York State.
• Developed an index combining measures of resource use, regional use variation (coefficient of variation), and the rate of change in intervention value.
• Applied standard economic principles to calculate dollar-valued welfare loss from practice variations.

Main Results:

• Identified coronary artery bypass graft as having the highest index ($0.95 billion/year).
• Highlighted significant welfare losses from nonsurgical interventions, including psychosis hospitalizations ($0.74 billion/year) and cardiac catheterization ($0.62 billion/year).
• The top 25 interventions resulted in an annual welfare loss exceeding $7 billion.

Conclusions:

• The potential gains from assessing and reducing unexplained variations in medical practices significantly exceed the costs of necessary studies.
• Prioritizing assessments based on the developed index can lead to substantial economic welfare improvements.
• Economic evaluation frameworks are vital for optimizing healthcare resource allocation and improving patient outcomes.