The value of a QALY towards the end of life and its determinants: Experimental evidence.

OBJECTIVES: Individual and societal willingness to pay (WTP) for end-of-life medical interventions continue to be subject to considerable uncertainty. This study aims at deriving both types of WTP estimates for an extension of survival time and an improvement of quality of life amounting to a QALY. METHODS: A discrete choice experiment (DCE) involving a hypothetical novel drug for the treatment of terminal cancer involving 1529 Swiss residents was performed in 2014. In its individual setting, respondents choose between the status quo and a hypothetical drug with varying characteristics and out-of-pocket payments, adopting the perspective of a terminal cancer patient. In the societal setting, participants are asked to choose between the status quo and a social health insurance contract with and without coverage of the novel drug and a varying insurance contribution. RESULTS: In the individual setting, respondents put a higher value on their quality of life than on their survival time whereas in the societal setting, they put a higher value on extra survival time. The combination of the two extensions results in a mean individual WTP per QALY of CHF 96,150 (1 CHF = 1 USD as of 2014). Mean societal WTP for a QALY even amounts to CHF 213,500 in favor of an adult patient, CHF 255,600 for a child, and CHF 153,600 for a person aged over 70 years, respectively. While estimated societal values consistently exceed their individual counterparts, they vary considerably with respondents' socioeconomic characteristics in both settings. CONCLUSIONS: This research finds that individual WTP for an extension of survival time to one year is dominated by WTP for health-related quality of life whereas for societal WTP, it is the other way round. Both individual and societal WTP values exhibit a great deal of heterogeneity, with the latter depending on the type of beneficiary.

The 'Red Herring' Hypothesis: Some Theory and New Evidence.

The 'red herring' hypothesis (RHH) claims that apart from income and medical technology, proximity to death rather than age constitutes the main determinant of healthcare expenditure (HCE). This paper seeks to underpin the RHH with some theory to derive new predictions also for a rationed setting, and to test them against published empirical evidence. One set comprising ten predictions uses women's longer life expectancy as an indicator of the difference in time to death in their favor. Out of 28 testing opportunities drawn from the published evidence, in the case of no rationing seven out of eleven result in full and two in partial confirmation; in the case of rationing, twelve out of 17 result in full and one in partial confirmation. The other set, containing 35 testing opportunities, concerns the age profile of HCE. In the case of no rationing, seven out of twelve result in full and four in partial confirmation; in the case of rationing, eleven out of 23 in full and nine in partial confirmation. There are but ten contradictions in total. Overall, the new tests of the RHH can be said to receive a good deal of empirical support, both from countries and settings with and without rationing.

A Reconstruction Algorithm for Temporally Aliased Seismic Signals Recorded by the InSight Mars Lander.

In December 2018, the NASA InSight lander successfully placed a seismometer on the surface of Mars. Alongside, a hammering device was deployed at the landing site that penetrated into the ground to attempt the first measurements of the planetary heat flow of Mars. The hammering of the heat probe generated repeated seismic signals that were registered by the seismometer and can potentially be used to image the shallow subsurface just below the lander. However, the broad frequency content of the seismic signals generated by the hammering extends beyond the Nyquist frequency governed by the seismometer's sampling rate of 100 samples per second. Here, we propose an algorithm to reconstruct the seismic signals beyond the classical sampling limits. We exploit the structure in the data due to thousands of repeated, only gradually varying hammering signals as the heat probe slowly penetrates into the ground. In addition, we make use of the fact that repeated hammering signals are sub-sampled differently due to the unsynchronized timing between the hammer strikes and the seismometer recordings. This allows us to reconstruct signals beyond the classical Nyquist frequency limit by enforcing a sparsity constraint on the signal in a modified Radon transform domain. In addition, the proposed method reduces uncorrelated noise in the recorded data. Using both synthetic data and actual data recorded on Mars, we show how the proposed algorithm can be used to reconstruct the high-frequency hammering signal at very high resolution.

Innovation in health care through information technology (IT): The role of incentives.

For several years now, information technology (IT) has been hailed as an innovation that will revolutionize medicine and health care more generally. Yet adoption of new IT in the healthcare sector has been slow, possibly reflecting a lack of interest. In economic terms, the incentives of the major players in health care may work against new IT, which fosters process and organizational innovation much more than product innovation. While product innovation causes an increase in consumers' willingness to pay and is therefore welcomed by those working in the healthcare sector, process innovation is resisted because it often means performing the same service but at a lower cost. This is also true of organizational innovation, which frequently entails vertical integration and hence a loss of autonomy (as evidenced by the difficulties of creating Managed Care Organizations). The objective of this paper therefore is to predict the circumstances in which (both current and potential) patients, physicians, hospitals, health insurers, and governments are likely to support innovation in health care through IT.

Mental health: The burden of social stigma.

The burden of mental health has two facets, social and psychological. Social stigma causes individuals who suspect to be suffering from a mental condition to conceal it, importantly by seeking care from a nonspecialist provider willing to diagnose it as physical disease. In this way, social stigma adds to both the direct and indirect cost of mental health. A microeconomic model depicting an individual who searches for an accommodating provider leads to the prediction that individuals undertake more search in response to a higher degree of social stigma. However, this holds only in the absence of errors in decision-making, typically as long as mental impairment is not too serious. While government and employers have an incentive to reduce the burden of social stigma, their efforts therefore need to focus on persons with a degree of mental impairment that still allows them to avoid errors in pursuing their own interest.

Mental health: A Particular Challenge Confronting Policy Makers and Economists.

The first objective of this paper is to expound the particular challenge posed by the occurrence of inconsistency in the expression of preferences by mental health patients to both economists and policy makers. Since this difficulty cannot be resolved, the second aim of the paper is to identify agents who may be counted upon to identify the true patient preferences. A decision rule is developed to help identify these agents who may be family members or judges in court, who have the ability and incentive to make these decisions. No single agent is found to dominate with respect to the five dimensions of preference distinguished, constituting a major challenge to policy makers.

Buying efficiency: optimal hospital payment in the presence of double upcoding.

BACKGROUND: With DRG payments, hospitals can game the system by 'upcoding' true patient's severity of illness. This paper takes into account that upcoding can be performed by the chief physician and hospital management, with the extent of the distortion depending on hospital's internal decision-making process. The internal decision making can be of the principal-agent type with the management as the principal and the chief physician as the agent, but the chief physicians may be able to engage in negotiations with management resulting in a bargaining solution. RESULTS: In case of the principal-agent mechanism, the distortion due to upcoding is shown to accumulate, whereas in the bargaining case it is avoided at the level of the chief physician. CONCLUSION: In the presence of upcoding it may be appropriate for the sponsor to design a payment system that fosters bargaining to avoid additional distortions even if this requires extra funding.

End-of-life healthcare expenditure: Testing economic explanations using a discrete choice experiment.

Healthcare expenditure (HCE) spent during an individual's last year of life accounts for a high share of lifetime HCE. This finding is puzzling because an investment in health is unlikely to have a sufficiently long payback period. However, Becker et al. (2007) and Philipson et al. (2010) have advanced a theory designed to explain high willingness to pay (WTP) for an extension of life close to its end. Their testable implications are complemented by the concept of 'pain of risk bearing' introduced by Eeckhoudt and Schlesinger (2006). They are tested using a discrete choice experiment performed in 2014, involving 1,529 Swiss adults. An individual setting where the price attribute is substantial out-of-pocket payment for a novel drug for treatment of terminal cancer is distinguished from a societal one, where it is an increase in contributions to social health insurance. Most of the economic predictions receive empirical support.

Choice of reserve capacity by hospitals: a problem for prospective payment.

This contribution analyzes the impact of prospective payment on hospital decisions with regard to reserve capacity, using Swiss hospital data covering the years 2004-2009. This data set is unique because it permits distinguishing of institutional characteristics (e.g., ownership status) from the mode of payment as determinants of hospital efficiency, due to the fact that some Swiss cantons introduced prospective payment early while others waited for federal legislation to be enacted in 2012. Since a hospital's choice of reserve capacity depends also on the risk preferences of management while affecting the cost function, heterogeneity is predicted even in the presence of identical technology and factor prices. For estimating hospitals' marginal costs, we employ the flexible representation of risk preferences by Pope and Chavas [Am J Agric Econ 76, 196-204 (1994)]. Production uncertainty is measured as the difference between actual admissions and admissions predicted by an autoregressive moving average model. Its effect on hospital cost is analyzed using a multilevel stochastic cost frontier model with random coefficients reflecting unobserved differences in technology. Public hospitals are found to opt for a higher probability of meeting unexpected demand, as predicted. Their operating cost is 1.1% higher than for private hospitals and even 1.9% higher than for teaching hospitals, creating an incentive to turn away patients or to keep them waiting for treatment.

Overcoming resistance against managed care - insights from a bargaining model.

Recent healthcare reforms have sought to increase efficiency by introducing managed care (MC) while respecting consumer preferences by admitting choice between MC and conventional care. This article proposes an institutional change designed to let German consumers choose between the two settings through directing payments from the Federal Health Fund to social health insurers (SHIs) or to specialized MC organizations (MCOs). To gauge the chance of success of this reform, a game involving a SHI, a MCO, and a representative insured (RI) is analyzed. In a "three-player/three-cake" game the coalitions {SHI, MCO}, {MCO, RI}, and {SHI, RI} can form. Players' possibility to switch between coalitions creates new outside options, causing the conventional bilateral Nash bargaining solution to be replaced by the so-called von Neumann-Morgenstern triple. These triples are compared to the status quo (where the RI has no threat potential) and related to institutional conditions characterizing Germany, the Netherlands, and Switzerland.

Medical ethics: enhanced or undermined by modes of payment?

BACKGROUND: In the medical literature [1, 2, 7], the view prevails that any change away from fee-for-service (FFS) jeopardizes medical ethics, defined as motivational preference in this article. The objective of this contribution is to test this hypothesis by first developing two theoretical models of behavior, building on the pioneering works of Ellis and McGuire [4] and Pauly and Redisch [11]. Medical ethics is reflected by a parameter α, which indicates how much importance the physician attributes to patient well-being relative to his or her own income. Accordingly, a weakening of ethical orientation amounts to a fall in the value of α. While traditional economic theory takes preferences as predetermined, more recent contributions view them as endogenous (see, e.g., Frey and Oberholzer-Gee [5]). METHODS: The model variant based on Ellis and McGuire [4] depicts the behavior of a physician in private practice, while the one based on Pauly and Redisch [11] applies to providers who share resources such as in hospital or group practice. Two changes in the mode of payment are analyzed, one from FFS to prospective payment (PP), the other to pay-for-performance (P4P). One set of predictions relates physician effort to a change in the mode of payment; another, physician effort to a change in α, the parameter reflecting ethics. Using these two relationships, a change in ethics can observationally be related to a change in the mode of payment. The predictions derived from the models are pitted against several case studies from diverse countries. RESULTS: A shift from FFS to PP is predicted to give rise to a negative observed relationship between the medical ethics of physicians in private practice under a wide variety of circumstances, more so than a shift to P4P, which can even be seen as enhancing medical ethics, provided physician effort has a sufficiently high marginal effectiveness in terms of patient well-being. This prediction is confirmed to a considerable degree by circumstantial evidence coming from the case studies. As to physicians working in hospital or group practice, the prediction is again that a transition in hospital payment from FFS to PP weakens their ethical orientation. However, this prediction could not be tested because the one hospital study found relates to a transition to P4P, suggesting that this mode of payment may actually enhance medical ethics of healthcare providers working in a hospital or group practice. CONCLUSION: The claim that moving away from FFS undermines medical ethics is far too sweeping. It can only in part be justified by observed relationships, which even may suggest that a transition to P4P strengthens medical ethics.

Experimental measurement of preferences in health care using best-worst scaling (BWS): theoretical and statistical issues.

For optimal solutions in health care, decision makers inevitably must evaluate trade-offs, which call for multi-attribute valuation methods. Researchers have proposed using best-worst scaling (BWS) methods which seek to extract information from respondents by asking them to identify the best and worst items in each choice set. While a companion paper describes the different types of BWS, application and their advantages and downsides, this contribution expounds their relationships with microeconomic theory, which also have implications for statistical inference. This article devotes to the microeconomic foundations of preference measurement, also addressing issues such as scale invariance and scale heterogeneity. Furthermore the paper discusses the basics of preference measurement using rating, ranking and stated choice data in the light of the findings of the preceding section. Moreover the paper gives an introduction to the use of stated choice data and juxtaposes BWS with the microeconomic foundations.

Experimental measurement of preferences in health and healthcare using best-worst scaling: an overview.

Best-worst scaling (BWS), also known as maximum-difference scaling, is a multiattribute approach to measuring preferences. BWS aims at the analysis of preferences regarding a set of attributes, their levels or alternatives. It is a stated-preference method based on the assumption that respondents are capable of making judgments regarding the best and the worst (or the most and least important, respectively) out of three or more elements of a choice-set. As is true of discrete choice experiments (DCE) generally, BWS avoids the known weaknesses of rating and ranking scales while holding the promise of generating additional information by making respondents choose twice, namely the best as well as the worst criteria. A systematic literature review found 53 BWS applications in health and healthcare. This article expounds possibilities of application, the underlying theoretical concepts and the implementation of BWS in its three variants: 'object case', 'profile case', 'multiprofile case'. This paper contains a survey of BWS methods and revolves around study design, experimental design, and data analysis. Moreover the article discusses the strengths and weaknesses of the three types of BWS distinguished and offered an outlook. A companion paper focuses on special issues of theory and statistical inference confronting BWS in preference measurement.

Why 'Optimal' Payment for Healthcare Providers Can Never be Optimal Under Community Rating.

This article extends the existing literature on optimal provider payment by accounting for consumer heterogeneity in preferences for health insurance and healthcare. This heterogeneity breaks down the separation of the relationship between providers and the health insurer and the relationship between consumers and the insurer. Both experimental and market evidence for a high degree of heterogeneity are presented. Given heterogeneity, a uniform policy fails to effectively control moral hazard, while incentives for risk selection created by community rating cannot be neutralized through risk adjustment. Consumer heterogeneity spills over into relationships with providers, such that a uniform contract with providers also cannot be optimal. The decisive condition for ensuring optimality of provider payment is to replace community rating (which violates the principle of marginal cost pricing) with risk rating of contributions combined with subsidization targeted at high risks with low incomes.

Cost-Effectiveness Analysis of Universal Human Papillomavirus Vaccination Using a Dynamic Bayesian Methodology: The BEST II Study.

BACKGROUND: Human papillomavirus (HPV) plays a role in the development of benign and malign neoplasms in both sexes. The Italian recommendations for HPV vaccines consider only females. The BEST II study (Bayesian modelling to assess the Effectiveness of a vaccination Strategy to prevent HPV-related diseases) evaluates 1) the cost-effectiveness of immunization strategies targeting universal vaccination compared with cervical cancer screening and female-only vaccination and 2) the economic impact of immunization on various HPV-induced diseases. OBJECTIVE: The objective of this study was to evaluate whether female-only vaccination or universal vaccination is the most cost-effective intervention against HPV. METHODS: We present a dynamic Bayesian Markov model to investigate transmission dynamics in cohorts of females and males in a follow-up period of 55 years. We assumed that quadrivalent vaccination (against HPV 16, 18, 6, and 11) is available for 12-year-old individuals. The model accounts for the progression of subjects across HPV-induced health states (cervical, vaginal, vulvar, anal, penile, and head/neck cancer as well as anogenital warts). The sexual mixing is modeled on the basis of age-, sex-, and sexual behavioral-specific matrices to obtain the dynamic force of infection. RESULTS: In comparison to cervical cancer screening, universal vaccination results in an incremental cost-effectiveness ratio of €1,500. When universal immunization is compared with female-only vaccination, it is cost-effective with an incremental cost-effectiveness ratio of €11,600. Probabilistic sensitivity analysis shows a relatively large amount of parameter uncertainty, which interestingly has, however, no substantial impact on the decision-making process. The intervention being assessed seems to be associated with an attractive cost-effectiveness profile. CONCLUSIONS: Universal HPV vaccination is found to be a cost-effective choice when compared with either cervical cancer screening or female-only vaccination within the Italian context.