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The Medical Treatment of Depression, 1991-1996: Productive Inefficiency, Expected Outcome Variations, and Price Indexes

Posted: 11 Aug 2001  

Ernst R. Berndt

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Anupa Bir

Harvard Medical School

Susan H. Busch

Yale University - School of Public Health

Richard G. Frank

Harvard Medical School; National Bureau of Economic Research (NBER)

Sharon-Lise T. Normand

Harvard Medical School & Harvard School of Public

Multiple version iconThere are 2 versions of this paper

Date Written: July 1, 2000

Abstract

We examine the price of treating episodes of acute phase major depression over the 1991-1996 time period. We combine data from a large retrospective medical claims data base (MarketScanTM, from the MedStat Group) with clinical literature and expert clinical opinion elicited from a two-state Delphi procedure. This enables us to construct a variety of treatment price indexes that include variations over time in the proportion of 'off-frontier' production, as well as the corresponding variations in expected treatment outcomes. We also incorporate the fact that the no treatment option ('waiting list') frequently results in spontaneous remission of depressive symptoms. We find that in general the incremental cost of successfully treating an episode of acute phase major depression has generally fallen over the 1991-96 time period. Based on hedonic regression equations that account for the effects of changing patient mix, we find price reductions that range from about -1.66% to -2.13% per year. An implication of this is that, since expenditures on depression are thought to be increasing since at least 1991, the source of the spending increases is volume (quantity) increases, and not price increases.

JEL Classification: I1,O3

Suggested Citation

Berndt, Ernst R. and Bir, Anupa and Busch, Susan H. and Frank, Richard G. and Normand, Sharon-Lise T., The Medical Treatment of Depression, 1991-1996: Productive Inefficiency, Expected Outcome Variations, and Price Indexes (July 1, 2000). Available at SSRN: https://ssrn.com/abstract=270569

Ernst R. Berndt (Contact Author)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

Room E52-452
Cambridge, MA 02142
United States
617-253-2665 (Phone)
617-258-6055 (Fax)

Anupa Bir

Harvard Medical School ( email )

Dept. of Health Care Policy
Boston, MA 02115
United States
617-432-0305 (Phone)

Susan H. Busch

Yale University - School of Public Health ( email )

PO Box 208034
60 College Street
New Haven, CT 06520-8034
United States

Richard G. Frank

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Harvard Medical School ( email )

Department of Health Care Policy
Boston, MA 02115
United States
617-432-0178 (Phone)
617-432-1219 (Fax)

Sharon-Lise T. Normand

Harvard Medical School & Harvard School of Public ( email )

Dept. of Biostatistics
Boston, MA 02115
United States
617-432-3260 (Phone)

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