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

Posted: 11 Aug 2001

See all articles by Ernst R. Berndt

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 - Department of Health Policy and Management

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)

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

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Anupa Bir

Harvard Medical School ( email )

Dept. of Health Care Policy
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United States
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Susan H. Busch

Yale University - Department of Health Policy and Management ( email )

New Haven, CT
United States

Richard G. Frank

Harvard Medical School ( email )

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

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

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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