Measuring the Productivity of Diabetes Treatment, 1997-2005

Posted: 14 Jun 2007

See all articles by Karen Eggleston

Karen Eggleston

Stanford University - Walter H. Shorenstein Asia-Pacific Research Center (APARC)

Nilay Shah

Mayo Clinic - College of Medicine and Science

Steven A. Smith

Mayo Clinic - College of Medicine and Science

Amy E. Wagie

Mayo Clinic - College of Medicine and Science

Kirsten Long

Mayo Clinic College of Medicine, Health Sciences Research

Arthur Williams

Mayo Clinic - College of Medicine and Science

Ernst R. Berndt

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

Ritesh Banerjee

affiliation not provided to SSRN

Jerome H. Grossman

affiliation not provided to SSRN

Joseph P. Newhouse

Harvard Medical School; Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER); Harvard University - Harvard Kennedy School (HKS)

Date Written: June 2007

Abstract

This research contributes to the literature on the value of health spending by estimating quality-adjusted price indices for treatment of patients with diabetes. We analyze rich data on patient outcomes and actual transaction prices for a sample of 735 patients identified in a large electronic diabetes management database (classified as type 1, type 2, or indeterminate type diabetes). To assure we capture all medical spending, we focus on employees or dependents of a large health care employer in the Midwestern United States (18 years or older) continuously enrolled in a self-insured health plan from 1997 to 2005 or to date of death.

Measures of patient outcomes include HbA1c, cardiovascular risks using the UK Prospective Diabetes Study equation, and mortality. To disentangle quality changes attributable to medical care from those associated with aging, we age-adjust the quality measures. Actual transactions prices represent direct medical spending for all medical care, including pharmaceuticals.

Because time since onset is a documented risk factor for complications, we structure the analysis so that we can document whether improved medical care has slowed the rate of progression of the disease. To minimize bias toward the sicker patients who receive more frequent tests, we define 3-year windows and use the last outcome measure for each window.

We find that patient outcomes have improved and spending has increased substantially over the nine year period. The percent of patients with HbA1c below 7, for example, increased across almost all diagnosis cohorts, so that by the 2003-2005 period, patients exhibiting this level of control ranged from 50% (of patients diagnosed before 1985) to 72% (of those diagnosed after 2000). Median annual spending increased 28% for those diagnosed before 1985, 76% for patients diagnosed between 1985 and 1996, and almost 4-fold for patients diagnosed during the 1997-99 period. Whether quality-adjusted prices have been increasing or not depends on the value of quality improvements. We estimate quality-adjusted price indices using techniques previously developed for treatment of heart attacks and depression (Cutler et al. 1998, Berndt et al. 2002), controlling for patient baseline severity, age and years since diagnosis.

Keywords: productivity, Diabetes, price indices, value for money, chronic disease management

JEL Classification: I10

Suggested Citation

Eggleston, Karen and Shah, Nilay and Smith, Steven A. and Wagie, Amy E. and Long, Kirsten and Williams, Arthur and Berndt, Ernst R. and Banerjee, Ritesh and Grossman, Jerome H. and Newhouse, Joseph P., Measuring the Productivity of Diabetes Treatment, 1997-2005 (June 2007). iHEA 2007 6th World Congress: Explorations in Health Economics Paper, Available at SSRN: https://ssrn.com/abstract=992989

Karen Eggleston (Contact Author)

Stanford University - Walter H. Shorenstein Asia-Pacific Research Center (APARC) ( email )

Stanford, CA 94305
United States

Nilay Shah

Mayo Clinic - College of Medicine and Science ( email )

200 First Street S.W
Rochester, MN 55905
United States

Steven A. Smith

Mayo Clinic - College of Medicine and Science ( email )

200 First Street S.W
Rochester, MN 55905
United States

Amy E. Wagie

Mayo Clinic - College of Medicine and Science ( email )

200 First Street S.W
Rochester, MN 55905
United States

Kirsten Long

Mayo Clinic College of Medicine, Health Sciences Research ( email )

200 First Street S.W
Rochester, MN 55905
United States

Arthur Williams

Mayo Clinic - College of Medicine and Science ( email )

200 First Street S.W
Rochester, MN 55905
United States

Ernst R. Berndt

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)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Ritesh Banerjee

affiliation not provided to SSRN

Jerome H. Grossman

affiliation not provided to SSRN ( email )

No Address Available

Joseph P. Newhouse

Harvard Medical School; Harvard Kennedy School (HKS) ( email )

Department of Health Care Policy
Boston, MA 02115
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States

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