Understanding Medical and Financial Risks

There is a very interesting piece in the Wall Street Journal on hospitals’ efforts to assure that their patients understand the consent forms they are signing. Here is a description of the VA’s efforts:

The Department of Veteran’s Affairs, with 153 hospitals, has over the past several years adopted a new electronic informed-consent software program that allows patients to use a digital pad to sign the consent forms, which can then be stored in their medical record. The program, known as iMedConsent, includes a library of anatomical diagrams and explanations written at a sixth-grade reading level for more than 2,000 procedures in more than 30 medical specialties.

This is a laudable effort to use computer technology to make new (and old) medical technologies accessible. The general idea probably has applications outside the medical field–particularly in a black box economy where “magic numbers” and complex deals are becoming ever more common:

[Satyajit] Das [author of “Traders, Guns and Money: Knowns and Unknowns in the Dazzling World of Derivatives”] disparages . . . bankers [for] creating “complexity for the sake of complexity,” trying to wow their clients by inventing more sophisticated-seeming investments. “Financial innovation is a magical catch phrase,” he explains. “It’s very sophisticated and chi-chi.” “Investment bankers want to make them more complex, so that they won’t be copied, and so that their clients won’t understand them,” he says. “When they ask whether they’re paying the right amount, they won’t know.”

But some advocates of evidence-based medicine suggest that the value of many standard medical procedures may be as uncertain as newfangled CDO-backed investments. . . .

For example, Henry Aaron highlights how little medical professionals know about the value of many of the technologies they employ:

U.S. analysts have suggested a six-level framework with which to evaluate improved technology such as diagnostic imaging. First, does the test perform as intended in a physical sense? For example, can a newer CT scanner distinguish tumor from normal tissue more effectively than an older model did? The second level of evaluation refers to diagnostic accuracy: is the test sensitive and specific? For example, does a stress test accurately show heart disease when it is present and clearly indicate its absence when it is not? Third, does the test alter the clinician’s diagnosis? When simple methods work, sophisticated techniques may add nothing but cost. Fourth, does the test affect the patient’s treatment? Accurately diagnosing a condition for which no effective treatment is available has little value. Fifth, do the test and associated changes in treatment improve patient health? Finally, what are the social consequences of the test as measured, for example, by cost effectiveness when compared to another procedure?

This six-level framework for evaluation is based on methods applied in the U.S. Agency for Healthcare Research and Quality as described by Athina Tatsioni et al., Challenges in Systematic Reviews of Diagnostic Technologies, 142 ANNALS OF INTERNAL MED. 1048, 1048 (2005).

Level-one and level-two evaluations are most common. A count of studies of magnetic resonance spectroscopy for brain tumors through 2004 revealed eighty-five level-one studies and eight level-two studies had been performed, but only two level-three studies, two level-four studies, and no level-five or level-six studies. Yet it is level-five and level-six studies that are most relevant for decisions of any group, private or public, responsible for administering limited health resources…

…as well as to patients deciding on whether to consent.

One final connection; while patients may be deliberating on the risk of illness, businesses in the health field may find their biggest risk is general good health:

Fewer flu patients mean lower profits at hospitals. David Dill, CFO at Lifepoint, told investors at a conference last month put on by financial advisers Stanford Group. “[T]here are cases when you have a strong flu season and the ancillary business is very profitable,” he said, such as when “an elderly person that shows up in the ICU and all of a sudden needs a [tracheostomy tube] to be put in, and that turns into higher acuity business for us. Or on the pediatric side, young kids coming into the hospital, that’s a nice margin for us, as well.”

One thing we can be sure of–if market-driven changes in medicine continue, the intertwining of health and financial risk will become an ever more pervasive feature of daily life for most Americans. Members of the lower and middle classes are often one ill or disabled family member away from financial ruin. Here’s just one story on the astonishing sparseness of “social care” in the U.S.:

O’BRIEN: Singing with the church choir offers Suzanne [] a brief break from the stress of looking after her husband her suffered a catastrophic stroke more than a year ago. The medical bills have put her into enormous debt and the financial burden is now so overwhelming that lawyers have advised her to make an appalling decision.

GIEGEL: I really may have to confront the issue of divorcing him. Pretty much everyone in our family believes that this would be a devastating blow to him because his dementia is not so severe that he wouldn’t know what was happening, I mean he would know what was happening. But his dementia is severe enough that he wouldn’t understand the logic or the financial reasons why, he would simply be hurt at a time when he’s so vulnerable already. And I feel pretty vulnerable, I feel very alone much of the time. And I suspect I have more support than some people.

When we read about things like cuts in the Medicaid budget, it’s people like Geigel who are often bearing the brunt of them.

Cross posted from Madisonian (and modified).

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