Health Care Costs example essay topic

The cost of health care in the United States has been increasing at an alarming rate. Several years ago, prior to the 1980's when resources for health care seemed to be unlimited, there were few believers in the concept that health care costs had to be reduced or even contained. However, in the 1980's, when the amount spent on health care in the U.S. began to increase by about $30 to $50 billion dollars per year, those who paid for the care of patients started looking for ways to decrease the amount spent on health care. Studies conducted by researchers at the RAND Corporation showed that as much as one-third of medical care provided to patients could be considered unnecessary or of little benefit.

As a result several groups including the federal government, launched ambitious efforts to measure and improve the quality and effectiveness of medical care. Methods adopted, many of which are still in existence, include the use of generic drugs, fixed fees for services (regardless of the actual costs of care), formulary control and therapeutic substitution of drugs, shortened length of hospital stay, and the use of less expensive procedures and medications. Health care institutions quickly realized that for them to survive the downward pressure on revenue and increased pressure on cost, they would need to decrease the cost of care. After some experimentation, a discipline of health economics surfaced in which models were developed to assist decision makers in this process of selecting drugs and therapies. The goal was to find treatments that enabled the goals of therapy to be met at the lowest possible cost.

Two fundamental principles emerged. The first principle was the recognition that patients could be categorized by, and grouped into similar populations. While individual therapy might need to be monitored and adjusted, initial therapy could be planned and ordered on a population basis. This allowed for standardized care plans and widespread use of cost-minimization techniques (to be addressed later in paper). The second principle was that it would not be financially possible for every patient to receive therapy which had the maximum effectiveness. Sacrifices in efficacy would have to be made in order to avoid harsher rationing, and ultimately, refusal of care.

The process by which different therapies or drug regimens are evaluated in order to measure the extent to which a goal of therapy, or desirable outcome can be reached, is known as outcomes research. Outcomes research differs from traditional clinical trials research because it examines issues such as cost-effectiveness and the effect of treatment on quality of life. Outcomes, which have been identified in the literature as relevant for patients, include economic, clinical and humanistic outcomes. Pharmacoeconomics, a division of health care economics, is a tool, not a solution. It is designed to provide users and decision-makers with information about the cost-effectiveness of different pharmacotherapies. It is used in combination with outcomes research, as an analytic tool in which the result of research are manipulated and modified using different mathematical techniques.

The goal of pharmacoeconomics is to recommend the most cost-effective agent at achieving a designated outcome in a specific population, and the role of the pharmacoeconomists and researchers is not to make a decision, but rather to provide decision-makers with relevant information about both cost and efficacy so that they may select from among alternative therapies.