Understanding the value of chronic disease care is critical to confronting the challenges of aging societies. In a new ebook published by the Centre for Economic Policy Research, APARC Deputy Director and Asia Health Policy Program Director Karen Eggleston provides a framework for assessing the social value of health spending.

The world population is aging faster than ever before and governments must confront the increasing burden of healthcare spending on their economies. At a time when the economics of aging is inseparable from the economics of healthcare, successful adaptations to older population age structures necessitate better understanding of the value of medical care. Policymakers, in particular, must incorporate value into considerations of healthcare cost growth, so they can determine the extent to which average health improvements offset added cost, reduce cases in which health spending rises without sufficient corresponding health outcomes, and reward those in which “we are getting what we pay for.”

A new book chapter, authored by APARC Deputy Director and Asia Health Policy Program Director Karen Eggleston, provides a framework for assessing the social value of health spending. Titled “Understanding ‘value for money’ in healthy aging,” the chapter is part of an ebook, Live Long and Prosper? The Economics of Ageing, published by the Centre for Economic Policy Research (CEPR).

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Quality-Adjusted Cost of Care

How do health economists incorporate value into measurements of health spending and how do they measure the social value of medical care? First they assume each additional year of life brings a given monetary value. Then they measure the growth in value to patients as monetized gains in “quality-adjusted life-years,” a metric that includes increases in life expectancy and quality of life. The difference between the change in health spending and the change in monetized gains on improved survival is the net change in quality-adjusted health spending or the net value of medical care.

Understanding the value of chronic disease care is especially critical in aging societies, as governments must transform their health systems to support patients who will live with chronic diseases for decades. Health benefits of medical care, however, are difficult to aggregate across disparate services and diseases, and hence focusing on management of a single important chronic disease allows researchers to develop metrics of quality improvement and value that are linked to rigorous clinical studies. Eggleston describes a recent international research collaboration, which she was part of, that did just that. The researchers studied quality adjustment for one disease of growing global prevalence, type 2 diabetes, in four different health systems: one in Europe (the Netherlands) and three in East Asia (Japan, Hong Kong, and Taiwan).

Results of the study suggest that, in each health system, the value of improved survival outweighs the increase in health spending. For example, in the case of Japan, Eggleston and her colleagues found a positive value net of $2,595 for $100,000 value of a life-year. They also compared net value across the four health systems and different patient samples, finding mean net value that ranged between $600 and $10,000 for a $100,000 value of a life-year. Moreover, net value was positive for all age groups and remains positive and significant for individuals well beyond traditional retirement ages. These results, says Eggleston, indicate “the importance of continuing investments in medical treatments and services that deliver health outcomes of commensurate or higher value.”

Policy Implications

Confronting the challenges of aging societies requires careful thinking about the value of investments in new technologies for managing chronic conditions. To promote healthy aging governments must be “resiliently persistent in measuring the value of innovations for healthy aging and rewarding those that deliver high net value,” argues Eggleston. The goal should be improving the “value for money” of medical care rather than applying largescale cost controls that might stifle important breakthroughs.

The four-system study by Eggleston and her colleagues provides a framework for developing methods for assessing quality improvement and the net value of chronic disease spending and, more broadly, for measuring the value of healthy aging.

Download Eggleston’s chapter as part of the entire ebook >>

Learn more about Dr. Karen Eggleston’s research agenda seeking to assess net value in diabetes management and to identify and analyze innovation for healthy aging.

Type 2 diabetes has become a major public health problem in South Asia in recent decades. The region is now home to an estimated 84 million people suffering from diabetes—approximately one-fifth of the world’s 451 million adults with diabetes—a number that is expected to rise by 78% by 2045. Even more concerning, across South Asia the disease burden increasingly occurs in the most productive midlife period. Among Indians, for example, diabetes is estimated to occur on average 10 years earlier than their western counterparts, and almost half of Indian patients with type 2 diabetes are diagnosed before age 40.

How do South Asian health system influence diabetes care? What is the magnitude of the economic impact of diabetes in South Asia? And what can be done to mitigate that economic burden? These are some of the questions that a team of researchers, including Karen Eggleston, APARC’s deputy director and director of the Asia Health Policy Program, set out to answer in a new study published in the journal Current Diabetes Reports.

Eggleston co-authored the study with Kavita Singh of the Public Health Foundation of India and the Centre for Chronic Disease Control in New Delhi, and with M. Venkat Narayan, Professor of Medicine and Epidemiology and Director of the Global Diabetes Research Center at Emory University. They find that diabetes-related complications lead to enormous treatment costs, causing catastrophic medical spending and illness-induced poverty for many households.

The new study is related to a broader research project led by Eggleston, entitled Net Value in Diabetes Management, that compares health care use, medical spending, and clinical outcomes for patients with diabetes as a lens for understanding the economics of caring for patients with complicated chronic diseases across diverse health systems. This international collaborative research convenes teams of clinicians and health economists in ten countries (and growing) across Asia, as well as the United States and The Netherlands. Together, they analyze big data—detailed, longitudinal patient-level information for large samples from each country, including millions of records of clinical encounters, health-check-up, and medical spending—to compare the health care use and patient outcomes for adults with type 2 diabetes in their health systems.

In the new publication, Eggleston and her co-authors first introduce several unique features that characterize the type 2 diabetes epidemic in South Asia. These include a high risk of developing diabetes even at lower levels of body mass index than observed among western populations; a high prevalence of glucose intolerance, low levels of HDL cholesterol, and high levels of triglycerides; a relationship between impaired fetal nutrition, diabetes, and cardiovascular risk; and the likelihood of rapid urbanization impacting the diabetes burden of the wealthy and the underprivileged differently.

Furthermore, South Asian countries face difficult challenges in delivering diabetes care. The health sector in the region has little organized financing, leading to heavy out-of-pocket spending by patients. Limited availability and affordability of anti-diabetic drugs is a major driver of lower use of such medicines. These factors, combined with a general lack of health care professionals and infrastructural resources and low quality of healthcare governance, all contribute to poor health outcomes.

Eggleston and her co-authors assess the current literature on the economic impact of diabetes in South Asia. They show that, compared with the high prevalence of diabetes in South Asian countries, the total health spending as a percentage of GDP in the region has remained low and fairly constant (3-4% in most countries) over the last two decades, with less than 1% of GDP spent on healthcare by the government, and a miniscule 0.2% by pre-paid private insurance, resulting in a large proportion of out-of-pocket healthcare spending. The financial burden of diabetes and its complications can therefore have catastrophic implications for households that are often driven to sacrifice disastrous proportions of their income to cover treatment costs.

Diabetes causes premature mortality, high morbidity, and disability. To mitigate the economic and social welfare burden of the disease, the researchers conclude, policymakers in South Asia must take urgent action “to increase investment in evaluating cost-effective strategies to manage diabetes and preventative approaches.” The team offers a set of policy recommendations, including monitoring the economic burden of diabetes and the quality of care; focusing on the screening and prevention of diabetes and its risk factors; strengthening government health facilities and primary care services; expanding access to affordable, essential medicines, and more.

In the summer of 2018, the Asia Health Policy Program (AHPP) at the Shorenstein Asia-Pacific Research Center (co)hosted two conferences in Beijing. From June 25-26, AHPP hosted “Healthy Aging and Chronic Disease Management in China and India in International Comparison” at the Stanford Center at Peking University in Beijing. Immediately following the event, June 26-27 AHPP cohosted, along with Professor Fang Hai, Peking University China Center for Health Development Studies, the “Fourth Annual Conference on Primary Care and China’s Health System Reform”, focused this year on China’s family doctor system.

Healthy Aging and Chronic Disease

Day one of the Healthy Aging and Chronic Disease Management conference combined discussions of chronic disease control in India and China (part of an ongoing SCPKU Team Innovation faculty fellowship) with a workshop focused on assessing net value of diabetes management across Asia.

Research teams from Hong Kong, South Korea, India, Taiwan, and the United States convened to discuss research on net value analysis of diabetes in their respective countries. The Net Value in Diabetes Management project seeks to develop a method for measuring net value of diabetes internationally­–based on previous methods discussed in an 2009 study by Karen Eggleston and Joseph Newhouse with data from the Mayo Clinic for Type 2 Diabetes.

The research teams provided updates to their calculations from the gathering last year and explained the strengths and weaknesses of their data sets, the risk prediction model they employed or created for their specific population, and the cost effectiveness analyses conducted with their data.

Participants included Kavita Singh from the Public Health Foundation of India, Janet Lam from Hong Kong University, Hongsoo Kim and Wankyo Chung from Seoul National University, Rachel Lu and Ying Isabel Chen of Chang Gung University Taiwan, and Kyueun Lee and Karen Eggleston of Stanford University.

Non-communicable/Chronic Disease Control

The afternoon of day one featured presentations by various representatives from provincial and national-level Centers for Disease Control and Prevention (CDC) in China regarding non-communicable disease (NCD) control initiatives.

Dong Jianqun from the People’s Republic of China CDC presented the “Effect of Community-Based 5+1 staged diabetes management.” This research project–fielded in sites in three different provinces–involved staged diabetes targeting management. Results showed that examination rates for complications management increased. Fang Le from the Zhejiang Provincial CDC presented updates on community management of NCDs in Zhejiang, including the intensive follow-up system for high risk diabetes patients. Representatives from Shandong University and the Shandong CDC, including Dr. WANG Yan, presented “The Status, Problems, and Determinants of community management and control of diabetes in Shandong Province” while also discussing current policy and implementation.

The afternoon ended in a session comparing health care systems and ongoing initiatives for chronic disease control in China and India. Kavita Singh discussed issues in India’s health system, including high out of pocket expenditure, over-privatization, and large health inequities across states and between urban and rural areas. Singh introduced existing innovations being used, including smartphone-based decision support software in heart disease monitoring. Dong Jianqun and colleagues discussed NCD control in China, including the demonstration areas that have integrated initiatives including better surveillance and management of diabetes and hypertension, and prevention education.

The first conference closed the next morning by bringing together representatives from various Chinese organizations to discuss the current state of primary care, family doctor system, and health care reform within the country. During a highly immersive classroom session for the Diabetes Net Value Teams, Dr. Sanjay Basu shared insights regarding best practices in predictive risk modeling.

China’s Family Doctor System

Beginning the afternoon of June 26, the second conference was devoted to China’s family doctor system, primary care, and health care reforms.  The event opened with remarks from Zhuang Ning, Deputy Director of the State Department of Health, System Reform Department, about the importance of community health and greater recognition of primary health providers in China.

The director’s remarks were followed by an opening keynote address by Professor MENG Qingyue, Dean of the Peking University School of Public Health and Director of the China Center for Health Development Studies at Peking University. Professor Meng reflected on the role of primary care in the development of China’s health system. Qin Jiangmei, Director of the Community Health Research Center, National Health and Family Planning Commission Health Development Research Center, next introduced the necessity of comprehensive health reform in China as well as funding challenges.

Afterwards, representatives from the Beijing Dongcheng district, Shanghai Changning district,  Xiamen City, and Shenzhen Luohu Hospital Group shared their experiences constructing family doctor systems within their respective regions. Important points stressed by the presenters included consolidation, maintaining a good evaluation system, and establishing trust with their patients.

The day ended with a Primary Medical Care Roundtable Discussion featuring four directors of district-level community health centers. The panelists answered questions concerning the future model of primary care in China, as well as changes they would like to see at the community and policy levels. The district directors advocated that more funds be allocated to general practitioners, believing that they will be the dominant form of primary care in China. Participants also spoke of the additional need for clearer targets to ensure that primary care providers are better funded (so that, with enough time, patients will begin to recognize the importance of the family physician).

The second conference concluded on June 27 by way of a highly engaging classroom session on the continuing collaboration between the Zhejiang Provincial CDC and Stanford University Asia Health Policy Program.

Emily Tuong-Vi Nguyen, a Stanford student studying human biology, writes about the Asia Health Policy Program’s international conference on diabetes

The Asia Health Policy Program at the Shorenstein Asia-Pacific Research Center hosted the Net Value in Diabetes Management Workshop in March to discuss progress on an international research collaboration. Research teams from Hong Kong, Singapore, China, Taiwan, South Korea and the United States convened at the Stanford Center at Peking University (SCPKU) in Beijing to work on research that compares utilization and spending patterns on diabetes across different countries and to develop a method for measuring the net value of diabetes internationally, based on previous methods discussed in a Eggleston and Newhouse et al. 2009 study with Mayo Clinic Data for Type 2 diabetes.

The research teams from various Asian countries are attempting to calculate the net value of diabetes in those countries by observing the changes in diabetes value and spending. These calculations include monetizing the value of health benefits of new treatments and improvements in health, as well as avoided spending on treatments when prevention was effective, and associated mortality and probability of survival. Previous models used to measure diabetic values and risks, such as the United Kingdom Prospective Diabetes Study (UKPDS) risk engine that was created from U.K. data and populations, are not very relevant for Asian populations. The goal is to create separate risk models specifically suited for populations from Hong Kong, Singapore, China, Taiwan and South Korea.

During the workshop that spanned two days, the research teams had an opportunity to share updates on their individual projects and to discuss methods and ideas for future collaboration.

On the first day, each research team presented its work, describing data sets and explaining the risk models that were used or developed. Karen Eggleston, director of the Asia Health Policy Program, delivered introductory remarks and shared current progress by the Japan and Netherlands research teams on calculating value and risk for diabetes with data from the Netherlands and Japan. The data sets from those two countries were best estimated by the JJ Risk Engine for the Japan data and the UKPDS model for the Netherlands data.

Chao Quan of the University of Hong Kong presented the risk model used for Hong Kong populations. His work primarily looked at how the UKPDS risk engine predicted risk in Hong Kong populations as compared to a local Hong Kong risk engine and how to best calibrate the Hong Kong risk engine. His next step will be to monetize the value for improved survival in diabetes in Hong Kong. He offered to re-estimate the model using the risk factors available on others’ datasets so that the Hong Kong risk model could potentially be used by other teams as well.

Stefan Ma and Zheng Li Yau of the Ministry of Health of Singapore discussed the 5-year prediction model and statistical methods they used for all-cause mortality of Singaporean individuals with diabetes. Their work is based on Singapore’s extensive administrative and claims data as well as data provided by the national health surveys conducted every six years by the National Health Service of Singapore. The researchers plan to look into how their overall risk model compares with models for specific subpopulations, such as Chinese, Malay and Indian populations in Singapore.

Katherine Hastings from the Stanford University team, led by principal investigator Latha Palaniappan, presented preliminary ideas about measuring cardiovascular risk with the Atherosclerotic Cardiovascular Disease Risk Score in analyses of Stanford health system diabetic patients. The researchers are collaborating with a clinical bioinformatics team at Stanford to use machine learning to expedite the analysis.

Min Yu and Haibin Wu of the Zhejiang Center for Disease Control and Prevention shared results from their analysis of health data collected from community health centers for diabetes management, diabetes surveillance data, cause of death data and insurance claims data that showed relationships between different patient characteristics and insurance types. The researchers then estimated the annual cost of Type 2 diabetes and its complications in Tongxiang province, China.

Hai Fang and Huyang Zhang of Peking University worked with claims data of diabetic patients insured by the New Cooperative Medical Scheme in Beijing, and at the workshop, shared regression analyses on the relationship between outpatient visits and inpatient admissions.

Jianqun Dong of the People’s Republic of China Center for Disease Control and Prevention presented ongoing research about diabetes management in China, including preliminary results of a randomized control trial of diabetes self-management strategies.

Wankyo Chung of Seoul National University shared preliminary estimates of a risk model for mortality among diabetic patients in South Korea and discussed next steps for estimating net value of diabetes management using the detailed clinical and claims data available in South Korea.

On the second day, the workshop concluded with a videoconference between workshop participants in Beijing and collaborators at Stanford Graduate Business School, including Stanford professor Latha Palaniappan and Harvard visiting professor Joseph P. Newhouse, using the Highly Immersive Classroom.

The workshop was a good opportunity for the research teams to discuss preliminary models, to offer each other suggestions regarding research methods, and to discuss the future direction of the international collaboration on the net value of diabetes. All research teams are preparing comparative research papers that will be included in the working paper series of the Asia Health Policy Program. A follow-up event will be held at Stanford in November 2017 in recognition of World Diabetes Day.

Non-communicable diseases such as heart and respiratory disease, cancer, obesity and diabetes are now responsible for some two-thirds of premature deaths around the world. And most of those are in low- and middle-income countries.

The United Nations has estimated that on top of the social and psychological burdens of chronic disease, the cumulative loss to the global economy could reach $47 trillion by 2030 if things remain status quo.

“That was a big whopper of a number and got a lot of attention, and that was good because it raised awareness,” said Rachel Nugent, vice president for global non-communicable diseases (NDCs) at the research institute RTI International.

“It’s an issue that is driven by a lot of different factors, “ she said. “And understanding how the larger social and economic factors affect NDCs, at a policy level, very little progress has been made — there’s been very little collaboration.”

Nugent was addressing the fourth annual Global Health Economics Colloquium at University of California San Francisco, with health experts, policymakers, students and researchers from Stanford, Berkeley and UCSF who gather every year to take a deep dive into the economics of a global health issue. More than 200 experts from 10 universities and public health departments attended the conference.

The daylong gathering focused on recent developments in the economics of NDCs, looking at case studies from around the world, and new guidelines for cost-effectiveness analysis and the role of economics in reducing health inequality.

“The donors are not convinced that there are cost-effective things that we can do in these countries; a lot of them are very skeptical that this is affecting the poor,” said Nugent, a member of the World Health Organization’s expert advisory panel on the management of NCDs.

In India, for example, much of the population still defecates outdoors, contaminating water sources and agricultural products, which can lead to malnutrition and physical and cognitive disorders. Many donors would rather see funds go to building latrines as they can see tangible results; NDC prevention is a long-term slog.

“But I don’t think we should necessarily think of NDCs as either-or,” said Nugent.  “I think that integration of services and programming is very much at the forefront of what is the right way to go.”

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Cost-effectiveness Analyses

Nugent’s research has shown five cost-effective interventions would avert more than 5 million premature deaths from NCDs by 2030, or a reduction of 28.5 percent in projected mortality from chronic disease around the world. And the average benefit-cost ratio is 9:1, at a global cost of $8.5 billion a year.

The interventions are raising the price of tobacco products by 125 percent through taxation; providing aspirin to 75 percent of those suffering from acute myocardial infarction; reducing salt intake by 30 percent; reducing the prevalence of high blood pressure with low-cost hypertension medication; and providing preventive drug therapy to 70 percent of those at high risk of heart disease.

Gillian Sanders-Schmidler, a professor of medicine at Duke University Medical Center and former assistant professor of medicine at Stanford Health Policy’s Center for Primary Care and Outcomes Research, addressed the colloquium about recommendations of the Second Panel on Cost-Effectiveness in Health and Medicine.

“There is a continued emphasis on transparency and comparability across analyses,” said Sanders-Schmidler. “And of course the big changes are that we’re now asking for a second reference case and using an ‘impact inventory’ table to clarify the scope of the findings.”

The independent panel of non-government scientists and scholars, which also included Stanford Health Policy’s Douglas K. Owens, focused on new ways to deliver health care effectively, yet with a focus on efficiency, as health care spending in the United States has reached 18 percent of GDP, much greater than the global average of 10 percent.

The first panel that convened in 1996 recommended that all cost-effectiveness analyses of health interventions include a reference case that uses standard methodological practices to improve comparability and quality. The second panel, which published its findings in September, now recommends that in addition to the societal perspective recommended by the original panel, that CEAs include a second reference case that looks at the health-care sector impact of an intervention. Additional guidance was given on what to include in the societal perspective reference case.

The panel wrote in its JAMA “special communication” that these societal reference cases should include medical costs “borne by third-party payers and paid out-of-pocket by patients, time costs of patients in seeking and receiving care, time costs of informal (unpaid) caregivers, transportation costs, effects on future productivity and consumption, and other costs and effects outside the health-care sector.”

They found most countries, including the United States, give greater weight to clinical evidence in their cost-effectiveness analyses. The panel now recommends an “impact inventory” that helps analysts and end-users of cost effectiveness analyses look at the impact of interventions beyond the formal health-care sector.

“We’re trying to ask people to be explicit,” said Owens, director of the Center of Primary Care and Outcomes Research and Center for Health Policy at Stanford.

“We want them to look at how to value outcomes in a societal perspective, not just the health-care sector, to look at all these other sectors such as productivity consumption, criminal justice, education, housing and the environment,” he said.

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Case Studies

Several case studies presented at the colloquium indicated that policy changes, government intervention and social factors are key to preventing obesity and diabetes and other NCDs.

Kristine Madsen, an associate professor of public health at UC Berkeley who focuses on childhood obesity, spoke about the nation’s first “soda tax” on sugar-sweetened beverages, which was implemented in Berkeley in March 2015.

The city has seen a 21 percent decline in the drinking of soda and other sugary drinks in low-income neighborhoods after the city levied a penny-per-ounce tax on sodas and sugary drinks. At the same time, according to a study in the American Journal of Public Health, neighboring San Francisco — where a similar soda-tax measure was defeated — and Oakland saw a 4 percent increase in the purchase of sweetened beverages.

“This decline of 21 percent in Berkeley represents the largest public health impact in an intervention that I have ever seen,” said Madsen.

Sergio Bautista of the Mexico National Institute of Public Health and UC Berkeley, said that Mexico’s sugary drinks tax implemented in January 2014 is expected to lead to a 10 percent reduction in sugary drinks consumption and prevent an estimated 189,300 cases of diabetes in a country famed for its sugary bottled cola.

William Dow, a professor of health policy management at UC Berkeley, shared his research on Costa Rica, where on average people live longer than Americans, despite the several times higher income and 10 times higher health expenditures in the United States.

Costa Rican men have a life expectancy of 77 and the women typically live until age 82; in Americans the numbers are 76 and 81, respectively. Obesity is low among Costa Rican men and few of their women smoke. Lung cancer mortality in the United States is four times higher among men and six times higher among women.

“It’s remarkable in so many ways,” Dow said, noting that deaths in the Central American country are due predominantly to infectious disease. “Does Costa Rica have any unique effective programs to emulate, or is there something going on upstream driving those health outcomes?”

He believes Costa Rica’s national health insurance and excellent access to primary care for nearly all its people are key. Having this guaranteed lifetime access to health care also reduces the stress and depression that can so badly harm physical health.

“And I would argue that probably diet is one of the most important things going on here,” said Dow, noting their diets are healthy.

Costa Ricans eat mostly unprocessed foods such as rice and black beans, corn tortilla, yam and squash, with little meat and plenty of fresh fruit.

“They also have the highest remaining life expectancy at age 80 of any country in the world, he said. “What we have learned in Costa Rica would be helpful in many other countries.”

Nearly 100 health economists from across the United States signed a pledge urging U.S. presidential candidates to make chronic disease a policy priority. Karen Eggleston, a scholar of comparative healthcare systems and director of Stanford’s Asia Health Policy Program, is one of the signatories. 

The pledge calls upon the candidates to reset the national healthcare agenda to better address chronic disease, which causes seven out of 10 deaths in America and affects the economy through lost productivity and disability.

Read the pledge below.