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Access Type

WSU Access

Date of Award

2010

Degree Type

Dissertation

Degree Name

Ph.D.

Department

Economics

First Advisor

Allen C. Goodman

Abstract

ABSTRACT

Background and objectives:

Technological change has a major role in driving up health care cost and expenditure. Yet we are not fully able to know the extent to which technological change affects cost and expenditure and the way new technologies enter the cost or expenditure functions. This paper uses historical data of US elderly males to see how health care spending associated with prostate cancer treatment behaves over time. Understanding the extent and mechanism by which a new technology actually translates into higher cost are main objectives of this study.

Study design, data and organization of the report:

This study uses a retrospective research design with observational historical data. The subjects are Medicare enrolled individuals aged 65 or above who were diagnosed with prostate cancer from 1991 to 2002. SEER Medicare-linked database is used in the study. In Chapter 2, I present a long run view of health care spending growth. Spending associated with prostate cancer care was calculated by diagnosis, diagnosis and treatment and method of treatment status. Chapter 3 uses outcome as a single measure of technological change. Prostate cancer caused death rate is used as the key outcome in this regard. The last key chapter is Chapter 4, which is focused on the two innovations in external beam radiation therapy. Of main interest is whether the incremental spending caused by new treatments grows over time. Two innovations in radiation therapy, 3D-CRT and IMRT, are examined.

Major findings and conclusions:

The average first year incremental spending following an individual's diagnosis of prostate cancer increased from $31,000 in 1993 to $66,000 in 2002, which is 113%. The increase in expenditure associated with the diagnosis and treatment was from $48,018 to $85,267 (80%) during the same period. The findings suggest a substantial increase in health care expenditure that is explained by the changes in prostate cancer care during the study period. If all changes are loosely defined as technological changes, then technological change in the first year of prostate cancer care alone contributed about 100 percent increase in expenditure in 10 years' period. There were more substantial changes in treatment options than in overall care. Among treatment options, surgery saw the highest and the fastest growth of spending.

The estimates using the death rate as a proxy measure of technological change show that the cost per patient would add to $19,055 for the entire decline in death rate caused by prostate cancer. It also meant avoiding one prostate cancer related death in the 65 and older age group would cost $185,000 in the first year of care only. The findings imply that avoiding a death from PCa gave about 7 additional life years in the period. The first year cost of additional life year from this perspective is about $26,000.

Finally, estimates show that one year average costs were $8,627 and $11,836 higher than SRT for 3D-CRT and 3D-CRT and IMRT combined respectively. Similarly, two year cost differentials were $12,242 and $14,724 higher for 3D-CRT and 3D-CRT and IMRT combined respectively. The findings show that incremental spending of 3D-CRT rose consistently for a certain period before it started subsiding. Estimates that included both 3D-CRT and IMRT show that incremental spending did not subside but kept increasing after IMRT was introduced. It is found that the incremental cost of new technology rises as the acceptance of that technology gains momentum. This suggests that technology also enters cost and expenditure functions through the strategic plans of health care providers, primarily hospitals. Therefore the role of new technologies to drive up cost and spending at least partly depends on the technology adoption behavior of the health care providers, such as who adopts the new technology first.