FRBSF Economic Letter
2002-20; July 5, 2002
Productivity in Heart Attack Treatments
Health care spending is growing rapidly in the U.S. and, at 14% of GDP,
is much larger than such spending in other industrialized countries. The
increase in spending reflects not only changing U.S. demographics but
also the use of new, and often costly, treatments, as well as institutional
factors relating to health insurance and the structure of the health care
industry. The question naturally arises, then, whether the increasing
cost of treatments has been accompanied by more effective, or, equivalently,
more productive, health care services.
This Economic Letter addresses this question by taking a detailed
look at treatments for one particular condition, heart attacks. An economic
analysis of this disease is important in its own right: in 1999, heart
attack patients numbered around 829,000, with medical treatment costing
an average of over $20,000 per patient, and heart attacks accounted for
around 199,000 deaths. Moreover, because heart attack treatments exhibit
the same patterns of growth as the overall health sector, this analysis
also can illuminate developments in the entire health sector.
Heart attacks and treatments
Heart attacks occur when the arteries that supply blood to the heart
are blocked. Without oxygen from the blood, part of the heart muscle can
die within hours. Heart attack treatments have two goals: in the short
run, to limit immediate damage to the heart; in the long run, to reduce
Heart attack patients typically receive a combination of therapies, which
may include both invasive (or surgical) and non-invasive treatments. The
primary invasive treatments are heart bypass surgery and angioplasty,
both of which are preceded by diagnostic surgical treatments. Bypass surgery
involves grafting an artery or vein around the blocked artery. Angioplasty
involves using a balloon catheter to break up blockages in arteries. Non-invasive
procedures include drug therapies such as clot-busting (thrombolytic)
drugs and ACE inhibitors that reduce the pressure of blood flowing to
the heart, as well as therapies to change lifestyles, such as exercise
and smoking cessation programs.
Several of these procedures highlight the substantial technological progress
in treating heart attacks over the past 20 years. For example, many drug
therapies, including clot-busting agents, have been developed over this
time. Angioplasty was developed in the mid-1980s and further modified
in the 1990s to include the use of stents to keep arteries open. In addition,
evidence indicates that older procedures, such as bypass surgery, which
was introduced in the 1970s, are now more effective.
Figure 1 shows the per capita number of heart attacks, deaths from heart
attacks, and invasive heart surgeries in the U.S. over the last 20 years.
Although the number of heart attacks has been roughly constant, the increase
in invasive treatments and the decrease in deaths from heart attacks have
been huge. Heart bypass surgery has grown at an average annual rate of
8.4%, and angioplasty has grown from nothing to be even more common than
heart attacks. Both treatments also can be used to prevent heart attacks,
and this use is growing. Deaths from heart disease are declining at an
annual rate of 2.0%.
Productivity and cost changes
One can measure the productivity of heart attack treatments by examining
their impact on patient health outcomes. Cutler and McClellan (2001) examined
a large data set of Medicare patients created from hospital insurance
claims to the government and found that, corresponding to the decline
in deaths from heart disease, the average life expectancy for elderly
heart attack patients has increased by just over one year between 1984
and 1998. Evidence also shows that the quality of life following heart
attacks has improved.
The reasons for the increase in the productivity of heart attack treatments
are varied and appear to come from new and improved treatments as well
as from better use of existing treatments. Heidenreich and McClellan (2001)
apportion 34% of the increase in life expectancy after a heart attack
between 1975 and 1995 to the increased use of aspirin, a drug that was
invented in the 19th century, and a further 17% of the increase to clot-busting
drugs. They arrive at these numbers by combining the fact that randomized
clinical trials have consistently found a benefit from these treatments
with the fact that their usage became much more prevalent between 1975
and 1995. Using Medicare claims data and innovative methods designed to
control for the fact that the data were not created from randomized clinical
trials, McClellan and Newhouse (1997) find that surgical procedures reduce
the probability of a patient's death within two years by an average of
27%. This suggests that the increased use of surgical procedures contributed
to the increased productivity as well.
As medical spending in general has increased in the U.S., so has spending
on heart attack treatments. From the claims data, Cutler and McClellan
(2001) find that the average Medicare spending per heart attack patient
increased by $9,600, from $12,100 in 1984 to $21,700 in 1998, when expressed
in constant 1993 dollars. It is not coincidental that both costs and surgical
treatments, which are expensive relative to non-invasive treatments, have
increased dramatically. By further examining billing data from an unidentified
major teaching hospital, Cutler, McClellan, Newhouse, and Remler (1998)
show that the real prices of surgical and non-invasive procedures have
both remained roughly constant, on average. This implies that the increase
in the costs of heart attack treatments is attributable to the increased
use of surgical treatments.
Are the increases in the costs of heart attack treatments commensurate
with the increased benefits? Answering this kind of question is difficult
for many reasons, not least because it involves coming up with a way to
place a dollar value on the additional year of life that the treatments
provide. Though such measures of the value of life are uncertain and controversial,
they generally imply that the value of one year of life is much higher
than $9,600, which is the increase in the costs of heart attack treatments
between 1984 and 1998 noted above. As a result, research that has studied
this issue (see Cutler and McClellan 2001 and Jones 2001) finds that treatments
for heart attacks are, on average, more economically supportable today
than they were 20 years ago.
Although there appear to have been significant benefits from the technological
change in heart attack treatments, other practice patterns could have
been even more effective and cheaper. One can better assess the optimality
of treatment patterns by looking at the variation across countries. Figure
2 presents data from four different regions that are representative of
cardiac care in the developed world: the U.S., Scotland, Finland, and
Ontario, Canada; Panel A shows the percent of patients receiving bypass
surgery with one year of a heart attack, Panel B shows the percent of
patients receiving angioplasty within one year of a heart attack, and
Panel C shows the percent of patients who die within one year of a heart
attack. The data are from the Technological Change in Health Care (TECH)
project, an international collaboration of investigators from 17 countries,
and are based on large, nationally representative samples of patients.
Corresponding to the general trend of health expenditures, the U.S. has
much higher rates of bypass and angioplasty than other countries: for
instance, in 1997, the one-year bypass and angioplasty rates in the U.S.
were 18.4% and 27.9%, respectively, while for Ontario, the rates were
10.4% and 10.0%. But the differences in mortality rates for heart attack
patients are much smaller: in 1996, Ontario had a one-year mortality rate
of 24.1%, which is very similar to the United States rate of 24.2%; Scotland
and Finland had higher mortality rates, but the difference of roughly
5 percentage points between their rates and the U.S. rate was much smaller
than the differences in the rates of surgical treatments. Note, however,
that we measure only one outcome, patient death. It is possible that the
surviving heart attack patients in the U.S. have a higher level of physical
function, and hence a higher quality of life, as a result of more invasive
It might seem that the evidence from the U.S. is at odds with the cross-country
evidence. Are new heart attack treatments valuable or not? The apparent
contradiction can be resolved by noting that average effects can often
be different from incremental effects. In particular, evidence suggests
that surgical treatments are valuable on average. However, the incremental
surgical treatments done in the United States may not reduce death rates.
In other words, angioplasty and bypass surgery reduce the death rates
for some patients by a large amount, and yet for many patients they provided
little or no benefit.
What economic reasons explain why the United States spends more on heart
attack treatments? Chernew, Gowrisankaran, and Fendrick (2002) find that
traditional private insurance may provide incentives for hospitals and
physicians to open bypass units and hence provide invasive treatments,
although managed health care appears to reduce such incentives.
Furthermore, even though the incremental use of invasive surgeries may
not help patients, bypass and angioplasty surgery have transformed the
prognosis for heart attack patients. The U.S. health care system is different
from most other industrialized countries in that services are highly decentralized.
Decentralization can lead to vast technological advances but also to unnecessary
care. The challenge is to design systems that maximize the diffusion of
technological advances while minimizing unnecessary care.
Chernew, M., G. Gowrisankaran, and A.M. Fendrick. 2002. "Payer Type
and the Returns to Bypass Surgery: Evidence from Hospital Entry Behavior."
Journal of Health Economics 21, pp. 451-474.
Cutler, D.M., and M. McClellan. 2001. "Is Technological Change in
Medicine Worth It?" Health Affairs (September/October) pp. 11-29.
Cutler, D.M, M. McClellan, J. Newhouse, and D. Remler. 1998. "Are
Medical Prices Declining? Evidence from Heart Attack Treatments."
Quarterly Journal of Economics (November) pp. 991-1024.
Heidenreich, P., and M. McClellan. 2001. "Trends in Treatment and
Outcomes for Acute Myocardial Infarction: 1975-1995." The American
Journal of Medicine 110, pp. 165-174.
Jones, C. 2001. "The Economic Return
to Health Expenditures." FRBSF Economic Letter 2001-36 (December
McClellan, M., and J. Newhouse. 1997. "The Marginal Cost-Effectiveness
of Medical Technology: A Panel Instrumental-Variables Approach."
Journal of Econometrics 77, pp. 39-64.
*The author thanks the TECH project for providing data. The views expressed
herein do not reflect those of the TECH project.