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Evaluating the Total Costs of Cancer

Evaluating the Total Costs of Cancer

ABSTRACT: The Northwestern University Costs of Cancer Program consists of a series of pilot studies that address the costs of cancer care. The program is designed to serve as a template in preparation for undertaking a large-scale study of a nationally representative sample of cancer patients-ie, in preparation for a cancer costs and services utilization study in the future. In this article, we outline the theoretical framework associated with a study of cancer costs and summarize findings from our ongoing pilot studies in this area.

In the United States, cancer is the second leading cause of death after heart disease. One of every four deaths in this country is caused by cancer. According to the American Cancer Society, in the United States in 2002, there were an estimated 1,284,900 new cancer cases, not including 1 million new cases of skin cancer. In addition, an estimated 555,500 people died of cancer in 2002.[1]

Cancer care is undoubtedly expensive, but the precise costs are unknown. Although the National Institutes of Health estimates that the overall annual costs of cancer care are $156.7 billion, no study has formally evaluated these costs at a national level. This is in contrast to the setting of human immunodeficiency virus (HIV), for which a recently completed $35 million study from the RAND Corporation reported on total medical costs for a nationally representative sample of 2,864 HIVinfected individuals in the United States.[2] The HIV Costs and Services Utilization Study found that, in 1996, the total direct costs of illness were $6.8 billion. However, even this large study did not provide a totally comprehensive picture of the costs of an illness, as estimates of the indirect morbidity and mortality costs were not reported. Moreover, before embarking on this $35 million study, RAND researchers carried out a series of smaller pilot studies that evaluated the costs of HIV care in convenient populations.[3] Using methodologies developed in these studies, the larger investigation was undertaken.

Study Rationale

Understanding the costs of an illness is essential to policy makers. For cancer patients, policy makers are faced with many controversies such as the high costs of cancer drugs, access to clinical trials, palliative and end-stage cancer concerns, and the failure of insurance companies to reimburse for high-tech procedures. In order to make informed policies, empirical data on the costs of cancer care are needed. Again, HIV serves as a role model here. Armed with comprehensive data on the costs of HIV care, policy makers have developed comprehensive reimbursement programs such as the Ryan White Titles I, II, and III funds.[4] These programs provide financial support for HIV-infected individuals in settings where the current health-care system might otherwise fail.

It is with this motivation that we have developed the Northwestern University Costs of Cancer Program (NUCCP). The NUCCP consists of a series of pilot studies that address the costs of cancer care. The program is designed to serve as a template in preparation for undertaking a largescale study of a nationally representative sample of cancer patients-ie, in preparation for a cancer costs and services utilization study in the future. In this article, we outline the theoretical framework associated with a study of cancer costs and summarize findings from our ongoing pilot studies in this area.

Which Costs to Consider

Reported costs of cancer represent the societal value of oncologyrelated resources consumed in providing cancer care, including the costs associated with drugs and devices, consultation with physicians, and hospitalization. However, most of the detailed information on cancer costs relates to the direct medical expenditures for cancer treatment, rather than for care related to treatment- related toxicity. Very little is known about the societal value of resources used as a result of toxicity, including both the direct medical costs for supportive care and the indirect costs of care to patients and providers. The indirect costs include the value of lost time from work as a result of the illness, decreased productivity while at work, time or money spent by people looking after the patient, premature retirement or death, and demotion in employment.

Additionally, out-of-pocket expenses for patients and the effect on future insurability all have significant costs associated with them, but depend on the perspective of the assessment. Health-care professionals, insurance companies, pharmaceuticals, the government, and patients all have interests in the economic impact of health care, but their respective goals differ greatly. Health-care professionals are concerned about the ability to perform their services within a budget (theirs and the patient's), whereas insurance companies must try to maximize cost efficiency to lower their own costs. Pharmaceutical manufacturers want to maintain their drug prices at higher levels to maximize profits.

The government must bear all of these goals in mind for each sector of the health-care economy in order to regulate the costs upon the consumer. In addition, they must evaluate cost from a societal point of view.[5] Generally, costs can be considered from the perspective of the patient (travel costs, out-of-pocket expenses, lost work time), the employer (lost employee productivity, increased health insurance premiums), or society (overall costs to patients, employers, providers, payers, and the public as a whole).

Cost Categories

Generally, health-care costs are classified into three categories: direct medical costs, indirect morbidity costs, and indirect mortality costs. Direct medical costs include the aspects most closely associated with treatment, such as physician bills, laboratory work, drugs, and hospital stays.[6] These costs are the factors most commonly used for analysis, and they often exclude the costs of building and providing health-care facilities such as hospitals and pharmacies.[5]

Direct nonmedical costs are costs associated with treatment that do not involve the procedure itself, including transportation and dietary needs. Finally, indirect costs do not relate to the treatment itself, but they may occur as a consequence. Opportunity costs such as lost work time and reduced productivity fall into this category. It is important to note that to give a complete picture, indirect costs should be factored in as well. These will vary greatly between disparate socioeconomic groups, particularly in terms of cost-benefit ratios, a consideration to bear in mind when making claims for society as a whole.[7]

Patients provide an important perspective because they are the most influenced by costs overall-particularly indirect costs-and these effects will determine the government's reaction to the state of health economics. In contrast to using only monetary costs, patient perspectives allow for a societal cost analysis, which is essential in determining overall costs.[7]

Determining Costs

The determination of these costs proves tricky. Even before comparing the direct and indirect costs, the prices and methods that health-care organizations use to convey them do not necessarily reveal information in a straightforward manner. For example, health care is often expressed in average costs of services and goods, but in order to make a strong comparison to indirect costs, marginal costs would be of greater utility.

The ratio of costs to charges (RCC) is a common way of expressing costs, although this method has received wide criticism for being based solely upon Medicare patients, limiting its applicability to the general population. A newer approach using relative- value units (RVUs), assigns value to medical procedures according to the needed resources. While this avoids problems associated with interinstitutional cost comparisons (another criticism of the RCC approach), its utility may be of limited value for individual institutions in terms of selfevaluations.[ 7]

Comparing the Data

Another difficulty underlying these analyses is the establishment of a comparison method for the data. For example, the dilemma of whether to recruit patients using diagnostic- based, treatment-based, or randomized criteria will bias the population to be studied, most likely skewing the collected data. While specific patient selections will have more utility for studies comparing various methods and management approaches, a randomized study will be more representative of the general population, and this may prove to be more useful for economic analyses.

It has also been recognized that patients in clinical trials often have better prognoses, and the data obtained through these studies may not accurately reflect the true costs involved.[ 8] Another factor that is often overlooked in cost analyses is the comparison between treatment and preventive measures. Many cancers and serious health conditions do not lend themselves to good preventive strategies. However, with certain conditions (eg, lung cancer), prevention plays an important role in epidemiology and should always be taken into consideration.[5]


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