For immediate release:
Tuesday, February 7, 2006
12:01 a.m. EDT


Christopher Fleming

Dartmouth Researchers Say Rising Health Care Costs Don’t Necessarily Buy Better Health 

Cutler, Garber Join In Stressing Need To Find Ways To Promote Efficiency

Bethesda, MD — When it comes to achieving better medical outcomes, how much you spend matters a great deal less than what you buy.

The conventional wisdom is that health care may cost more, but it’s money well-spent on new treatments that save lives. A new study by economists Jonathan Skinner and Douglas Staiger and physician Elliott Fisher challenges that wisdom. They find that the factors fueling enormous improvements in outcomes for heart attack patients were not the factors that fueled tremendous increases in costs. On average, over the period 1986-2002, there was a substantial gain in survival following heart attacks. But nearly all of that gain occurred before 1997, while costs have continued to rise since then. And much of the gain occurred in regions of the U.S. exhibiting below-average growth in spending.

“Uneven distribution of cost-effective innovations is a key factor driving differences in patient costs and outcomes,” the Dartmouth trio writes in a study published today on the Health Affairs Web site. “Put more simply, the benefits of health spending depend on how one spends the money.” Health Affairs has also posted perspectives on the Dartmouth study by Stanford’s Alan Garber, MD, and Harvard’s David Cutler.

The Dartmouth study, funded by the National Institute on Aging, sheds new light on the pioneering research by Cutler and Mark McClellan, MD. The researchers looked at care from 1986-2002 for acute myocardial infarction – or heart attack – along two dimensions. The first dimension was an index of “low-cost, highly effective” treatments, including whether patients were given aspirin and beta blockers at hospital discharge and whether they were given reperfusion within 12 hours of admission. The second dimension of care was the average number of physicians treating the patient within one year of the AMI, which “both measured the degree of reliance on specialists and provided a marker for continuity of care.”

Regions scoring high along the first dimension of care achieved better outcomes at lower costs than regions scoring high along the second dimension. The researchers argue that early adoption of cost-effective treatments can boost a region to being a more efficient one that saves more lives while spending less than other less efficient areas. The cost-effective treatments in this case were low-tech items such as aspirin and beta-blockers, but Skinner’s team notes that their analysis “applies equally to any highly effective treatment, whether high-tech or low-tech.”

This new view solves a number of puzzles. It explains why there is a negative association between spending and quality of care in a given year, because the less efficient regions are spending more money in inefficient ways that don’t result in better health outcomes. But it also explains why Cutler and others have found secular gains in survival at relatively modest costs: when aspirin, beta blockers, or reperfusion come along, everyone adopts them, but some more rapidly than others.

The Dartmouth researchers reject the competing “flat of the curve” explanation, which maintains that high-spending regions are on the same “production” curve as lower spending regions, practicing the same sorts of treatments, but are simply far enough out on the curve to be experiencing diminishing -- or even negative -- marginal returns. They argue that “simple overuse of unnecessary treatments cannot explain why high-spending regions are less likely to provide inexpensive but effective treatments.”

Unlike the flat of the curve approach, the Dartmouth researchers warn, “Our new model does not preclude the possibility that sharp cutbacks in the low-efficiency, high-cost regions could adversely affect quality of care.” Instead of simply cutting spending, they recommend “improving productivity: restructuring hospital resources, improving the efficiency of physician treatment patterns, and accelerating the diffusion of highly effective treatments.” Skinner’s team declares: “Efforts to develop measures of quality and efficiency that can encourage hospitals or provider groups to adopt low-cost, highly effective care, while discouraging incremental spending with no apparent benefits, might allow us to keep the golden goose of technological progress alive and well nourished.”

In his perspective, Garber observes that, “as much as we would like new tools” to fight disease, “Skinner and colleagues show that we haven’t mastered the tools that we already possess.” Garber calls for increasing the “paltry sum” that we spend learning to use our existing tools better; he notes that the entire budget of the Agency for Healthcare Research and Quality is only about a third of the cost of developing one new drug – and “an average drug, not a breakthrough” at that.

Cutler suggests that the Dartmouth authors may be letting lower-spending regions off the hook too easily, arguing that there is ample room for even these better performers to become more efficient. He calls greater efficiency “the only hope we have of saving money in medicine” short of “explicit rationing,” and he recommends experimenting with promoting efficiency through both provider pay-for-performance and financial incentives to patients.

Cutler also draws attention to the Dartmouth finding that, even in the aggregate, the positive association over time between increased spending on AMI and better outcomes atrophies after 1996. Confessing some bafflement, Cutler suggest that possible explanations include a sicker population and treatments that are either harmful or carry only delayed benefits.

The Dartmouth study can be read online at

The Cutler Perspective can be read online at

The Garber Perspective can be read online at


Health Affairs, published by Project HOPE, is the leading journal of health policy. The peer-reviewed journal appears bimonthly in print with additional online-only papers published weekly as Health Affairs Web Exclusives at


©2006 Project HOPE–The People-to-People Health Foundation, Inc.