What is "efficiency?"

  • by: |
  • 09/18/2006

There’s a lot of talk about how our use of pharmaceuticals needs to be “more efficient.”

But what does “efficient” mean?

Does it mean more cost-effective or more medically efficient? Does it mean either?

Let’s call a spade a spade — “efficient” means short-term savings for payors (although, as we shall see in a moment, only in penny wise but pound foolish ways). Restrictive formularies (in the US both public and private) and health care systems (in the EU, Canada, and elsewhere) that deny access to the right drug for the right patient at the right time but pay for more expensive and invasive procedures later on have their priorities upside down.

Perverse in so many ways — not the least of which is that “savings” are entirely transitory.

Consider the facts. A longitudinal prospective study by Dr. Susan Horn, et al.*, examined the relationship between HMO cost-containment strategies and utilization and total cost of health care for a number of medical (non-psychiatric) illnesses. The study showed that the tighter the formulary restrictions, the higher the overall cost of care — and what drove the increased costs was the association between formulary restrictions and utilization of care. (Many thanks to Dr. Frederick Goodwin — a CMPI board member — for calling this study to our attention.)

A blunter way of putting this is that “efficient,” as the term has come to be defined, has nothing to do with patient care. “Efficient” is a cost-based word and patient-centric concerns be damned.

Welcome to the world of health technology assessment, aka evidence-based medicine, aka rational use of medicine.

And remember, you can’t spell rational without r-a-t-i-o-n.

* If you would like to see the full study, here’s the full citation: Horn SD, Sharkey PD, Tracy DM, et al., Intended and unintended consequences of HMO cost-containment strategies: results from the Managed Care Outcomes Project. Am J Managed Care 1996;2:253-264


Center for Medicine in the Public Interest is a nonprofit, non-partisan organization promoting innovative solutions that advance medical progress, reduce health disparities, extend life and make health care more affordable, preventive and patient-centered. CMPI also provides the public, policymakers and the media a reliable source of independent scientific analysis on issues ranging from personalized medicine, food and drug safety, health care reform and comparative effectiveness.

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