Friday, March 28, 2008

Why are health costs out of control? Is it the lack of information?

Dear Colleagues

There are many reasons that health costs are out of control. I am reminded of an old saying that I grew up with in the UK: "Ignorance is bliss, 'tis folly to be wise".

In the case of the global health sector there is an apparent total ignorance about cost ... I say "apparent" because in many situations it appears that health sector leadership is still able to make very profitable decisions when personal interest is in play!

Certainly the public is kept in almost total ignorance about cost ... and this needs to change.

Most of the corporate organizations that are well regarded for their operating performance have a deep understanding of their costs ... and how costs behave under various conditions. Because they have this information, their decisions to get cost effective performance are well informed.

In most of the global health sector decisions are rarely based on any deep understanding of costs, even in the most simplistic terms. Certainly there is little or no articulation of the way costs behave under different conditions.

While the science of medicine has progressed rapidly over the past fifty years ... with exponential acceleration, maybe ... information and awareness of costs and cost behavior is languishing in a bygone era.

There is absolutely no good reason why this should be. There are ways that cost information can be developed that has wide value ... but it needs to be done in a manner that is both professional and cost effective. It can be done. It should be done.


Peter Burgess

Thursday, March 27, 2008

Cost accounting does not call for randomized statistical method.

Dear Colleagues

I have recently been sent a copy of a report "Constructing the evidence base on the social determinants of health: A guide". It is more than 300 pages long, and I cannot pretend to have absorbed all of its content by a long shot.

But I was interested to find the following:
One of the most influential British texts in the history of evidence based medicine appeared in 1972. This was Archie Cochrane’s essay Effectiveness and Efficiency: Random Reflections on Health Services. Cochrane, himself an eminent physician, argued that health services have a tendency towards inefficiency because of organizational, institutional, demographic and technical factors and a variety of other things including human failure. His principal concern was that there was no agreed way to determine what worked or did not work, and therefore it was not possible to tell whether interventions did more harm than good, or had neutral effects. He also complained that no one could tell how much anything cost, so there was no way of telling what was good value for money and what was not. He advocated the use of the clinical trial and argued that economic appraisal of medical interventions must be undertaken. The randomized controlled trial (RCT), as Cochrane realized, was the most precise way to determine the effectiveness of an intervention. With subjects properly randomized and with investigators blind to which is the experimental group and which is the control group, it provides the best way to determine whether something works and allows bias of various kinds to be controlled to a large extent.
This is very interesting ... both in regard to the lack of understanding about cost ... and the lack of understanding about effectiveness.

More than three decades later the use of randomized trials is commonplace ... and, I would argue, has its place in understanding the science of medicine.

But the same techniques are not, in my view, appropriate in determining costs. Rather it is accounting, and specifically cost accounting that should be used, and this does not make use of randomized statistical methods. Such methods have their place in audit ... but not in accounting.

Furthermore, I would argue that where there is large scale deployment of a public health intervention ... such as IRS or bednets in a malaria control campaign ... the costs should be easy to ascertain, and the outcomes quite easily observable and measurable. If the results are hardly obvious ... and the area is a malaria endemic area, the presumption has to be that the intervention is not appropriate.

Where there are serious health crises ... and the disease is as common and well known as malaria ... it would seem that the result of costly interventions should be easily and quickly observable. If not, then something is wrong.


Peter Burgess

Thursday, March 6, 2008

Health and development

Dear Colleagues

The Tr-Ac-Net perspective is that health is an important component of development ... but the performance of the international relief and development sector over the past several decades has been poor ... and the pre-occupation with health is one of the reasons for the poor socio-economic results.

Health is a VERY important part of development ... but human health without economic health in the society is not an adequate outcome.

One of the most widely used one liners about health is "Malaria kills 3,000 children every day in Africa". Less widely used is the statistic that 30,000 children die every day in Africa from a variety of causes, most of which are preventable ... and poverty, hunger, polluted water are some of the preventable causes.

As work is done to improve the health situation for the world's population, it is imperative that the causes of ill health are included in the analysis so that decisions are made that will result in sustainable progress. The crisis of malaria is, in part, caused by malaria control strategies that have failed to address the problem of perpetual reinfection.

There are many questions, and the medical profession knows most of the answers:

  • How does health impact poverty? How does poverty impact health?
  • What role does polluted water have in causing disease? What role poor sanitation?
  • Is hunger a cause of ill-health? Is ill-health a cause of hunger?
  • What role shortages of medical staff?
  • What role shortage of medicines and medical supplies
  • Is the health sector funding too much ... or too little ... or wrongly applied?

The challenge is to get these questions answered and for actions to take place to correct the situation. This is only partly a health sector question ... in large part it is health in conjuction with many other parts of the economy and of society.

The potential for success is available ... but the system needs to be improved in order to realise success with the available resources.


Peter Burgess
The Tr-Ac-Net Organization

Note: This was originally posted in December 2007 and is now relocated because of a spelling error in the blog name.

Incredible science ... terrible economics

Dear Colleagues

The primary impression that Tr-Ac-Net has about health is that the science is incredible, but that the economics are terrible. This is a systemic problem that needs to be addressed, yet those in control either have no interest in solving the problem, or are incapable of solving the problem. Neither is a good situation.

The good news is that because the underlying science has progressed so well over the past several decades, and there is a huge pool of incredible talent in the health sector ... a solution to the economic crisis can be fashioned so that there is an almost universal win-win-win.

Tr-Ac-Net wants to contribute to the dialog that we see as an essential part of almost any systemic change, and especially change where some of those in control have huge economic incentives to maintain the status quo.


Peter Burgess
The Tr-Ac-Net Organization

Note: This was originally posted in December 2007 and relocated now due to a spelling error in the blog name.

AIDS diverts attention from other diseases

Dear Colleagues

Thompson Ayodele, Director Initiative for Public Policy Analysis, Shomolu, Lagos, Nigeria ( wrote the following that appeared in the Nigerian newspaper. The Daily Independent.

Hiv/Aids Will Undermine Treatment For Other Diseases

The HIV/AIDS pandemic has remained the highest-profile public health challenge, although more people die from curable diseases. Last year the UNAIDS estimate of the number of people living with HIV/AIDS was reduced from 40 million to 33.2 million. The reduction in the number of victims has continued, generating ripples in public discourse and lending credence to earlier assertions that infection figures being bandied about were indeed questionable.

In the last few years, HIV/AIDS has received tremendous support from individuals, governments and foundations for helping victims or preventing the spread of the virus. A lot of funds continue to flow into HIV/AIDS programmes.

In order to command massive support for HIV/AIDS campaign, there is a propensity to overstate the actual numbers of victims primarily to gather more political and financial support but surveys conducted by scientists in Mali, Zambia and South Africa reveal that AIDS is not as widespread as believed.

In many countries in Africa, most health policies have been concentrated on HIV/AIDS. This is understandable. For now there is no known cure for the virus. What is available at present is expensive and complicated life-prolonging anti-retroviral drugs (ARVs).

The over-estimation is dangerous. It further questions other assessments and puts at risk continuing support to curb the disease. Inflated figures clearly undermine credibility. Although steady progress is being reported across Africa, the virus continues to kill more Africans each year. In spite of the huge amount of spending on HIV/AIDS, the epidemic is spreading into the remotest villages threatening the very survival of rural communities, despite further spending on education, abstinence and condomisation.

One of the reasons there was over-estimation of the HIV/AIDS figures was to command huge resources and find jobs for campaigners. Often local people are not co-opted and the funds are administered by organizations from donor countries.

For instance, PEPFAR is the largest donor for AIDS in many countries. It provides 62 per cent of AIDS resources in Zambia, 73 per cent in Uganda and 78 per cent in Mozambique. Most of the funding is channelled through international organizations based in those countries. The import of this arrangement is that there is no clear way of handing over responsibility to local stakeholders in the long-term.

While HIV/AIDS kills many people, there are other preventable and curable diseases that kill more. Many can be treated for a fraction of what HIV/AIDS gulps up.

Since there is less funding for these diseases, HIV/AIDS has dwarfed the attention that other killer diseases such as malaria, tuberculosis, whooping cough and others ought to have got. About 90 percent of the 600 million malaria cases occur in Africa per year and the incidence of tuberculosis in the continent is the highest in the world. In Nigeria for instance, nearly 300 died between October 2007 and January 2008 from a renewed outbreak of measles, cholera and cerebrospinal meningitis. Lack of access to good drinkable water and sanitation kills tens of thousands.

Most often, HIV intervention is not cost-effective enough to justify this huge spending. In essence, money being spent on the virus could be more effective if used to strengthen existing healthcare delivery in poor communities and prevent other killer diseases. Ironically, money is spent on areas that reflect the interests of those on the AIDS industry payroll.

Scientific studies have indicated that HIV/AIDS victims who have access to ARVs and use them as prescribed can live with the virus for more than 10 years. Unfortunately, the same cannot be said about diseases such as malaria and tuberculosis that can snuff life out within a very short period of time. The impact of HIV/AIDS on the labour force is aggravated by the fact that its political importance results in a massive diversion of resources away from fighting other diseases of poverty, which in turn exacerbates their economic consequences.

The need to tackle other diseases ought to be seen in the context of achieving the targets for the Millennium Development Goals, which call for progress across many other developmental priorities. Many curable diseases threaten these goals, especially those related to poverty and health. Focusing on the prevention of only one of these diseases is not prudent.

The operational cost of HIV/AIDS is huge and far greater than any other public health crisis. However, this does not mean that other diseases should be left unattended. A healthy population is critical to development. This is because healthier people live longer and have stronger incentives to invest capital in developing their skills. This however might be elusive if one disease that affects a handful of the population overshadows other diseases that affect many more people.

Diseases of any kind slow down economic progress. Whatever methods are used to address any of the diseases, the primary aim should be to save as many lives as possible. It should not be about which disease is a money-spinner or commands huge funds. It is simply about creating a better life for everyone.

•Thompson Ayodele, Director Initiative for Public Policy Analysis, ,
Lagos, Nigeria,


From the Tr-Ac-Net perspective the situation is probably even more grave than the picture described by Thompson Ayodele. There are hardly any performance metrics in the international relief and development sector, and the accounting for fund flows is archaic and to some extent best described as incompetent. This opens huge opportunities for either outright corruption and misappropriation or simply just poor implementation where the only beneficiaries are the staff and the institutions and organizations involved. This is a chronic problem with nobody, it seems, interested in addressing. Why is this? Probably because there are too many people whose careers will be adversely affected ... too many decision makers who will be tainted by the acknowledgement of this mess.


Peter Burgess
The Tr-Ac-Net Organization