Rice health economist launches project to study costs associated with cancer treatment

BY FRANZ BROTZEN
Rice News staff

Surgeons who perform more of certain types of cancer surgeries each year have lower hospital costs per patient. However, hospitals that perform more of the operations do not experience lower average costs. Vivian Ho, chair in health economics at the James A. Baker III Institute for Public Policy and a professor of economics at Rice, is studying this counterintuitive phenomenon, which she describes as a “black box” because it could hold the key to controlling some health care costs.

	VIVIAN HO

Ho and co-investigator Thomas Aloia, a surgeon at The Methodist Hospital, conducted research in the past that found the discrepancy between surgeon costs and hospital costs for six different complex cancer operations that are commonly performed on patients with colorectal, lung, esophageal or pancreatic cancer.

With funding from the National Cancer Institute (NCI), Ho and Aloia seek to understand the factors that lead to higher costs. Their research is designed to help develop strategies to restrain cost growth, while improving health outcomes for cancer patients.

Ho, who is also an associate professor of medicine at Baylor College of Medicine, said her hypothesis is that “high volume” hospitals provide higher quality care and lower costs due to fewer surgery-related complications, but these cost savings are hidden by the investments that hospitals must make to provide care. For example, high-volume hospitals may have higher nurse-to-patient ratios, better-equipped intensive-care units and more advanced preoperative and postoperative monitoring. “The NCI grant gives us the resources to delve into a range of data sources to determine which of these factors are most important in determining costs,” Ho said.

The results of Ho’s research could have important implications for identifying cost-effective approaches to providing cancer surgery. These costs represent a significant burden to the health care system. For example, colon cancer surgery alone accounts for more than $1 billion in Medicare costs each year. “Our analyses will shed light on whether referring patients to high-volume providers, lowering Medicare reimbursement rates to discourage low-volume providers or disseminating best practices among providers will restrain cost growth and improve the quality of patient care,” Ho said.