Introduction

Health care has changed much in recent years, and will likely continue to do so. While some amazing advancements have been made in fields ranging from diagnostic imaging to new pharmaceuticals, as well as new surgical interventions, numerous challenges have arisen with respect to cost and access. Regardless of the economic and political discussions of health care, there is certainty that amid the changing current climate, the population is aging. The first of the baby boomers are entering their 60s and will soon become part of the Medicare population. This will greatly increase the number of older patients who will expect high-quality care. In this chapter, the authors will provide an overview of the economics affecting health care, current challenges, and how these topics fit into providing spine care to an aging population.

Overview of the Economy and Healthcare

The year 2008 ended with great economic changes and challenges to be addressed by the incoming Obama administration in 2009. The biggest names in the financial world, such as Lehman Brothers, Merrill Lynch, Bear Stearns, Wells Fargo, AIG, and Citibank were plummeting into ruin. Icons of American industry such as GM, Ford, Chrysler, and others such as Circuit City, were facing complete failure. These financial problems swept the globe in a wave of uncertainty. Many turned to the federal government for bailout support. The government chose an avenue of giving large companies billions of dollars in bailouts and stimulus packages to try to avert a total meltdown of the economy. It is proposed that saving these large businesses as well as creating jobs through highway improvement and other shovel-ready projects will increase confidence in the financial system and let people feel confident enough to spend money to fuel the economic recovery. This is a somewhat confusing issue, however, because a large part of the problem was based on too much credit without enough savings and now, in the short term, the government hopes to change the present course of recession with more spending. How well this course of action works will not be determined for several years. On an individual level, millions have lost their savings for retirement, and millions have lost their jobs, leading to the loss of homes and even access to health insurance.

Health care represents some of the best and worst in the United States. Great advances continue to be made in imaging and other diagnostic procedures, implants are continually patented and developed, and widespread use of the Internet has produced a much more educated patient than in years ago. However, problems with our health care system include the many uninsured (due to lack of availability, lack of affordability, and persons opting to not pay for insurance although they can afford it), workers becoming uninsured through layoffs or illness, workers with insurance having requests for treatment denied by insurers, escalating costs, decreasing physician reimbursements, lack of access, frivolous medical-related lawsuits, unnecessary procedures being prescribed, and inadequate quality assessment and feedback systems. With respect to costs, new terms, such as “medical foreclosure” and “medical bankruptcy” have been added to our vocabulary in recent years.

The amount of resources consumed by health care continues to grow rapidly, well ahead of the pace of inflation. In 2007, the estimated spending was $2.2 trillion and was expected to rise to $4.3 trillion by 2017.¹ At that time, it is estimated that health care spending will represent 19.5% of the gross domestic product. The paradox lies in what Americans are getting for their health care dollars. While the United States spends more on health care than any other country, in 2004, it ranked twenty-third in life expectancy for men and twenty-fifth for women.² Approximately 20% of Americans between the ages of 18 and 64 years do not have health insurance.³ Among the working population in this age group, the average premium for workplace-based health insurance rose more than 115% from 1999 to 2008, burdening both employees and employers.⁴ One of the problems for this group is insurance being linked to employment. If someone loses his or her job, he also loses his access to affordable insurance coverage. Many in this group also feel that even if they have insurance, once a health problem arises, they are often denied coverage for treatment.

On the other hand, insurers struggle with escalating costs charged for newly developed drugs and implants, as well as the potential for add-on technologies to be used during an operation or a course of treatment. They also are accountable for meeting the demands of their investors to consistently produce a competitive profit margin. The Internet has helped greatly in educating patients about various health-related conditions and potential treatment options. However, the Internet, along with direct-to-consumer marketing, has produced patients with greater demands for their health care providers to prescribe particular medications and perform various procedures that the consumers may not otherwise ask for.

The concept of competitive effectiveness is at present (April 2009) a topic being addressed in Washington as a solution for rising health care costs. Although on the surface the concept is irrefutable, there is much concern that when Washington makes these decisions without significant physician and patient input and then adds cost-effectiveness, health care rationing, such as is seen in Canada and England, might well result.

One possible scenario to address the 47 million uninsured as well as revamping health care insurance might be a government-sponsored program to subsidize health savings accounts (HSAs). This would make the patient the source of purchasing health care and, just as with purchasing a car, the consumer would purchase what is needed based on comparative analysis of different procedures, providers, and implants. Pay-for-performance, which insurers are proposing, would be carried out in HSA scenario to the individual and not capricious treatment decisions made by the insurance companies. In addition, such a system would afford patients the much-sought after portability.

Other areas of health care have changed drastically during the past several years. There is much less trust in the FDA’s ability to adequately monitor the safety of food, medications, and medical devices; use and promotion of products off-label has come to merit investigation by the FBI and other federal agencies; concern has arisen over the financial relationships between industry and physicians; and, for many years, physicians have felt obligated to practice defensive medicine to help ward off exorbitant malpractice lawsuits.

Overview of Spine Care

Spine care is far from immune from the challenges health care is facing. Guyer described this paradox in spine care with the excitement of numerous new devices and treatments contrasted with financial challenges.⁵ As previously mentioned, there is a problem with the physician–medical manufacturer relationship. As the health care market became more competitive, spine companies looked to new ways of improving and marketing products. At the same time, declining reimbursements led physicians to look for other avenues of revenue. This led to companies teaming with surgeon-consultants to design new implants. The companies provide the engineering expertise and the surgeons provide expertise in knowing what types of devices are needed and what designs are most feasible for use. Unfortunately, some companies and surgeons elected to abuse this productive collaboration and instead turn it into an unethical practice of payment for use of certain products and payments for services that were never rendered. This has resulted in a declining interaction between industry and physicians, reduced funding to support research and education, public disclosure of financial relationships and investigations, and arrests for inappropriate payments to physicians as well as for off-label promotion by physicians and corporate employees. Groups such as Advamed have emerged, and continue to refine guidelines for interaction between industry and physicians. Others have suggested banning any relationship or support from industry to physicians or organizations. This drastic a measure would undoubtedly have severely detrimental effects on research as well as new product development.

Although back pain is a multibillion-dollar problem annually in the United States, there is surprisingly little solicitation for federal grants to support research in this area. Ultimately, without corporate support, back pain research and education would be severely limited, a step that cannot be beneficial by any measure.

Back Pain in a Changing Population

The increasing percentage of the population that is over 60 years will impact spine care. Much of the focus in the past has been on younger patients, in whom the majority of back pain has been related to herniated discs and painful disc degeneration. In many publications dealing with the treatment of painful spinal conditions, the mean age has been in the 40s. With the influx of baby boomers into the Medicare population, the dominant needs in spine care will likely shift. Their needs will be oriented toward stenosis, osteoporotic spinal fractures, and degenerative scoliosis. One should remember some of the characteristics of this generation as well. They generally want to be active and demand quality service. A few steps have already been taken toward designing surgical interventions for older patients. In recent years, implants such as interspinous devices have been introduced and they continue to evolve. Osteoporotic fractures are now treated with procedures such as kyphoplasty and vertebroplasty. It is likely that we will continue to see increased focus on the development of therapies for those 50 to 60 years old and older that are often minimally invasive and focused on return to activity.

There has been great enthusiasm for the movement away from traditional spinal fusion toward motion-preserving technologies. Singh et al projected that by 2010, 47.9% of the spine market will be arthroplasty devices.⁶ This was estimated to be approximately $2.18 billion.

It is to be noted that the medical spine market does not necessarily follow the traditional pattern of economics, with respect to the pricing of devices varying with supply and demand. One example of this was described by Lieberman who applied it to pedicle screws.⁷ While the basic design of the pedicle screw and rod systems changed little from 1900 to 2000, their prices rose from $135 to $160 to $225 to $700. The continual increase was not attributed to increasing development or manufacturing costs, but rather to what the market would bear. As noted by Hochschuler on this topic, with many new technology items such as computers, time and competition drive the prices lower if there are no significant enhancements of the product.⁶ However, what was seen with pedicle screws is that the number of companies offering screw and rod systems increased through the years, but the prices increased rather than decreased.

One item that is often discussed is the cost-effectiveness of spinal surgery. Unfortunately, there have been very few studies investigating this topic. However, in the few studies that do exist, spine surgery has been found to be in line with other commonly accepted surgeries. One of the strategies employed to address the cost-effectiveness of spinal surgery has been to compare various procedures to well-accepted surgical procedures. Polly et al reviewed the SF-36 results reported in 11 different fusion studies and compared them, based on cost per unit of change in the physical component scores of the SF-36, to results reported from total hip replacement, total knee replacement, and carotid artery bypass surgery.⁸ Their analysis found that fusion was more cost-effective than bypass surgery, similar to knee replacement, and less cost-effective than hip replacement. However, it should be noted that 9 of the 11 fusion studies included in the analysis were based on IDE trials. This may have somewhat skewed the results, due to the rigorous patient selection criteria employed in most trials. Also, the surgical protocol in such studies does not allow the use of multiple bone graft types, off-label use of bone graft or implants, or the decision to use additional items such as anterior lumbar plates, “door stop” screws with anterior graft or cages, or other items. This restriction of implants may have lowered the costs of fusion in the IDE trials compared to typical use patterns. Another study investigated the cost-effectiveness of spinal decompression by comparing it to total hip replacement.⁸ The authors found decompression to be 50% more cost-effective than hip replacement. Some of this may be attributable to the lack of implants used in spinal decompression.

As advances have been made in spinal surgery, one item of debate has been the use of bone morphogenic protein (BMP) to enhance spinal fusion. While this material has been attributed to producing a high fusion rate, its cost has been the source of concern. One study analyzing this issue found that the operative cost of using BMP was greater; however, over time BMP became cost-neutral due to the reduced costs of future care associated with iliac crest donor site pain and subsequent costs related to a higher rate of pseudarthrosis in fusion surgeries performed not using BMP.⁹

As interest in spine surgery has moved away from fusion to motion-preserving technologies, the concern about costs has moved into this arena as well. One such intervention is total disc replacement (TDR). While this technology holds the promise of reducing pain and allowing motion of the operated segment, questions about the costs related to its use have arisen. Guyer et al reported the results of a cost-effectiveness model comparing the operative costs and treatment costs through a 24-month postoperative period.¹⁰ TDR was compared to ALIF with BMP and cages, ALIF with iliac crest autograft, and PLIF using autograft and pedicle screw fixation. The cost model suggests that operative costs, as well as costs throughout the follow-up, were significantly less in the TDR group compared to each of the fusion procedures. Also comparing the costs of TDR to fusion, Patel et al reviewed hospital costs related to single-level TLIF, circumferential fusion, ALIF alone, and TDR.¹¹ They found the total hospital costs of TDR were significantly less than any of the three fusion groups. The cost of TDR was similar to TLIF and ALIF, if the cost associated with using BMP in these fusion procedures was not included. Levin et al also reported that single-level TDR was related to significantly lower hospital charges compared to circumferential fusion.¹² However, they found no significant difference in the charges for two-level procedures.

The evaluation of TDR in Switzerland is perhaps a predictor of the future on a global basis for the evaluation of new spinal implants. The Swiss government required a national registry of all TDR procedures. From the data collected, a decision would be made concerning the reimbursement for use of the device. The early data from that registry have recently been published.¹³ The authors referred to this process as following the “health technology assessment” principle of ‘‘coverage with evidence development.” Prospective data for 427 patients were analyzed. Pain scores, quality of life, and medication usage all improved significantly. The rate of complications occurring with the surgery and/or initial hospital stay was 3.9% for single-level cases and 8.6% for two-level procedures. Rehospitalization and revisions occurred in 3.1% of single-level cases and 1.4% of two-level cases. The authors concluded that TDR appeared to be a relatively safe and effective procedure, at least in the short-term. But what may be more important about this study is that it creates a comprehensive model to evaluate new technologies. The use of such registries may help to address many concerns that arise in IDE trials and individual studies with respect to how generalizable are study results to broad-scale use. It also provides the collection of data for a large number of subjects so that the occurrence of complications can be identified more quickly than in relatively small studies.

The lumbar spine has generally received much more attention than the cervical region. However, there are many patients with significant neck pain and related cost of treatment. With the aging population, the number of cervical problems related to degenerative spinal conditions is likely to increase. In analyzing surgery for cervical spine disease, Patil et al found that the number of procedures doubled in the years from 1990 to 2000.¹⁴ During that time, the patient age and number of comorbidities increased; however, mortality and length of hospital stay decreased. Inflation-adjusted costs of cervical surgery increased 48% during the decade, to surpass $2 billion.

The many recent and emerging advances in spine care contribute to this being a very exciting time for spine care providers. Alternatives to spinal fusion using the patient’s own iliac crest for graft material have been realized in the form of BMP and other fusion materials. Even more exciting has been the development of total disc replacements for the lumbar and cervical spine. Designs of dynamic stabilization devices are numerous. Total facet replacements are being evaluated. The arena of minimally invasive spine surgery is growing rapidly. However, who pays for all of these advances? Which patients are most likely to benefit from expensive treatment options and which can achieve good results with less expensive interventions?

The costs related to back pain were reported to range between $100 and $200 billion a year in the United States.¹⁵ Much of this cost was due to patients missing work. The same authors reported that, annually, less than 5% of patients use 75% of the total cost of back pain. Another high cost area for back pain is surgical implants. This was reported to be $2.5 billion in 2003.

One component of back pain costs that is not often addressed is the cost related to time off work. Ekman et al reported that costs related to loss of productivity were about 84% of the total societal costs of back pain.¹⁶ These data suggest that one means of reducing the overall costs of back pain is incorporating strategies to keep back pain patients at work as long as possible and to return them to work as soon as possible after back pain–related absence.

Compensation

With the government’s emphasis on cost reduction, rising costs need to be addressed. Part of cost-cutting to date has included decreasing compensation to surgeons. Data over the last 10 years show that hospital income has increased 18%, spinal device companies’ income has increased 154%, while the spine surgeon’s payment has decreased 30%. However, there not only needs to be more appropriate dollar reconciliation of the entities, but plaintiff attorneys’ involvement in the system and malpractice settlements need to be addressed, as well as the whole adjudication process. In addition, insurance companies need to redesign products to help reduce costs and make portability possible or a one-payer government system will evolve.

Medical Tourism

One issue that has arisen in recent years is medical tourism. There are many web pages that offer highly discounted medical services with the added allure of foreign travel. While some patients feel that this may be their only option for some expensive procedures for which they do not have insurance or for which their insurance denies coverage, it is a system that has yet to be fully tested. Many questions arise, such as how can they be assured that they are traveling to a quality facility? Will patients receive quality implants including tissue transplanted from others? What happens if a complication arises? What if the patient dies overseas? How will complications that arise after return to the United States be treated and paid for? Also of concern is can America compete fairly in this arena? In many countries offering medical tourism packages, the cost of health care delivery is heavily subsidized by the government, which helps drive the cost down. Also, in those countries, the need to pay malpractice and similar insurances by physicians, clinics, hospitals, and manufacturers does not exist. This also contributes significantly to the ability to charge less for medical care.

Cost-Effectiveness

While the concept of assessing treatments based on cost-effectiveness certainly has merit and appears to be relatively straightforward, such studies are extremely difficult to perform in the United States, due to HIPAA and the lack of any comprehensive data-capture system to assess all costs, not just the hospitalization costs related to a single surgical event. There is no way for researchers to have access to complete patient records. A surgeon can access the costs incurred at his/her center and possibly the operative costs at the hospital where the surgery was performed. However, one cannot get access to costs related to treatment provided outside of these entities. Such costs would be any services provided off-campus such as physical therapy, chiropractic, medication, pain management, and in some cases, reoperation. In addition, care providers do not have access to the indirect costs such as disability payments made to a patient due to their back pain. All these are important in determining the true cost-effectiveness of an intervention. These difficulties, coupled with the wide variety of procedures and implants used, make detailed cost analysis very difficult. If such studies are performed, they will likely be criticized by those who disagree with the results due to all of the potential problems with getting reliable full datasets for patients.

There have been a few cost-effectiveness studies performed for spinal surgery. From the SPORT (Spine Patient Outcomes Research Trial) study, the cost-effectiveness of decompression and decompression with fusion were compared to nonoperative treatment for lumbar spinal stenosis.¹⁸ Based on the cost per quality-adjusted life-year (QALY) over a 2-year follow-up, the authors reported that the economic value of spinal surgery for this group compares favorably with other health-related interventions.

Considering the rapidly expanding number of treatment options and additional items that may be used, the cost-effectiveness calculation becomes even more complicated. For example, consider the cost-effectiveness of anterior lumbar fusion. The simplest procedure may use a femoral ring allograft and a graft extender. The cost of this simple procedure is greatly reduced compared to cages packed with BMP, use of an anterior plate, and the use of interoperative neural monitoring. Can it be shown that any or all of the additional costs associated with the latter procedure result in a proportionally better outcome? To date, there are too few outcome data available to address questions such as these, but they are relevant to the tune of several thousand dollars difference in the cost of a single-level ALIF. Unfortunately, while there may be sound biomechanical or litigious reasons for many of the implants used in spine surgery, there are currently no clinical data available to demonstrate the benefits of many such interventions. As with many things, the key likely does not lie in a simplistic dichotomy, either beneficial or not beneficial. The real answer more likely lies in the need to determine which combinations of implants and services are needed in which subgroups of patients. Those with multiple risk factors for failures or with unusually shaped anatomy may merit the use of more expensive constructs, while such costs cannot be justified in simple cases.

Where to Go from Here

As previously mentioned, there is a movement going on in general to shift from the current practice of medicine to one employing evidence-based guidelines and cost-effectiveness to determine care. While this approach appears logical, there are several potential shortcomings. These include lack of rigorous research, inability to collect comprehensive cost data, and decisions made by bureaucrats in Washington without appropriate input from physicians or patients.

Care providers have been reluctant to embrace treatment based solely on evidence-based– and cost-effectiveness–based information. It is essential to allow doctors the freedom to use their education and experience gained from many years of practice. However, just as with residency training, accountability with, perhaps, peer review might prove efficacious. The all-important relationship of physician with industry needs clarification with appropriate compensation. No one wishes for businessmen or engineers to design new implants in isolation. In no other field other than those receiving bailout support has any professional organization agreed with a government or Advamed mandate as to hourly consulting fees. If this is to be accepted in medicine, the authors suggest that a cap be applied to apply to Wall Street executives, lawyers, accountants, etc.

In closing, no doubt there are changes on the horizon in spine medicine. If health care is allowed to expand undeterred, our country will be bankrupt. Hard decisions need to be made. It is in our common interest to involve all factions, which must include patients and doctors, with transparency and full disclosure as to the goals and consequences of various scenarios.