Investment vs Consumption in Healthcare

It's no secret that healthcare budgets these days are under stress. As provincial governments look with concern to current healthcare costs, as well as to potential future healthcare costs with our graying demographics, there's plenty of incentive to minimize spending within the medical community.

While I disagree with some of the approaches being taken, it's a worthy goal - not everything in healthcare is cost-effective, and there's good reason to think that freeing up money for other social expenses could be more be more beneficial than many direct medical expenditures. It's also an opportunity to dig into the role of medicine in our society and what we actually expect for the rather large sums of money we throw at our healthcare system.

Healthcare comprises both elements of investment (expenses which are expected to yield an economic return) and consumption (expenses which are not expected to yield an economic return but which hopefully confer benefits to longevity or quality of life). That's a bit too sharp of a split - in reality, all healthcare should be improving the quantity and quality of life of patients and most expenses tend to have some sort of an economic return, even if that return falls below the medical expense and wouldn't be worthwhile as an investment alone.

However, the degree to which we priority each element - investment vs consumption - tells us a fair bit about how we view healthcare's role. These priorities in turn can dictate how much we spend on healthcare overall.

Right now, in Canada and much of the rest of the western world, the focus is on consumption. When people rally for better access to medical services, it's usually for the immediate impact on patients' quality of life. Likewise, when analyzing an intervention's merit, we tend to focus on cost-effectiveness, using metrics like cost per Quality-Adjusted Life Year (QALY). These capture quality of life gains, and analyze all medical interventions as though they were consumptive in nature, but generally ignore economic returns on expenditures.

It's difficult to view and analyze healthcare from an investment perspective, however. For one, it's really hard to accurately measure return on investment when it comes to medical interventions - QALYs or similar metrics are much easier to determine. Second, doing so requires making judgments on the economic worth of individual people (or groups). Most of us are pretty uncomfortable thinking of human lives in economic terms. Physicians especially try to avoid these judgments, as they can devalue certain groups, especially the vulnerable and those in need of the most help.

Yet, there are some broader programs that make no direct judgment on individual worth, yet would have clear beneficial investment components in addition to their meaningful improvements on quantity and quality of life. Mental health is a major one. It hits adolescents and younger adults frequently and is a significant impairment when it comes to productivity at work or school. Individuals who are not currently working are also at high risk for mental health problems, particularly the elderly with dementia and/or depression, of course, but compared to many other medical services we provide, the benefits from investments in mental health more frequently affect individuals who could be more economically productive if optimally treated. When we start making the hard choices about which programs and services are worth funding, it may be worth putting a higher emphasis on economic returns - it might make our tax dollars go a little bit further and lessen the burden of our healthcare expenditures.

I'm rambling a bit, so I'll wrap up by saying this: we want to be healthy and our medical system is a major part of that. However, healthcare does more than just improve health and other social services play a big role in improving health overall. It's worth taking a step back every once in a while to reevaluate our priorities in medicine, to be critical about what how best we can serve the societies we live in, and how some parts of our healthcare system - even the helpful parts - might not be worth the cost when compared to alternatives.