LDI Research Seminar Series

Richard Frank, PhD
Professor of Health Economics
Harvard Medical School

"Price Indexes, Cost Effectiveness Analysis and Productivity in Mental Health Care"

April 5, 2002 12:00 p.m.
Colonial Penn Center Auditorium

Biosketch Abstract Paper

Richard G. Frank, Ph.D., is the Margaret T. Morris Professor of Health Economics in the Department of Health Care Policy at Harvard Medical School. He is also a Research Associate with the National Bureau of Economic Research. Dr. Frank is engaged in research in three general areas: 1) the economics of mental health care; 2) the economics of the pharmaceutical industry; and 3) the organization and financing of physician group practices.

Richard Frank and his colleagues are examining competing strategies for organizing and financing mental health and substance abuse care under research grants from the National Institute of Mental Health, the Robert Wood Johnson Foundation and the National Institute of Drug Abuse. To this end, he is studying the use of financial incentives to pay plans fairly and to promote access to quality treatments of mental and addictive disorders. Under grants from the NIMH and the MacArthur Foundation, Frank and colleagues are developing a set of productivity measures for the treatment of depression and schizophrenia.

His work in the area of pharmaceuticals has focused on drug pricing and the dynamics of competition. He is also conducting studies on the impact of prescription drug formularies and direct to consumer advertising pf drugs. The third area of activity involves understanding the economic and organizational factors that influence the performance of medical group practices. Dr. Frank and his colleagues are studying the organizational, managerial and financial factors that explain variation in the performance of medical group practices.

Dr. Frank serves on the Biobehavioral Sciences Board of the Institute of Medicine. He advises several state mental health and substance abuse agencies on issues related to managed care and financing of care. Dr. Frank was awarded the Georgescu-Roegen prize from the Southern Economic Association for his collaborative work on drug pricing, the Carl A. Taube Award from the American Public Health Association for outstanding contributions to mental health services and economics research, and the Emily Mumford Medal from Columbia University's Department of Psychiatry.

We examine the price of treating episodes of acute phase major depression over the 1991-1996 time period. We combine data from a large retrospective medical claims data base (MarketScanTM, from the Medstat Group) with clinical literature and expert clinical opinion elicited from a two-state Delphi procedure. This enables us to construct a variety of treatment price indexes that include variations over time in the proportion of the "off-frontier" production, as well as the corresponding variations in expected treatment outcomes. We also incorporate that fact that the no treatment option ("waiting list") frequently results in spontaneous remission of depressive symptoms.

We find that in general the incremental cost of successfully treating an episode of acute phase major depression has generally fallen over the 1991-1996 time period. Based on hedonic regression equations that account for the effects of changing patient mix, we find reductions that range from about -1.66% to -2.13% per year. An implication of this is that, since expenditures on depression are thought to be increasing since at least 1991, the source of the spending increases in volume (quantity) increases, and not price increases.

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