An Economic Theory of Patient Decision-Making

1 An Economic Theory of Patient Decision-Making* Douglas O Stewart, PhD (Correspondent) Associate Professor Department of Economics Cleveland State University Euclid Avenue at East 24th Street Cleveland, Ohio USA Telephone: (216) 687-4515 Fax: (216) 687-9206 Email: d.o.stewart@csuohio.edu and Joseph P DeMarco, PhD Professor Department of Philosophy Cleveland State University Euclid Avenue at East 24th Street Cleveland, Ohio USA Telephone: (216) 687-3901 Fax: (216) 752-1208 Email: j.demarco@csuohio.edu Word count: main text—6806, abstract 221 ABSTRACT An Economic Theory of Patient Decision-Making Patient autonomy, as exercised in the informed consent process, is a central concern in bioethics The typical bioethicist’s analysis of autonomy centers on decisional capacity – finding the line between autonomy and its absence This approach leaves unexplored the structure of reasoning behind patient treatment decisions To counter that approach, we present a microeconomic theory of patient decision-making regarding the acceptable level of medical treatment from the patient’s perspective We show that a rational patient’s desired treatment level typically departs from the level yielding an absence of symptoms, the level we call ideal This microeconomic theory demonstrates why patients have good reason not to pursue treatment to the point of absence of physical symptoms We defend our view against possible objections that it is unrealistic and that it fails to adequately consider harm a patient may suffer by curtailing treatment Our analysis is fruitful in a various ways unreasonable might be fully reasonable It shows why decisions often considered It offers a theoretical account of how physician misinformation may adversely affect a patient’s decision It shows how billing costs influence patient decision-making It indicates that health care professionals’ beliefs about the “unreasonable” attitudes of patients might often be wrong It provides a better understanding of patient rationality that should help to ensure fuller information as well as increased respect for patient decision-making An Economic Theory of Patient Decision-Making Patient autonomy, exercised in the informed consent process, is a central concern in bioethics The typical analysis of decision-making centers on decisional capacity  finding the line between autonomy and its absence This approach leaves unexplored the structure of the reasoning behind a patient’s autonomous decisions To understand the structure of patient reasoning, we present a microeconomic theory of patient decision-making This theory is fruitful in several ways: It shows that decisions often considered unreasonably noncompliant may be in the patient’s interest; such decisions should be respected It explains how physician misinformation adversely affects a patient’s decision; it places responsibility on the physician to provide reliable and full information about both costs and benefits of treatment Furthermore, the theory provides an explicit account of how billing costs influence patient decision-making; it offers information about the impact of third party payment Our approach may be controversial because it concludes that patients may frequently have good reasons against pursuing treatment to the level at which all physical symptoms are absent We assume the main goal of medical intervention is treatment until physical symptoms are absent Because health care professionals might view decisions not to eliminate physical symptoms as unreasonable, these professionals might present information in a way that improperly influences patients to pursue further treatment A better understanding of patient rationality should help to ensure accurate information and should increase respect for patient decision-making Our approach is developed mainly in terms of the diagnosis and treatment of diabetes although the approach is generally applicable.1 We offer a series of graphs to explain decision-making concerning a patient’s desired treatment level The graphs are of the sort used in microeconomic analysis We show that the patient’s desired treatment level departs from the level yielding absence of symptoms After explaining what we take to be the importance of this analysis, we defend it against claims that it is unrealistic and that it fails to consider the harm a patient may suffer by curtailing treatment I Physicians often diagnose diseases by administering tests to find whether the results differ from a predetermined physiological level Hypertension and diabetes are examples of diseases whose diagnoses depend on such tests One test for diabetes involves determining whether a patient's blood glucose level is greater than 125 mg/dl If the test shows that the patient’s blood glucose level is greater than 125 mg/dl, then the patient is said to suffer from diabetes, and the higher the level of blood glucose, the worse the condition.2 Our presentation of an economic theory of patient decision-making about diabetes and its treatment involves four levels of blood glucose test results: (1) Go, the starting or original blood glucose level assumed to be substantially above 125 mg/dl, (2) GI, the current blood glucose diagnosis level of 125 mg/dl, (3) Gn, a blood glucose level somewhat above 125 mg/dl which we show based on the economic theory is the minimum level of blood glucose to which diabetes should be treated, and (4) G*, the blood glucose level the patient would choose as the goal of treatment based on the economic theory We assume that GI is the level physicians consider ideal for health and at which they diagnose diabetes because at it no symptoms of diabetes are expected for the typical patient We begin our presentation by using economic theory to examine the rationality of GI as the treatment level for diabetes.3 Suppose that a patient makes an initial visit to a physician and that the physician conducts a blood glucose test Further suppose that the test’s result is Go, a blood glucose level substantially above the diagnosis level, 125 mg/dl, so that the physician diagnoses that the patient suffers from diabetes Should the diagnosis level, GI, be adopted as the goal of treatment, or should the treatment goal be different? And, if the diagnosis level of blood glucose, GI, should not be adopted as the goal of treatment, what level of blood glucose should be used? GI is determined entirely by a lack of symptoms and does not take all patient benefits or costs into account To be fully rational from the patient’s perspective, benefits and costs as evaluated by the patient should be considered because it is not reasonable for the patient to pursue any activity with costs greater than benefits Consideration of benefits and costs should occur when making health care as well as other decisions From the point of view of the rational patient, treatment is acceptable only if there is a positive net benefit (which is defined as benefits minus costs) Let us pause at this point in our presentation to clarify our use of the terms rational, costs, and benefits We consider each from the perspective of the patient We use the term rational to indicate that a person optimizes a stable and consistent set of preferences This is standard usage in economics and also in much of philosophy For example, John Rawls uses rational in this way Typically, we use the term reasonable in an equivalent way Costs and benefits are measured in monetary units Their measurement provides the valuation that the patient places on the costs associated with treatment, such as trips to the physician’s office, billed charges, dietary restraints, exercise time, costs of medication, side effects, and the benefits from avoidance of symptoms Benefits are associated with reduction of damage done by the disease as well as other factors such as the avoidance of future medical costs We can measure either the total value of benefits and costs or the marginal value The total benefits are all of the benefits received by pursuing an activity at its present level compared to the benefits received by pursuing an activity at its initial or reference level For example, total benefits of treating the patient described above to the point that the blood glucose level falls from Go to GI is the total value of the change in the patient’s health status that results from the blood glucose reduction Marginal benefits are the additional benefits received from a one unit change in the level of the activity whose benefits are being measured For example, marginal benefits might be measured for a reduction in a patient’s blood glucose level from 183 mg/dl to 182 mg/dl Measurement of total costs and marginal costs is analogous to measurement of the corresponding benefits concept We return to answering the two questions we have posed First, would a goal of treatment other than GI be more appropriate? Treatment to lower the patient’s blood glucose level to GI from a slightly higher level is likely to result in minimal additional benefits to the patient, i.e., little avoidance of physical damage, and will have significant costs At or very near the ideal blood glucose level, determination of which does not take costs into account, it is expected that virtually all intensified treatment would encounter a net loss, i.e., benefits from intensified treatment would be less than the costs Consequently, positive or non-negative total net benefit occurs at a higher blood glucose level than the ideal blood glucose level A rational, fully informed patient would not accept intensified treatment at or very near the ideal diagnostic level Perhaps reference to the graph in Figure helps clarify the result In Figure 1, the line [Insert Figure about here] labeled MC shows the marginal cost of resources used to reduce the patient’s blood glucose level, measured from the perspective of the patient Previously we listed examples of elements of this marginal resource cost How is one to interpret the points on MC? Take for example point Q, the point on MC corresponding to the blood glucose level, GI The vertical distance at GI between Q and the horizontal axis represents the resource cost of reducing the patient’s blood glucose level by mg/dl, given a blood glucose level of GI The shape of MC indicates that starting at Go, the resource cost of reducing the blood glucose level by mg/dl increases as the patient’s blood glucose level decreases from Go to GI Further in Figure 1, the line labeled MB shows the marginal benefit of a reduction in the patient’s blood glucose level measured from the perspective of the patient As previously mentioned, marginal benefit is the valuation of the reduction of damage done by the disease as well as other factors Interpretation of the points on MB is analogous to interpretation of those on MC Take for example point P, the point on MB corresponding to the blood glucose level, Gn The vertical distance at Gn between P and the horizontal axis represents the benefit from reducing the patient’s blood glucose level by mg/dl, given a blood glucose level of Gn The shape of MB indicates that starting at Go, the benefit from reducing the blood glucose level by mg/dl decreases as the patient’s blood glucose level decreases from Go to GI In Figure and other figures following, linear functions are used to depict relationships between MC and blood glucose level and between MB and blood glucose level Complex curves, convex or concave to the horizontal axis, may be more accurate representations of the relationships But more complex functions would not change the results of our analysis as long as MC is negatively sloped and MB is positively sloped With this explanation of the graph in Figure in mind, let us use it to illustrate the result that a rational, fully informed patient would not accept intensified treatment at or very near the ideal diagnostic level Assume that the patient is presently receiving treatment that results in a sustained level of blood glucose of Gn Would the patient receive a positive net benefit from intensified treatment to further reduce the blood glucose level? According to Figure 1, this patient has MC greater than MB at Gn With this relationship between MC and MB at Gn, the patient would actually receive negative net benefit from the intensified treatment, i.e., the patient is better off at Gn than at GI The preceding analysis is represented graphically in Figure in which the blood glucose levels GI and Go are compared Moving from the original blood glucose level, Go, to G* provides a net benefit represented by the sum of all net gains (MB-MC at each blood glucose level) along the way The net benefit from this change in blood glucose level is captured by the area of the triangle JKL Moving from G* to the ideal level, GI , involves a net loss This loss is represented by the area of the triangle LQR The area of the triangle LQR is greater than the area of the triangle JKL Thus GI is shown to be a blood glucose level where the total benefits of treatment are less than total costs of treatment for this person with an initial blood glucose level of G0 The result that a rational, fully informed patient would not accept intensified treatment at, or very near, the ideal diagnostic level occurs when the appropriate treatment level is viewed from the patient’s perspective Viewed from a medical perspective, treating to the ideal level, a level that virtually every rational patient would reject, is also unreasonable After all, treatment of a disease is for the benefit of patients Furthermore, an unreasonable treatment goal represents an irresponsible use of resources We have concluded that GI is not the proper level of blood glucose to use as the goal in treating diabetes Then, what is the proper level? Finding the answer to this question requires additional analysis We denote by Gn the minimum level of blood glucose to which diabetes should be treated Economic theory provides a conceptual basis for determining Gn Treatment to any specific level of blood glucose is unreasonable when, from the starting level of Go, total net benefit from treatment is less than zero; no treatment of diabetes should be made to a lower level of blood glucose When the total net benefit is greater than zero, treatment would result in greater gains than losses With total net benefit greater than zero, an even lower level of blood glucose could be considered as a goal of treatment At any blood glucose level above the one where total net benefit of treatment equals zero, the same analysis holds: the treatment goal can be reduced with a positive total net benefit The stopping point occurs where total net benefit just equals zero This stopping point is the minimum blood glucose level, Gn, which should be used as the goal in treating diabetes.7 Gn is the point at which resources are not wasted in the sense that treating to Gn from the starting level of Go involves no net loss The blood glucose level Gn might be relatively close to GI, and so physical damage to the patient from diabetes is low From the physician’s medical perspective in this case, setting the goal of treatment at Gn should be unobjectionable due to good medical results and the absence of net loss to the patient In other cases, the treatment level, Gn, might exceed the ideal or diagnosis level, GI, by a significant amount so that there would be poorer medical results although the net loss from treatment is zero to the patient The blood glucose levels GI and Gn are compared graphically in Figure The triangle LOP has an area equal to that of triangle JKL Thus Gn is a blood glucose level where the total benefits of treatment are equal to the total costs of treatment for this patient with an initial blood glucose level of G0 Furthermore comparison of GI and Gn shows that Gn is a higher blood glucose level than the ideal level, GI, the level of blood glucose without physical symptoms Arguably, Gn is the lowest blood glucose level which should be selected as the goal of treatment for this patient Is Gn the blood glucose level that a rational patient would accept as the target level for treatment?8 The answer is “No.” Accepting Gn means that a patient is not maximizing total net benefit Recall that Gn is the point at which there is no net benefit to the patient compared to Go From the patient’s perspective, pursuing treatment until net benefit equals zero may be 10 unreasonable because a treatment goal at a higher blood glucose level may lower all patientevaluated costs so that damage from the additional physical symptoms would be acceptable Instead of choosing zero net benefit, the rational patient will seek to maximize total net benefit How we identify the blood glucose level at which total net benefit is maximized? The answer to this question derives from standard economic analysis The benchmark is this: maximize total net benefit by pursuing an activity until marginal benefit (MB) equals marginal cost (MC) From the patient’s perspective treatment should be pursued to the point that MB from treatment of diabetes just equals the MC of treatment To appreciate the implication of equality between MB and MC, consider a blood glucose level that departs from the blood glucose level at which MB equals MC Suppose that MB is greater than MC at the current blood glucose level but that a patient has already made health gains due to treatment Pursuing treatment further, decreasing blood glucose level by one additional unit, means that additional net gains will be made because the marginal (or added) benefit will exceed the marginal (or added) cost Remember that treatment activity at the margin means that increased treatment has resulted in an additional unit of decrease in the blood glucose level Whenever MB is greater than MC at the current blood glucose level, it would be reasonable to pursue further treatment because the next unit of reduction provides gains greater than the additional cost This net gain is added to net gains already made Because this is from the patient’s valuation, it is rational for the patient to continue treatment to this lower blood glucose level The same analysis occurs at every blood glucose level where MB is greater than MC, i.e., at all such levels, treatment to lower the patient’s blood glucose level should be intensified From the patient’s perspective a blood glucose level is too high if MB is greater than MC Therefore it is not rational, at any point at which MB is greater than MC, for a patient to fail to intensify 21 these are real burdens, and the patient is typically best at evaluating these burdens Defending decisions on the basis of cost and benefit considerations might be thought of as discriminatory Suppose poorer people reasonably accept treatment at a level that would involve more physical damage than would a wealthier person Under such conditions, it might seem unjust not to treat to a more ideal level, or at least unjust not to use persuasion to convince a poorer patient to accept additional treatment This conclusion, however, also involves an apparent injustice It treats the poorer patient as incapable of representing his or her own interests, and overlooks the fact that the treatment might not be viewed as optimal by the poorer patient The view that the poorer patient who reasonably accepts treatment of diabetes to a level other than the ideal glucose level is incapable of representing his or her interests is easily extended to virtually all patients Wealthy patients might experience greater opportunity costs, and so might reasonably reject extra visits to the physician’s office or might not be willing to spend extra time exercising Middle class patients might believe that resources are better spent on other goods and services, and might reject the pain and suffering that accompanies treatment Thus, coercive persuasion might appear proper from the physician’s perspective in virtually all cases A poorer patient may be harmed by withholding good information or by undue coercion used to secure compliance with the physician’s goal Regardless of a person’s economic status, his or her autonomy is violated by an attempt to support treatment that is not in the patient’s interest Coercing any reasonable person to be treated against what would be their adequately informed preference amounts to harm and lack of respect It is unfair to argue that poorer people generally are not reasonable This is true even if poorer people are more likely to accept a higher level of physical damage On the other hand, we might decide that socially speaking, avoiding harm is an important 22 consideration and that efforts to provide partial or full monetary compensation, at least for billing costs and medication, should be made Society might base this decision on “commodity egalitarianism” or another redistribution criterion This may be viewed as a way to protect, in particular, poorer patients In effect, making health care insurance fully available would involve, as we showed, a MC curve that is different from what it would be without insurance In advanced countries other than the United States, all or virtually all people are insured so that they incur less economic loss as a result of treatment A system that equalizes some of the monetary burden of treatment, including out-of-pocket and direct billing costs, will, at least ideally, permit marginal cost curves based solely on other burdens of treatment However, such other treatment costs as lost wages, pain and suffering, and waiting time are still incurred The existence of these other treatment costs means that, although billing costs are excluded, the point of equality between MC and MB is likely to be at a treatment level that accepts physical damage Even so, equal insurance would protect poorer patients and would free rational decision-making from the burden of billing and medication costs We turn to a final issue: surrogate decision-making for those who lack capacity If the patient is genuinely incapable of making an informed decision, a surrogate decision-maker should decide on the appropriate treatment If the patient did not previously indicate what he or she would prefer, then the surrogate should decide based on the best interests of the patient 19 Under these circumstances, one does not have access to marginal cost and marginal benefit data evaluated from the patient’s perspective In fact, given that the patient lacks decisional capacity, the patient would not incur many of the costs involved in treatment When a decision is made according to the best interests of a patient without decisional capacity, the surrogate should attempt to balance expected gains against the real costs the patient faces, including side effects and possible 23 resistance to the treatment regimen If the best interests of the patient are considered, it is likely that the proper treatment point accepted by the surrogate will diverge from the position considered ideal in terms of expected physical damage VI Economic analysis has mainly been used in bioethics to explore macroeconomic issues involving, for example, health care reform This presentation uses economic analysis in a new way by applying it to a central concern in clinical ethics We believe that our viewpoint suggests further advantages from using an economic perspective For example, we did not investigate externalities, such as benefits and burdens to family members An economic perspective on this issue might reinforce some of the claims of those who argue for a notion of autonomy that extends to the family Our hope is that the fruitfulness of an economic perspective will broaden the interdisciplinary nature of clinical bioethics 24 BIBLIOGRAPHY Annas, George, The Rights of Patients (Carbondale: Southern Illinois University Press, 2004) Beauchamp, Tom L and Childress, James F., Principles of Biomedical Ethics (Oxford: Oxford University Press, 5th edition, 2001) Feinberg, Joel, The Moral Limits of the Criminal Law: Volume One: Harm to Others (New York: Oxford University Press, 1984) Folland, Sherman, Goodman, Allen C., and Stano, Miron, The Economics of Health and Health Care (Upper Saddle River, NJ: Pearson Prentice Hall, 2004) Friedman, Milton, Essays in Positive Economics (Chicago: The University of Chicago Press, 1966) Gert, Bernard, Culver, Charles M., and Clouser, K Danner, Bioethics: A Return to Fundamentals (New York: Oxford University Press, 1997) Mankiw, Gregory, Microeconomics: Theory & Applications (New York: Thomson Southwestern Publishers, 3rd edition, 2004) Rawls, John, A Theory of Justice (Cambridge, Mass.: Harvard University Press, 1971) The Expert Committee on the Diagnosis and Classification of Diabetes Mellitus “Report of the Expert Committee on the Diagnosis and Classification of Diabetes Mellitus.” Diabetes Care 20 (7), July 1997, pp 1183-1197 25 26 27 28 29 30 31 ENDNOTES *Earlier versions of this paper were presented at the 2005 Annual Meetings of the Eastern Economic Association, New York, New York, March 5, 2005 and at The Humanities and Expertise conference sponsored by The Humanities Center at Carnegie Mellon University, Pittsburgh, PA, April 9, 2005 We thank all discussants and session participants at these conferences for their useful comments The criticisms and suggestions for revision by the editor of The Journal of Bioethical Inquiry and two reviewers have proved very helpful As is the practice, we absolve all but ourselves of blame for any remaining errors and shortcomings For the purpose of the present paper we accept as proper the diagnosis of a disease at the highest level of health status at which the patient does not exhibit physical symptoms of the disease While we believe this standard for diagnosis results in identifying too many diseased individuals, thorough discussion of this issue is beyond the scope of this paper The Expert Committee on the Diagnosis and Classification of Diabetes Mellitus “Report of the Expert Committee on the diagnosis and classification of diabetes mellitus.” Diabetes Care 1997; 20 pp 1183-1197 This report provides a review of this and other tests that are used to diagnose diabetes The report explains that 125 mg/dl is based on the fasting blood glucose test Other procedures use different numeric values as the basis for a diagnosis of diabetes Also, the range of 110-125 is called "impaired glucose metabolism." Nevertheless, for the purposes of this paper, we center on 125 mg/dl We are presenting a model of patient decision-making that describes the choice made by a patient under the assumption of rational behavior Numerous empirical studies showing behavior consistent with this model in the context of health and health care are cited in Sherman Folland, Allen C Goodman and Miron Stano, 2004, The Economics of Health and Health Care, Upper Saddle River, NJ, Pearson Prentice Hall, pp 569-600 The model is normative, insofar as it relates to physician behavior of accepting informed judgment of patients John Rawls, 1971 A Theory of Justice Cambridge, Mass.: Harvard University Press On p.143 Rawls explains that he is using the term as it is typically employed in social theory In footnote 14, he provides excellent citations, mainly to economists and philosophers In bioethics, Bernard Gert, Charles M Culver, and K Danner Clouser offer a nonstandard notion of “rational.” They define rational negatively, as not irrational They list activities that are irrational, such as killing oneself or desiring to be disabled A rational person does not such things However, since it is sometimes rational to “harm” oneself, they add that such activities are not irrational if there is an “adequate reason for so acting”; 1997 Bioethics: A Return to Fundamentals New York: Oxford University Press, p 26 This proviso deprives their view of any explanatory power Our more standard use of rational provides a better basis for predicting and explaining behavior than their nonstandard approach While in a strict sense, the costs and benefits flowing from choices need not be measured in monetary units, use of a monetary unit makes for a convenient measuring stick Also, there may be “externalities,” such as benefits to relatives who desire good health for the patient When we use “Gn” as a goal of treatment, we are referring to a general criterion for a patient This goal would be at a higher blood glucose level than GI Determination of that level would depend on careful empirical study The desirable treatment level, for an individual patient, is not typically known in advance Economists often assume full knowledge Under this assumption, the desired treatment level would be known However, many variables in treatment cannot be predicted with accuracy Thus, the desired treatment level may be found by trial and error as treatment progresses Then, for diseases such as diabetes, maintenance rather than cure is appropriate For simplicity, we shall continue to present our analysis as if a patient had full knowledge We also assume that achieving a lower glucose level is dependent on treatment and that more aggressive treatment can typically achieve a lower level For a helpful presentation of this type of analysis, see Gregory Mankiw 2004 Microeconomics: Theory & Applications, 3rd Edition New York: Thomson Southwestern Publishers 10 Our paper centers on rational decision-making Of course, many decisions are not rational, for example, due to fear, a desire not to optimize but rather to achieve just enough, or because of frequent changes in preferences Our view demonstrates that a rational patient will accept a lower level of treatment than that which would eliminate physical symptoms Irrationalities may increase or decrease the desired level of treatment Irrationalities may be important in dealing with individual patients; nevertheless, the viewpoint from the perspective of a rational patient shows that accepting less than ideal treatment may be fully rational This should be kept in mind when evaluating irrational decision-making 11 The Expert Committee on the Diagnosis and Classification of Diabetes Mellitus p 1190 12 This analogy is borrowed from Milton Friedman 1966 Essays in Positive Economics Chicago, The University of Chicago Press, p 21 13 If damage were underestimated, the MB curve would be lower With the same MC curve, the point at which MB is equal to MC would be at a higher blood glucose level 14 Joel Feinberg 1984 The Moral Limits of the Criminal Law: Volume One: Harm to Others New York, Oxford University Press, p 34 After defining harm as a setback to an interest, Feinberg points out that: A person’s “interest … consist of all those things in which one has a stake….” 15 Tom L Beauchamp and James F Childress 2001 Principles of Biomedical Ethics, Fifth Edition Oxford, Oxford University Press, p 193 16 Beneficence is at the heart of one of Beauchamp and Childress’ four principles in Principles of Biomedical Ethics, Fifth Edition Their other principles focus on autonomy, nonharm, and justice We believe that the overall weight of their theory, often called “principlism,” would support our view We already dealt with nonharm and beneficence (or doing good), and much of our presentation deals with autonomy The issue of justice may enter in terms of offering insurance to the uninsured, which we will briefly explore 17 There are instances in which the treatment level chosen by a patient yields benefits or costs to third parties, e.g., in the case of contagious diseases Economists call these third-party effects “externalities.” We are not considering this complication in our analysis 18 Physicians may influence patients with inaccurate information in a variety of ways George Annas, 2004, in The Rights of Patients, Carbondale, Southern Illinois University Press, p 117, points out that physicians differently use words, such as rare, almost certain, very likely, probable, almost never and the like to describe outcomes Misleading terminology is one way to alter behavior 19 This is a basic position in bioethics and in U.S law For example, see Beauchamp and Childress, pp 98 – 103 ... for patient decision-making 3 An Economic Theory of Patient Decision-Making Patient autonomy, exercised in the informed consent process, is a central concern in bioethics The typical analysis of. .. have to an economic analysis of patient decision-making These objections tend to focus on and intermingle three central issues: (1) An analysis of this sort is not realistic because patients... decisions To understand the structure of patient reasoning, we present a microeconomic theory of patient decision-making This theory is fruitful in several ways: It shows that decisions often considered