Formal Analysis, Policy Formulation, and

End-Stage Renal Disease

April 1981

NTIS order #PB81-209769
Library of Congress Catalog Card Number 80-600161

For sale by the Superintendent of Documents,

U.S. Government Printing Office, Washington, D.C. 20402
Foreword

This case study is one of

assessment, The Implications

That assessment analyzes the

17 studies comprising Background Paper #2 for OTA’s

of Cost-Effectiveness Analysis of Medical Technology.

feasibility, implications, and value of using cost-effectiveness and cost-benefit analysis (CEA/CBA) in health care decisionmaking. The major, policy-oriented report of the assessment was published in August 1980. In addition

to Background Paper #2, there are four other background papers being published in

conjunction with the assessment: 1) a document which addresses methodological

issues and reviews the CEA/CBA literature, published in September 1980; 2) a case

study of the efficacy and cost-effectiveness of psychotherapy, published in October

1980; 3) a case study of four common diagnostic X-ray procedures, to be published in

summer 1981; and 4) a review of international experience in managing medical technology, published in October 1980. Another related report was published in

September of 1979: A Review of Selected Federal Vaccine and Immunization Policies.

The case studies in Background Paper #2; Case Studies of Medical Technologies

are being published individually. They were commissioned by OTA both to provide

information on the specific technologies and to gain lessons that could be applied to

the broader policy aspects of the use of CEA/CBA. Several of the studies were specifically requested by the Senate Committee on Finance.

Drafts of each case study were reviewed by OTA staff; by members of the advisory panel to the overall assessment, chaired by Dr. John Hogness; by members of

the Health Program Advisory Committee, chaired by Dr. Frederick Robbins; and by

numerous other experts in clinical medicine, health policy, Government, and economics. We are grateful for their assistance. However, responsibility for the case studies remains with the authors.

JOHN H. GIBBONS

Director

111
Advisory Panel on The Implications of

Cost-Effectiveness Analysis of Medical Technology

John R. Hogness, Panel Chairman

President, Association of Academic Health Centers

Stuart H. Altman Sheldon Leonard

Dean Manager

Florence Heller School Regulatory Affairs

Brandeis University General Electric Co.

James L. Bennington

Chairman

Department of Anatomic Pathology and

Clinical Laboratories

Childrens Hospital of San Francisco

John D. Chase

Associate Dean for Clinical Affairs

University of Washington School of Medicine

Joseph Fletcher

Visiting Scholar

Medical Ethics

School of Medicine

University of Virginia

Clark C. Havighurst

Professor of Law

School of Law

Duke University

Barbara J. McNeil

Department of Radiology

Peter Bent Brigham Hospital

Robert H. Moser

Executive Vice President

American College of Physicians

Frederick Mosteller

Chairman

Department of Biostatistics

Harvard University

Robert M. Sigmond

Advisor on Hospital Affairs

Blue Cross and Blue Shield Associations

Jane Sisk Willems

VA Scholar

Veterans Administration
OTA Staff for Background Paper #2

Joyce C. Lashof, Assistant Director, OTA

Health and Life Sciences Division

H. David Banta, Health Program Manager

Clyde J. Behney, Project Director

Kerry Britten Kemp, * Editor

Virginia Cwalina, Research Assistant

Shirley Ann Gayheart, Secretary

Nancy L. Kenney, Secretary

Martha Finney, * Assistant Editor

Other Contributing Staff

Bryan R. Luce Lawrence Miike Michael A. Riddiough

Leonard Saxe Chester Strobel*

OTA Publishing Staff

John C. Holmes, Publishing Officer

John Bergling* Kathie S. Boss Debra M. Datcher

Patricia A. Dyson* Mary Harvey* Joe Henson

● OTA contract personnel
Preface

This case study is one of 17 topics being issued that comprise Background Paper #2 to the

OTA project on the Implicatiom of Cost-Effectiveness Analysis of Medical Technology. * The

overall project was requested by the Senate

Committee on Labor and Human Resources. In

all, 19 case studies of technological applications

were commissioned as part of that project.

Three of the 19 were specifically requested by

the Senate Committee on Finance: psychotherapy, which was issued separately as Background Paper #3; diagnostic X-ray, which will

be issued as Background Paper #.5; and respiratory therapies, which will be included as part of

this series. The other 16 case studies were selected by OTA staff.

In order to select those 16 case studies, OTA,

in consultation with the advisory panel to the

overall project, developed a set of selection

criteria. Those criteria were designed to ensure

that

●

●

●

●

●

●

●

as a group the case studies would provide:

examples of types of technologies by function (preventive, diagnostic, therapeutic,

and rehabilitative);

examples of types of technologies by physical nature (drugs, devices, and procedures);

examples of technologies in different stages

of development and diffusion (new, emerging, and established);

examples from different areas of medicine

(such as general medical practice, pediatrics, radiology, and surgery );

examples addressing medical problems that

are important because of their high frequency or significant impacts (such as

cost );

examples of technologies with associated

high costs either because of high volume

(for low-cost technologies) or high individal costs;

examples that could provide informative

material relating to the broader policy and

methodological issues of cost-effectiveness

or cost-benefit analysis (CEA/ CBA); and

 examples with sufficient evaluable literature.

On the basis of these criteria and recommendations by panel members and other experts,

OTA staff selected the other case studies. These

16 plus the respiratory therapy case study requested by the Finance Committee make up the

17 studies in this background paper.

All case studies were commissioned by OTA

and performed under contract by experts in academia. They are authored studies. OTA subjected each case study to an extensive review

process. Initial drafts of cases were reviewed by

OTA staff and by members of the advisory

panel to the project. Comments were provided

to authors, along with OTA’s suggestions for

revisions. Subsequent drafts were sent by OTA

to numerous experts for review and comment.

Each case was seen by at least 20, and some by

40 or more, outside reviewers. These reviewers

were from relevant Government agencies, professional societies, consumer and public interest

groups, medical practice, and academic medicine. Academicians such as economists and decision analysts also reviewed the cases. In all,

over 400 separate individuals or organizations

reviewed one or more case studies. Although all

these reviewers cannot be acknowledged individually OTA is very grateful for- their comments and advice. In addition, the authors of

the case studies themselves often sent drafts to

reviewers and incorporated their comments.

These case studies are authored works

commissioned by OTA. The authors are responsible for the conclusions of their specific case study. These cases are not statements of official OTA position. OTA does

not make recommendations or endorse particular technologies. During the various

stages of the review and revision process,

therefore, OTA encouraged the authors to

present balanced information and to recognize divergent points of view. In two cases,

OTA decided that in order to more fully

present divergent views on particular technologies a commentary should be added to

the case study. Thus, following the case
studies on gastrointestinal endoscopy and

on the Keyes technique for periodontal disease, commentaries from experts in the appropriate health care specialty have been

included, followed by responses from the

authors.

The case studies were selected and designed to

fulfill two functions. The first, and primary,

purpose was to provide OTA with specific information that could be used in formulating

general conclusions regarding the feasibility and

implications of applying CEA/CBA in health

care. By examining the 19 cases as a group and

looking for common problems or strengths in

the techniques of CEA/CBA, OTA was able to

better analyze the potential contribution that

these techniques might make to the management

of medical technologies and health care costs

and quality. The second function of the cases

was to provide useful information on the specific technologies covered. However, this was

not the major intent of the cases, and they

should not be regarded as complete and definitive studies of the individual technologies. In

many instances the case studies do represent excellent reviews of the literature pertaining to the

specific technologies and as such can stand on

their own as a useful contribution to the field. In

general, though, the design and the funding

levels of these case studies was such that they

should be read primarily in the context of the

overall OTA project on CEA/CBA in health

care.

Some of the case studies are formal CEAs or

CBAs; most are not. Some are primarily concerned with analysis of costs; others are more

concerned with analysis of efficacy or effectiveness. Some, such as the study on end-stage

renal disease, examine the role that formal

analysis of costs and benefits can play in policy

formulation. Others, such as the one on breast

cancer surgery, illustrate how influences other

than costs can determine the patterns of use of a

technology. In other words, each looks at evaluation of the costs and the benefits of medical

technologies from a slightly different perspective. The reader is encouraged to read this study

in the context of the overall assessment’s objectives in order to gain a feeling for the potential

role that CEA/CBA can or cannot play in health

care and to better understand the difficulties and

complexities involved in applying CEA/CBA to

specific medical technologies.

The 17 case studies comprising Background

Paper #2 short titles and their authors are:

Artificial Heart: Deborah P. Lubeck and John P.

Bunker

Automated Multichannel Chemistry Analyzers:

Milton C. Weinstein and Laurie A. Pearlman

Bone Marrow Transplants: Stuart O. Schweitzer and C. C. Scalzi

Breast Cancer Surgery: Karen Schachter and

Duncan Neuhauser

Cardiac Radionuclide Imaging: William B.

Stason and Eric Fortess

Cervical Cancer Screening: Bryan R. Luce

Cimetidine and Peptic Ulcer Disease: Harvey V.

Fineberg and Laurie A. Pearlman

Colon Cancer Screening: David M. Eddy

CT Scanning: Judith L. Wagner

Elective Hysterectomy: Carol Korenbrot, Ann

B. Flood, Michael Higgins, Noralou Roos,

and John P. Bunker

End-Stage Renal Disease: Richard A. Rettig

Gastrointestinal Endoscopy: Jonathan A. Showstack and Steven A. Schroeder

Neonatal Intensive Care: Peter Budetti, Peggy

McManus, Nancy Barrand, and Lu Ann

Heinen

Nurse Practitioners: Lauren LeRoy and Sharon

Solkowitz

Orthopedic Joint Prosthetic Implants: Judith D.

Bentkover and Philip G. Drew

Periodontal Disease Interventions: Richard M.

Scheffler and Sheldon Rovin

Selected Respiratory Therapies: Richard M.

Scheffler and Morgan Delaney

These studies will be available for sale by the

Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20401.

Call OTA’s Publishing Office (224-8996) for

availability and ordering information.
Case Study #1

Formal Analysis, Policy Formulation,

and End-Stage Renal Disease

Richard A. Rettig, Ph. D.

The Rand Corp.

Santa Monica, Calif.

AUTHOR’S ACKNOWLEDGMENTS

The author thanks the following individuals for helpful comments on an earlier

draft: Robert W. Berliner, M. D.; Benjamin T. Burton, Ph. D.; Nancy Boucot Cummings, M. D.; William de Cesare, M. D.; Joseph L. de la Puente; Richard B. Freeman,

M. D.; Carl W. Gottschalk, M. D.; Thomas J. Kennedy, Jr., M. D.; Herbert E. Klarman, Ph. D.; Irving J. Lewis; Charles L. Plante; George E. Schreiner, M. D.; Donald

W. Seldin, M. D.; and WiIliam H. Stewart, M.D. Remaining errors of fact are the responsibility of the author. Interpretations, of course, are wholly the author’s responsibility.
Contents

Page

Introduction. , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The ESRD Patient Population. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Formal Analysis Literature Pertaining to ESRD . . . . . . . . . . . . . . . . . . . . . . . . . . .

Formal Analysis and ESRD Policy Formulation . . . . . . . . . . . . . . . . . . . . . . . . . . .

Report of the Committee on Chronic Kidney Disease . . . . . . . . . . . . . . . . . . .

Kidney Disease Program Analysis: A Report to the Surgeon General . . . . . . .

The Policy and Eureaucratic Contexts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Policy and Program Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Conclusions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Table No.

1. Age Distribution of Dialysis Patients and

Programs, March 1960-March 1967 . . . .

2. Age Distribution of Dialysis Patients and

March 1963-March 1967. . . . . . . . . . . . .

Deaths in PHS-Supported

Deaths in VA

3. Patients Alive on Dialysis in the United States, 1970-76

4. Total Kidney Transplants Worldwide by Year, 1967-76

5. Medicare ESRD Patient Population, 1973-78 . . . . . . . .

6. Predicted Caseload in Patient Years of Dialysis Under Varying Levelsof

Expected Cases of Chronic Uremia

Transplantation, 3968-77 . . . . . . .

and Differing Amounts of

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

7. Increased Life-Years and Costs per Additional Life-Year by Means of

Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8. Total Estimated Federal and Non-Federal Patient Care Costs of a National

Dialysis and Transplantation Program

9. HEW Cost Summary . . . . . . . . . . . . .

10. Program Benefits . . . . . . . . . . . . . . . .

FIGURE

3

4

6

6

6

11

18

20

22

23

Page

4

4

5

5

5

10

11

12

14

15

Figure No. Page

1. Effect of the Advancing State of the Art on Future Program Composition . . . . . 16
Case Study #1:

Formal Analysis, Policy Formulation,

and End-Stage Renal Disease

Richard A. Rettig, Ph. D.

The Rand Corp.

Santa Monica, Calif.

INTRODUCTION

The past two decades have witnessed increasing use of formal analysis in Federal Government policymaking. Most strongly identified

with the Department of Defense in the early

1960’s (8,15,16), formal analysis has now been

extended to all areas of domestic public policy,

including health (35,36). The use of formal analysis has also been extended from policymaking

to program evaluation (44). In this case study,

we analyze two instances of the use of formal

analysis in the formulation of Federal Government policy for end-stage renal disease (ESRD).

The term formal analysis, as used in this

study, refers to any explicitly analytical means

of systematically examining the social costs and

benefits of alternative policies for the purpose of

choosing a preferred alternative in light of an a

priori normative decision rule. Included are

cost-benefit analysis (CBA), cost-effectiveness

analysis (CEA), risk-benefit analysis, technology assessment, and other comparable means of

analysis used in decisionmaking.

Much attention is given in the literature about

formal analysis for policymaking to the general

techniques and limits of analysis (23,30) or the

results and implications of particular studies. Of

critical importance, as well, however, are the institutional factors encouraging or inhibiting the

use of formal analysis in policymaking. These

institutional factors are a major concern of this

case study.

This case study examines two instances of the

use of formal analysis in the formulation of Federal Government policies toward ESRD.1 Its focus is on the work of two committees, whose reports were an integral part of the ESRD policy

formulation process in 1966 and 1967: 1) the

Gottschalk committee, advisory to the U.S. Bureau of the Budget (BOB), and 2) the Burton

committee, internal to the Public Health Service

(PHS). Several questions are addressed. What

factors gave rise to the demand for formal analysis within the policy process? What were the

purposes of and constraints on the analyses?

What did the analyses conclude? How were the

results of these analyses used? What general lessons can be drawn from this experience?

Background information about ESRD is presented in the first section below. The subsequent

section contains a review of the literature pertaining to ESRD, emphasizing the two major

analytical studies—the Gottschalk report and

the Burton report—which were pertinent to the

policy formulation process. The role that those

two studies played in that process is then examined in the next section. In the final section,

we develop our conclusions.

‘The general evolutlon of Federal policy in the area ot ESRD has

been analyzed elsewhere (32, 33).
THE ESRD PATlENT POPULATION

Treatment of ESRD by hemodialysis began in

early 1960. By early 1967, according to estimates prepared by an advisory committee to

BOB, approximately 750 to 1,000 patients had

been treated by dialysis (31).

Data on patients treated in PHS-supported

dialysis programs from March 1960 to March

1967 are presented in table 1. These data indicate that roughly 90 percent of these patients

were distributed across the four age groups from

15 to 54 years. They also show an overall mortality rate for these patients of 17 percent, with

considerable variation in the mortality rates for

specific age groups.

Table 2 presents similar data for patients

receiving dialysis in Veterans Administration

(VA) hospitals from March 1963 through March

1967. By comparison with the PHS data in table

1, the data on these patients reveal a slightly

higher patient mortality rate, fewer younger patients, and fewer elderly patients.

Time series data on dialysis began to be collected in 1970. Data from the National Dialysis

Registry2 are presented in table 3. These data

show: 1) the proportion of women in the total

patient population increased from 32 percent in

1970 to 40 percent in 1976; 2) the average age

climbed steadily for both in-center and home dialysis patients; and 3) the proportion of home

patients to total dialysis patients climbed to ap-

‘The National Dialysis Registry was managed by the Research

Triangle Institute from 1967 through 1976, under contract to the

National Institutes of Health (NIH). The National Dialysis Registry was known to underreport the total U.S. dialysis population,

because participation in the Registry was voluntary. Since the authorization of the medicare ESRD program in late 1972 created the

expectation that both the National Dialysis Registry and the Human Renal Transplant Registry would be merged into a single system, it can be assumed that underreporting was exacerbated from

1974 onward.

Table 1 .—Age Distribution of Dialysis Patients and Deaths in

PHS-Supported Programs, March 1960-March 1967

-.

Percen t Number - Percent

Age group All patients total patients deceased deceased

Under 15 . . . . . . . . 3

-

‘-1 .2-

0 0.0-

15-24 ., ., ., 42 17.0 7 16.7

25-34 ., 69 27.9 9 13.0

35-44 . . . . . . . . . 61 24.7 7 11.4

45-54 ... 52 21.1 13 25.0

55-64 . . . . . . . . . 18 7.3 5 27.8

Over 65 . . . . . . 2 0.8 1 50.0

Total . . ... . . 247 ‘1 00.0 ‘42-” ‘- 

‘

-

1-7,0

SOURCE Report of the Committee on Chronic Kidney Disease. September 1967

Table 2.—Age Distribution of Dialysis Patients and Deaths in VA Hospitals

March 1963-March 1967

Percent Number Percent -

Age group All patients total patients deceased deceased

Under 15 ,

—-

0 0.0 0 0.0 ‘-

15-24 . . . . . . 8 3.5 2 25.0

25-34 . . . ... 54 23.4 9 16.7

35-44 . . ., 99 42.8 18 18.2

45-54 ., ., . . 62 26.8 14 22,6

55-64 ., ... ... 8 3.5 4 50.0

Over 65 . . . 0 0.0 0 0.0

Total ., ., . . . 231 100.0 47 20,3

SOURCE Report of the Committee on Chronic Kidney Disease September 1967
Report

dated Jan. 1

1970.. .

1971 ..., .

1972,. 

1973 .

197 4

1975 . . .

1976 . .

Table 3.— Patients Alive on Dialysis in the United States, 1970-76

Total number

of patients alive

2,398

3,463

4,981

7,498

10,306

13,417

17,063

Number

of men

1,621

2,256

3,212

4,741

6.334

8,231

10,156

Number

of women

762

1,184

1,751

2,696

3,871

5,098

6,783

Number in Average age

home program In center patients Home patients

844 39 41

1,361 40 42

2,001 42 43

2,703 44 45

3,402 44 43

3,814 45 44

4,076 46 45

SOURCE Research Triangle Institute National Dialysis Registry, Final Report. August 1976

proximately 40 percent in 1971 and 1972, and

declined steadily thereafter to 24 percent in 1976

(4). (By 1979, home dialysis patients accounted

for approximately 13 percent of the total dialysis patient population. )

Worldwide data on kidney transplants from

the early 1950’s through May 1, 1976, are

shown in table 4. Based on the Human Renal

Transplant Registry, ’ these data show a fairly

stable number of transplants being performed in

the United States since 1972 (l).

Table 4.— Total Kidney Transplants Worldwide by Year, 1967-76’

1953-66 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 Total

United State s 1,146 462 702 872 1,139 1,676 2,232 2,417 2.218 2,399 438 15,701

Canada 93 64 83 83 126 200 165 211 177 72 – 1,274

Australia (to 4/30/75) 55 95 128 203 203 263 242 292 317 115 — 1,913

Other countries. 426 211 332 381 524 778 862 925 994 787 — 6,220

Total 1,720 83 2 1,245 1.539 1,992 2,917 3,501 3,845 3,706 3,373 438 25,108

a I nc I udes al I t ransp I ants recorded u p to Ma, 1 19 ?6

Tc)Ial trdnsplanl~ 25108

Total re[ I p lents 22261

SOURCE Amerlc dn Colleqe 01 Ptl’/\lctan~ Na! lundl Insf!tljte, ~f Healt II Orqan Trdns~)lant Rey(>tr! Mdk IVP,} L,/PIIe( 7976

Medicare coverage for ESRD treatment by

both dialysis and transplantation has been

available for more than 90 percent of the U.S.

population since July 1, 1973. The number of

patients in the medicare ESRD program from its

inception in 1973 through 1978 is shown in table

5. The proportion of patients 65 years old and

above in the medicare ESRD patient population

has increased from 5 percent in 1974 to basically

20 percent in 1977 and 1978.

The establishment of a data system for providing accurate, consistent, and timely data on

ESRD patients has proved to be an extremely

difficult task (32). The single Medicare Registry,

which was to have combined both the National

Dialysis and Human Renal Transplant Registries, existed briefly from 1975 through 1978 as

a contractor-managed system, and it issued reports only in December 1976. The management

contract for that Registry was terminated in

1978, and responsibility for the ESRD Medical

Information System was transferred from the

Bureau of Quality Assurance of PHS to the

Medicare Bureau of the Health Care Financing

Administration (HCFA). The new system began

to issue reports in 1979.

Table 5 .—Medicare ESRD Patient Population

1973-78

End of calender year Total number of patients

July 1, 1973a ., 11,000

1973. , . : 14$000

1974 ..., . . . . 23,000

1975 . 31,000

1976 : , : : : ., . . 38,000

1977 44.000

1978 50,000

‘1 nce~) t Ion of proq ram

SOURCE Of fire of F[nanc{dl and Acli~arlal Anal, SIS DI\ islon of Mec!(care CrJst

Estimates Health Care FIndn(Incj A!mnl\trat(on March 1979
FORMAL ANALYSIS LITERATURE

In 1967, two reports were published which

constitute the primary formal analyses pertaining to ESRD. One of these reports, often known

as the Gottschalk report,4 was the work of an

expert advisory committee to BOB (31 ). The

other report, known as the Burton report, 5 was

the work of a PHS task force which reported to

the U.S. Surgeon General (17). Work on the

Gottschalk report was begun in mid-1966 and

completed “1 year later. The Burton report was

prepared in 4 months in 1967. The two reports

were released together in November 1967, at a

press release called by PHS.

A derivative literature is associated with each

report. Herbert Klarman, an economist who

served on the Gottschalk committee, subsequently wrote abou: that committee’s effort in

several articles (18,19,20). Similarly, Robert

Grosse briefly discussed the Burton report to the

Surgeon General in several papers describing

the Health, Education, and Welfare (HEW) program analyses in health done in the 1965-67

period (1 1, 12, 13).

A set of analyses on kidney disease was performed by Research Triangle Institute} (RTI).

PERTAINING TO ESRD

RTI’s initial report to the Kidney Disease Control Program of PHS was prepared under a contract effective June 27, “1966 (14). A subsequent

paper set forth the methodology for conducting

benefit-cost analysis of kidney disease (10). The

full report on work performed under RTI’s contract was published later in 1968 (21). All this

work was either supported by or derived from

the Burton committee’s efforts.

Several other formal analyses have also been

done. Pliskin, for instance, developed a health

index for the selection of chronic renal disease

patients (27) and a methodology for projecting

needed hemodialysis beds (28). Barnes presented a simplified model of treating patients on

chronic hospital dialysis, chronic home dialysis,

living donor transplantation, and cadaver donor transplantation (2). Recently, Stange and

Sumner have compared expected life-years

gained from and costs of treatment by center dialysis, home dialysis, and transplantation (41).

In addition, there area few other brief formal

analyses that attempt to compare the costs and

effectiveness of the several means of treatment

for ESRD. These add little that is new by way of

data, methodology, or results to the literature

cited above, however, and since the focus of the

present study is on the institutional factors influencing the use of formal analysis, attention is

directed mainly to the Gottschalk and Burton

reports respectively.

FORMAL ANALYSIS AND ESRD POLICY FORMULATION

In the more than 15 years during which Fed- Report to the Surgeon General (the Burton reeral policy toward ESRD has developed, cost port) (17). These reports stimulated further

analyses have always been central to policy for- analyses and also provided guidance to action.

mulation. But only on one occasion have other

forms of analysis been integral to the policy Report of the Committee

process. In 1966 and 1967, two efforts were on Chronic Kidney Disease made to apply CEA to kidney disease. The

reports that resulted have already been men- The need for a review of Federal policies and

tioned: 1) Report of the Committee on Chronic programs related to ESRD was forcefully underKidney Disease to BOB (the Gottschalk report) lined for BOB by several events in 1965 and

(31), and 2) Kidney Disease Program Analysis: early 1966. First, VA submitted a budget request
to BOB for construction funds to create dialysis

units in a number of VA hospitals and for additional funds to staff these units. VA’s request

prompted BOB to ask the Office of Science and

Technology about the possibility of an external

review of the VA dialysis program. That Office

agreed that such a review would be useful, but

urged that it include all Federal Government efforts in ESRD.

The attractiveness of such a review was reinforced when NBC News, on November 28,

1965, presented a l-hour television documentary, “Who Shall Live?” (26). Narrated by Edwin Newman, that program dramatically contrasted the lack of funds for dying individuals

needing dialysis treatment to the hundreds of

millions of dollars being spent for exploration of

outer space and major weapons systems. Newman concluded the program by observing:

“What is wrong is that a medical miracle has

been achieved and we refuse to face its implications. We continue to argue over where the

money is coming from—and we have the money. ” Representative Melvin Laird (R., Wis. ),

then ranking Republican member of the House

appropriations subcommittee for HEW, was

quoted: “We’re spending billions of dollars to

get to the moon, and it seems to me that these

human problems, which we have right here on

earth, need to be solved. ” BOB, the Office of

Science and Technology, and the White House

all recognized that public pressures for more

Federal funding of dialysis were building.

The expansion of dialysis-related activities

was being actively promoted within PHS. Dr.

James Kimmey, chief of PHS’s Renal Disease

Activity Branch, Division of Chronic Diseases,

supported by certain congressional and medical

allies, was advocating a dialysis program that

would grow to an eventual level of $150 million

annually. In March 1966, however, BOB staff

discovered that Kimmey’s plan had not considered either the VA program or the offsetting effects of providing transplants to some patients,

although it did acknowledge that some dialysis

patients would die (24). The need for a Government-wide review seemed increasingly clear.

In early 1966, therefore, BOB organized an

advisory committee of outside experts to review

Federal activities in dialysis. Dr. Carl Gottschalk, University of North Carolina, agreed to

chair the committee and helped select the members from medicine, science, and ethics; BOB

selected Klarman and Gerald Rosenthal, the

economists. 6 The Gottschalk committee met

seven times from July 1966 through May 1967,

and submitted its report (31) to Charles

Schultze, BOB director, in September 1967; the

report was released to the public in November

of the same year.

Central to any analysis is its purpose. BOB’s

charge to the Gottschalk committee was not fully articulated at the outset, but instead evolved

over several months. Two concerns were foremost to BOB. One was national policy makers’

substantial interest at that time in realizing clinical payoff from the Nation’s large and continuing investment in biomedical research. That interest was dramatized on June 27, 1966, when

President Lyndon B. Johnson called the Director

of the National Institutes of Health (NIH) and

the directors of the individual institutes of NIH

to the White House to ask pointedly about the

practical benefits the Nation was receiving from

NIH-supported biomedical research (42).

BOB’s second concern was to involve itself

early in decisionmaking about new medical programs, especially those having major resource

implications, so that policies could be shaped

from a national perspective. Within BOB, Irving Lewis, Chief of the Health and Welfare Division, recalls: “We were very troubled by the VA

request. There was a VA program, there was a

PHS program, but there was no national approach to the problem” (22). The advisory committee of experts was convened to help BOB

develop a national approach to ESRD.

hlembt’re nlnllt t{e t hat f~~)fl (lr~anlzt’li n t’rt’ I )r lit!

nard Anl(~>. I>u At’ l] n I t’(’r~l t \ I ~r I t’t~ I \ ~\’ 131 u(’m It ~ \ n Ii’ t’ r~l t \ ~~t

l’t’nn~t’lvanl~ I)r \~’lllitlnl A [;rt’~’nt’ ( rll~~’r>it \ t~t 1<(~( ht’>tt’r

])r [ {t,rbt,rt Kldrman l,)hn~ l+t)pkln~ IInlt(rs[t \ 1 )r l(Ihn > ~’]

I<jr]<jn lln]i,t,r~]t~ t)t (- .Illt{)rnla S.]n [.r.inc IW {) [)r (;t,rald l<ow,nthat l}rclndt’]~ L lnltt’r~ll \ t)w ar hl I<ut’bhauwn 1~(’1’i’~’1~~’

l’llmpt(~n, Ly(}ns, and Ca tes, New York, Dr C,e[~rge E. Sch rel ner

G(Jrgetown Unl\’ers]ty, and I>r. D(~naId W’ Selciin Unr\ft>rsitv (lt

Texa\, Dallas. The advl~(~rs to the c(>mmlt tee were Dr Robert \\’

Berllner, Natl(~nal Heart In\t]tutt’ [>r Bernard Greenberg Unl\fer-

\I t ~’ (}I Nor-t h C-a rol ln~ and Dr Arnold S Nash, Llnr ~’er~l t y (lt

N’orth C~r(~llna The BOEl pr(lte>~l(~nal ~upp(~rtlng the c(lmmlttt’c’

wa~ Plerrc S [’almtr he rcp(~rted to Irving I l.ew’1~ Ch]et (~f

IKIU s Ht’alt h ancj \3’elf art, [l(t’l+i(~n
BOB expressed its two primary concerns at

the Gottschalk committee’s initial meeting in

July 1966, but clear definition of the committee’s

mission came later. The committee’s October

meeting involved conversations with visiting

foreign physicians attending the International

Congress on Nephrology. In November, the

group visited Dr. Belding H. Scribner, a pioneer

in treating kidney failure by hemodialysis, in

Seattle to learn about home dialysis and talk to

patients. Not until the December meeting, however, did BOB’s charge to the committee come

into sharp focus.

Some on the committee wished to conduct a

CBA addressing the relative priority “of investing resources in treatment of chronic kidney

disease as against other needs in the health field”

(37). One suggestion was to convene a group of

health generalists to consider alternative claims

on resources. A majority of those on the committee, however, held that determination of

priorities rested with the Surgeon General, the

Secretary of HEW, the BOB Director, and the

President. Irving Lewis, responding to an inquiry from his BOB staff, concurred: “I think

this is right. They should, however, give priorities within kidney disease.”7

The Gottschalk committee’s report, consequently, focused on those individuals with

chronic kidney failure who required treatment

by hemodialysis or kidney transplantation (31).

These two forms of treatment, it said, “are now

available as fruits of research and development

programs and are life-saving.” Though by no

means optimal, these treatments could add a

significant number of years to the lives of individuals “now dying because these treatment

forms are not generally available. ” The costeffectiveness section of the Gottschalk report

elaborated the reasons for not doing CBA, or

weighing the funds used for treating chronic

kidney failure against alternative uses of resources. The basic problem with CBA, it noted,

was placing a value on human life. Furthermore, the report said, “in the absence of overwhelming costs (as reflected by an appreciable

‘Klarman recalls that he and R(wenthal spent much time in 1967

attempting, wlth(~ut success, t[~ prepare a CBA,

fraction of the GNP), ” treatment for ESRD

should be made universally available (31):

The reasons for this decision are the irreversibilit y of the decision not to do so, as far as an

individual is concerned; the existence for the

first time of a technology capable of prolonging

the lives of persons otherwise doomed to an

early death; the relative youth of these persons;

the prospects of further improvements in technology; and the fact that patients are known and

identifiable, not members of a statistical distribution, enhances the community’s interest in

doing something in their behalf.

The committee’s CEA took as it point of

departure the committee’s conclusion and

recommendation that treatment be provided to

all in medical need of it.

The Gottschalk report also dealt with the

issue of prevention versus treatment. In transmitting the report to BOB Director Schultze,

Gottschalk wrote (31):

Prevention is obviously preferable to treatment of disease. Unfortunately, knowledge concerning the causes and prevention of end-stage

kidney disease is limited and this is an area in

which an expanded research effort is required.

Furthermore, even if a completely successful

method of prevention is developed it will have

no significant impact on the numbers of people

dying from end-stage kidney disease for many

years. Therefore, the Committee recommends a

national treatment program aimed at providing

chronic dialysis and/or transplantation for all of

the American population for whom it is medically indicated.

The conclusions of the committee’s report

were the following: 1) the high cost of ESRD

treatment required Federal financial assistance;8

2) ESRD treatment should be universally available, not arbitrarily provided, say, to veterans,

but denied to nonveterans; and 3) the Federal

commitment to ESRD treatment necessarily had

to be a continuing one. The Gottschalk committee also concluded that continuing medical research into the causes of kidney disease and

‘This conclusion was based on written and oral testim{~ny received by the committee tr(~m LOUIS Reed, %clal Security Admlnistra tion, and from representatives of all major health insurance

plans.
means of prevention was needed, though it did

not consider this issue at any length.

The recommendations that followed from

these conclusions dealt with the supply of and

demand for ESRD treatment, and the management of Federal efforts in this area. On the supply side, the Gottschalk committee recommended Federal investment in establishing comprehensive kidney centers and satellite community dialysis units, as well as in training

health professionals to staff such facilities. On

the demand side, its recommendation was to

provide for patient care financing by amending

title XVIII (medicare) of the Social Security Act.

Specifically, the committee recommended enacting the Johnson administration’s pendin g

amendment to extend medicare coverage to the

disabled under 65 years of age and redefining

disabled to include those with kidney failure

even though they might continue to work as a

result of treatment. On Federal management, it

suggested “an appropriate mechanism” for coordinating governmental efforts.

The formal analysis in the committee’s report

included sections on treatment by hemodialysis

and by transplantation, a discussion of the incidence and prevalence of chronic kidney failure, a projection of treatment needs, and CEA

itself (31). The hemodialysis section addressed

patient selection criteria. Ideal candidates for

hemodialysis were then thought to be persons

between 15 and 45 years of age, the upper age

limit was expected to rise, however, and for

analytical purposes, the committee used a 54-

year upper age limit. Vascular diseases as medical conditions limiting treatment were briefly

discussed, as were the limits of dialyzing

children. It was also noted that the degree of

rehabilitation of dialysis patients varied widely;

existing data were of little use on the matter. It

was expected that psychosocial problems of patients adapting to dialysis would increase as

selection criteria were relaxed.

PHS and VA data were analyzed for some indication of mortality. Later in the analysis, projections would be based on 15-percent mortality

of a dialysis population cohort in its first year,

and a 10-percent mortality in each successive

year. ’ Costs for 16 center dialysis programs

ranged from $10,000 to $21,000 per patient per

year. Five home dialysis programs had costs

ranging from $3,750 to $9,800 per year.

The section on transplantation outlined a

strong case for that treatment relative to dialysis. The report noted an important shift over

time in organ donor source—from identical

twins to close blood relatives to nonliving (cadaver) donors. Cadaver organs, it said, were becoming the most important source of organs,

owing in part to high success rates with them.

Worldwide mortality data from the Human

Renal Transplant Registry, however, showed

that survival rates declined with the shift from

identical twins to siblings to parents to unrelated living donors to cadavers (25). The best

l-year survival rate for cadaver kidneys was 38

percent. The report concluded that these worldwide data were of little predictive value, however, since they included the early experimental

stage of transplantation. The report used only

data for the 2 most recent years, broken down

by large and small transplantation centers.

These data showed l-year kidney survival rates

of 65 percent for sibling donors and 39 percent

for cadavers transplanted in large centers, results deemed “noteworthy” and “very encouraging. ”

The committee’s optimism about the future of

renal transplantation was based on two subsets

of data from the Human Renal Transplant Registry. The first excluded all deaths save those resulting from uncontrollable rejection: 3-year

survival rates for siblings and parents were 70

percent and over 60 percent for cadavers. The

second set included deaths from rejection and

infection: l-year survival rates were 66 percent

from close relatives and 54 percent from cadaver kidneys. The committee’s report found it “impressive” that projections for fifth year survival

for all cadaver kidneys, “if technical failures and

deaths due to causes other than infection or rejection are excluded, ” were 40 percent. The fuby Bernard Greenberg.

detailed survivorship
10 . Background Paper #2: Case Studies of Medical Technologies

ture prospects for transplantation, the report

suggested, were the following (31):

From the subsets it is possible to extrapolate

what might be expected from continuing experience and excellent management with existing

methods of treatment, i.e., between 65 percent

and 75 percent l-year survival for a closely

related donor, between 40 percent and 50 percent survival for a cadaver donor. Additional

known factors expected to improve the results

further are (a) selection of antigenically compatible donors, (b) improved immunosuppression,

and (c) the induction of specific immunologic

tolerance.

Several features about these projections for

kidney survival deserve mention. First, no estimates of the magnitude of the shift from living

to cadaver donors were given in its report; nor

were different projections developed for different degrees of shift. Second, the two subsets of

Registry data on which the projections were

based were not published. Finally, it was never

clearly indicated how the assumptions based on

these data subsets were used in the later CEA.

These matters are important because the optimism about transplantation, based on expert

testimony heard by the committee, was never

fully realized. One-year survival for cadaver

transplants subsequently reached 55 percent in

1970 and then declined slightly (1,43). At the

time of the committee’s report, there were few

who questioned the assumption that success

with transplantation would improve with time.

Reported costs for transplantation from four

centers ranged from $10,000 to $22,000, including preoperative and postoperative dialysis

costs. One center reported an average cost of

$13,300 for its 46 most recent transplants, and

the Gottschalk committee judged that as the

“most valid estimate. ”10

The report contained a long section on incidence and prevalence of chronic kidney failure.

Noting the absence of any periodic reporting on

this disease, the Gottschalk committee developed two estimates of the potential dialysis

cases for 1964, and from these derived an upper

limit, lower limit, and most probable annual dialysis caseload. Mortality estimates were derived from actual data on dialysis: 15 percent

mortality in the first year; 10 percent for each

successive year. The kidney transplant failure

rate was estimated to be 50 percent annually for

the first 2 years and 5 percent each year thereafter. Projections of the dialysis caseload for the

decade from 1968 through 1977 were made on

the basis of varying levels of chronic kidney failure and varying numbers of patients transplanted. These projections are shown in table 6.

If one compares the 1977 dialysis caseload for

maximum level of transplantation and lowest

level of total cases (29,201) with that for no

transplantation and the maximum number of dialysis cases (53,633), it is obvious that projecIOKlarman developed this estimate during a visit to Dr. David

Hume, one of the kidney transplant pioneers, at the Medical College of Virginia in Richmond.

Table 6.—Predicted Caseload in Patient Years of Dialysis Under Varying Levels of Expected Cases

of Chronic Uremia and Differing Amounts of Transplantation, 1968-77

—

Probable number Maximum number

No transplantation, and of transplantations, and of transplantations, and

number of cases is: number of cases is: number of cases is:

Most Most

Year Lower

Most

probable Upper Lower probable Upper Lower probable Upper

1968 . . . . . . 5,530 6,436 7,541 – 5,35 4

—

6,261 7,365 5,333 6,239

1969 . . . . . . 10,470

7,344

12,187 14,279 9,982 11,698 13,790 9,914 11,636 13,722

1970 . . . . . . 15,038 17,503 20,506 14,158 16,624 19,626 14,037 16,503 19,506

1971 . . . . . . 19,265 22,423 26,269 17,914 21,071 24,917 17,588 20,747 24,592

1972 . . . . . . 23,191 26,994 31,624 21,293 25,096 29,727 20,584 24,387

1973 ....., 26,847 31,252

29,017

36,611 24,325 28,728 34,088 23,141 27,544

1974, . . . . . 30,265 35,229

32,905

41,272 27,016 31,979 38,021 25,300 30,263

1975 . . . . . . 33,468

36,305

38,956 45,638 29,367 34,856 41,538 27,043 32,532 39,213

1976 . . . . . . 36,482 42,463 49,747 31,382 37,363 44,648 28,354 34,334 41,620

1977 ... , 39,332 45,779 53,633 33,053 39,498 47,351 29,201 35,649 43,505

———..——-——— .

SOURCE Report O( the Corrrrrr/ffee on Chronic Kfdney Dsease, September 1967
tions vary substantially as a consequence of

their underlying assumptions. Such wide variation can obviously affect planning for facilities,

if program decisions are to be based on the projections.

The heart of the Gottschalk report’s CEA was

a comparison of the expected life-years added

by transplantation and by dialysis with the

predicted costs of each. The critical assumptions

for transplantation were the 50-percent kidney

survival at the end of 2 years and a 5-percent

annual failure rate thereafter. On the basis of

these assumptions, transplantation led to an expected 17 additional life years (13.3 from transplantation and 3.9 from dialysis before and after

a transplantation). Dialysis, on the other hand,

based on a 15-percent first year mortality and

lo-percent for each successive year, led to an expected 9 additional life-years.

The present value costs of 17 years of additional life from transplantation were calculated

to be $44,500. The comparable present value

costs of 9 additional life-years from dialysis

were calculated to be $104,000 for center dialysis and $38,000 for home dialysis; if there were a

50-50 split between the two, the average estimated cost for dialysis would be $71,000. (The

present value estimates were based on 4- and 5-

percent discount rates, respectively, for center

and home dialysis. )

The results of the comparison are presented in

table 7. An adjustment for quality of life was

made for transplantation based on the observation that an additional year of life from a successful transplantation is much better (1.25

Table 7.— Increased Life-Years and Costs per

Additional Life-Year by Means of Treatment

Life-years cost

Modality cost gained per year

Dialysi s

Center. . . . . . $104,000 9 $11,600

Home. ... . . . 38,000 9 4,200

Average. . . . 71,000 9 7,900

Transplantation

Unadjusted. . . . . . 44,500 17 2,600

Adjusted for quality. 44,500 20.5 2,200

—

SOURCE Report 01 fhe Commlltee on Chronic Kldr7ey f)(sease September

1967

times better) than an additional life-year from

dialysis.

The conclusions of the Gottschalk report’s

CEA, not surprisingly, were these: 1) The maximum transplantation course was a better way

to increase life expectancy for a given cost; 2)

the value of a home dialysis program did not

differ much from that of transplantation, emphasizing the proportion of transplantation

costs attributable to dialysis; and 3) any shift in

the dialysis population away from center dialysis and toward home dialysis offered substantial

economic gain.

The committee’s recommendation, therefore,

was for a national treatment program aimed at

building adequate treatment capacity and paying patient bills. Within that policy, the committee said, transplantation should be encouraged to the maximum extent possible, and home

dialysis should be encouraged over center

dialysis,

The estimated total costs, including both Federal and non-Federal funds, for the patient care

portion of the national dialysis and transplantation program recommended by the Gottschalk committee were $40 million (low) and

$49 million (probable) for fiscal 1970, the first

year, and $157 million (low) and $205 million

(probable) for fiscal 1974, the fifth year. The

committee’s table summarizing the cost estimates is reproduced as table 8. Estimates for

total patients treated by both dialysis and

transplantation were 3,662 in the first year and

18,500 in the fifth. The estimated costs to the

Federal Government, from fiscal years 1969

through 1975, for construction or renovation,

initial equipment, operating subsidy, and training personnel for kidney centers and community

dialysis units, respectively, were $29 million,

$22 million, $30 million, $30 million, $22 million, $23 million, and $15 million.

Kidney Disease Program Analysis:

A Report to the Surgeon General

In the early 1960’s, under Defense Secretary

Robert McNamara, CEA was introduced into

national security decisionmaking with a flourish. In 1965, Henry S. Rowen left his position as
In-center dialysis

Cost/ -

‘Estimated

Patients patient Costa

Fiscal year treated year ($000,000 )

.

1970

Low estimate 1,456 $10,000 $15

Probable . . . 1,456 “14,000 20

1971

Low estimate 2,194 “ 0,000 22

Probable . . 2,194 14,000 31

1972

Low estimate 3,731 10,000 37

Probable 3,731 14,000 52

7973

Low estimate 5,878 10,000 59

Probable 5,878

1974

Low estimate 7,575

Probable 7,575

1975

Low estimate 8,925

Probabl e 8,925

aRounded to nearest m(lllon

4,000 82

0,000 76

4,000 106

0,000 89

4,000 125

Home dialysis Transplantations Total program

Cost/ Estimated Cost/ Estimated Estimated

Patients patient cost a Patients trans- Costa Patients cost a

treated ‘ year — ($000,000) treated plant ($000,000)l treated ($000,000)

.

1,456

1,456

2,194

2,194

3,731

3,731

5,879

5,879

7,576

7,576

8,926

8,926

$4,000 $17 750 $10,000 $ 8

5,000 19 750 13,000 10

4,000 16 1,250 10,000 13

5,000 18 1,250 13,000 16

4,000 30 1,750 10,000 18

5.000 34 1,750 13,000 23

4,000 45 2,550 10,000 26

5,000 51 2,550

4,000 47 3.350

5,000 55 3,350

4,000 49 4,150

5,000 58 4,150

3,000 33

3,662

3,662

5,638

5,638

9,212

9,212

4,307

4,307

0,000 34 18,501

3,000 44 18,501

0,000 42 22,001

3,000 54 22,001

$40

49

51

65

85

109

130

166

157

205

180

237

bBa~ed on ~pp c ~ables do ~n(j 41 Ex,:lu[je5 ~atlent ~edr5 of dla IySl~ rleeded for [ransplanfs (table d 1 I because the COSt of th(s dtalysls IS Included In the cost per traOS

plantation For 197375 the numl)er of pal,enl years o! dlalysls for new cases orglnatlng (n these years have been deducted because they are capability rather than re

qulrements they have beer replaced by mo>l probable number of new pal (ents need)ng d(alys{s (table 40) translated to patlenl years by using 925 percent the first

year 872 percenl second y~ar dn(i 876 percent thlr(j y ear

cFrom table 3

dlncludes ,n[tlal home dlalys(s e(lulpn)ent dnd Ira(n(ng costs of $lIJ 000 for new pat(~nts on home d(alys(s 1970 $,11 ‘2 rn!(l(on 1971 $74 mllllon 1972 $154 fnltllorl

1973 $21 5 mill ton 1974$17 ml Ijon 1975 $135 m[ll Ion Assumes that equ lpment provided for home d(alyws patients who have d(ed or been transplanted WIII be

made aval I able for new pat Ients :,larl I ng on home d{aly S(S

SOURCE Reporl of ffie Cornrn/(/e? on Ctrrorr/c K/drrev D/sease September 1977

Deputy Assistant Secretary of Defense for Systems Analysis to become the Assistant Director

of BOB. In that position, aided by a formal declaration from President Lyndon B. Johnson, he

promoted the use of CBA and CEA throughout

the domestic agencies of the Federal Government. Also in 1965, John Gardner became the

Secretary of HEW and took a number of steps to

increase his control over the far-flung HEW

bureaucracy. One step was to create the position of Assistant Secretary for Planning and

Evaluation to do for HEW what the systems

analysts had done for the Defense Department.

The first occupant of that post, William

Gorham, came from the Pentagon. Early in

1966, Gorham and his staff sought to promote

the use of CEA and CBA in HEW (34).

In response to these developments at HEW,

the U.S. Surgeon General, William H. Stewart,

in March 1967 established health program analysis groups to address disease control issues

related to air pollution, cancer, health care

facilities, kidney disease, manpower, and narcotic addiction.11 For each issue, these groups

were to discuss: 1) goals and objectives and

ways of measuring them; 2) alternative ap

-

proaches to the same objectives; 3) the cost “of

reaching various points on the continuum of objectives by means of alternative approaches;”

and 4) assumptions underlying conclusions, the

uncertainties affecting the estimates, and the

issues not resolvable at that time. Each alternative approach was to consider “the relative

mix of research, prevention, and control. ” The

program analysis groups were to complete their

work by May 30, 1967, and the resulting reports

were to guide the development of the HEW’s

1969-1973 5-year program and financial plan, as

well as the fiscal 1969 budget and legislative

proposals (9).

‘ A l~be l)r~~~r,]m Nlemt)rdndum ~)n St’!c’c ted I)Iwase ~ontro]”

l’r(lgrdm~, drafted I }rt’c~r c’c]rllc’r, w<i~ c I ted ds dn cxcrc iw t () gal n

t’xpc>r]enc e I n ~ppl yi ng t] n.] I y’ t ]ca 1 met h(d~ t () t hl~ \t ULIII L)} d lwaw

con t rol progrc] ms.
The kidney disease program analysis group,

chaired by Dr. Benjamin T. Burton, was composed of individuals from various parts of

PHS. 12 Its charge from the Surgeon General was

a general one given to all the program groups.

The kidney disease group, therefore, translated

this general guidance into a charge to perform

“a logical analysis of programs leading to a

solution or amelioration of the problem of kidney disease” (17). The group identified traditional disease control mechanisms for such a

task as prevention, diagnostic and therapeutic

techniques, laboratory and clinical research,

manpower training, public education, and the

construction of specialized facilities. It made the

assumption that no “single program component

would lead to a major reduction in the national

kidney disease problem, ” so a mix of approaches would have to be employed. It further

assumed that “unlimited Federal funds” were

not available for any given disease problem,

such as kidney disease; therefore, “a rational

balance” had to be struck between various approaches “to derive maximum benefits from any

current or possibly extended future Federal efforts. ” These controlling assumptions affected

the definition of the problem for analysis, the

analysis itself, and the implications of the

analysis.

The Burton report to the Surgeon General

(17) was organized into six chapters: the summary of the report and chapters dealing successively with the major types of kidney disease;

current kidney disease control programs, both

Federal and non-Federal; research methods; the

program analysis; and the cost of treating all patients with chronic kidney failure.

The Burton group’s analysis was based on a

breakdown of kidney disease into four primary

types:

1. infectious diseases,

2. hypersensitivity diseases,

3. diseases associated with hypertension,

and

4. end-stage disease.

The progression of each of the first three types

was to the same functional equivalent—endstage—where irreversible deterioration of kidney function had proceeded so far that untreated individuals would die.

Each of the four types of kidney disease was

analyzed in terms of four hypothetical programs, delineated by time, funding level, and

state of clinical practice. The four different programs were described as follows (17):13

1.

2.

3.

4.

hypothetical program at the current HEW

expenditure level (essentially $47 million),

based on the current state of the art;

hypothetical program at an intermediate

HEW expenditure level (roughly 21/2 times

the current level), based on the current

state of the art;

hypothetical program at an accelerated

HEW expenditure level (roughly six times

the current level), based on the current

state of the art; and

hypothetical program for fiscal year 1975,

at “an accelerated HEW expenditure level

(roughly six times the current level), based

on the expected advanced state of the art

in 1975.

Within each of the resulting 16 analyses, attention was given to “a rational mix of program

components” —prevention, diagnosis and treatment, research, training, and facilities. The

fourth program, it should be noted, was based

on numerous assumptions about scientific and

clinical progress by 1975; it is highly sensitive to

those assumptions and consequently its projections are not discussed below.

‘ ‘Freemdn recd]]~ that the intermediate’ prqectlons were c]ose

to redl number~ and the ‘ decelerated project l(~ns were t(~tdl]v

ILkd]L?eLi
14 . Background Paper #2: Case Studies of Medical Technologies

The estimated annual costs to HEW are lion, and $813 million. (All cost figures are in

shown in table 9 below. The totals for each of constant 1966 dollars. )

the four resource levels, respectively, are $47

million, $117 million, $290 million, and $293 Short- and long-term benefits from these varimillion. The corresponding total annual nation- ous expenditure levels were estimated. Shortal costs including HEW costs (not shown in the term benefits were calculated for reductions in

table) are $241 million, $333 million, $526 mil- annual mortality, number of new cases, and

Table 9.— HEW Cost Summary (in thousands of dollars)

Program level — Infectious Hypersensitivity Hypertensive End-stage cost Percent

Current expenditure Ievelb

Diagnosis, prevention, treatment:

Prevent ion (including education

and administration) . . . . . . . . . . . $3,803 $1,500 $4,000 $9,303 19.920/.

Diagnosis and treatment. . . . . . . . . —

—

— — $7,240 7,240 15.50
days of morbidity. Long-term benefits were

calculated in terms of eventual annual reduction

in number of cases reaching ESRD. Long-term,

though never specified, is essentially the 20th

year of program effort. For ESRD, only shortterm mortality reduction is shown, since that is

all that is possible. The calculated benefits are

shown in table 10.

What conclusions are to be drawn from the

Burton study? First, additional resources in

prevention beyond current levels promised little

additional benefit in reduced deaths and rather

modest additional benefits in reduced prevalence and morbidity. Second, the prevention of

hypertension offered an important means for

reduction of deaths from ESRD. Third, only the

direct treatment of ESRD offered the best prospect for reducing deaths from that type of

kidney disease. Although the Burton report

itself nowhere reaches these conclusions in so

crisp a fashion, careful perusal of table 10 provides the basis for these inferences.

Actually, the Burton report itself gives an impression somewhat at variance with the aforementioned conclusions. Figure 3 of the report,

reproduced as figure 1, discusses the changing

“state of the art” due to advances from scientific

research. The clear implication is that better

knowledge about preventing and treating primary kidney disease would cut deeply into the

Table 10.—Program Benefits

Total

Benefits by kidney disease category — —

Program level Infectious Hypersensitivity Hypertensive — End-stage

Current expenditure /eve/b

Short-term benefit-reductions

Mortality. ., . . . . . . . . . . . . . .

Prevalence . . . . . . . . . . . . .

Morbid days . . . . . . . . . . . . . .

Long-term benefit-reductions

Annual . . . . . . . . . . . . . . . . . .

Cumulative. . . . . . . . . . . . . .

Intermediate expenditure levelb

Short-term benefit-reductions

Mortality. . . . . . . . . . . . . . . .

Prevalence ... ... . . . . . . .

Morbid days. . . . . . . . . . . . . .

Long-term benefit-reductions

Annual . . . . . . . . . . . . . . . .

Cumulative. . . . . . . . . . . . . . .

Accelerated expenditure levelb

Short-term benefit-reductions

Mortality. ., . . . . . . . . .

Prevalence . . . . . . . . ...

Morbid days . . . . . . . . . . . .

Long-term benefit-reductions

Annual . . . . . . . . . . . . . . . . . .

Cumulative. . . . . . . . . . . . . . .

Accelerated expenditure levelc

Short-term benefit-reductions

Mortality. . . . . . . . . . . . . . . . .

Prevalence . . . . . . . . .

70 deaths

3,231,260 cases

15,962,420 days

610 deaths 2,190 deaths

27,000 cases

1,802,000 days

690 deaths 3,560 deaths

3,258,260 cases

17,764,420 days

6,080 deaths

112,410 deaths

1,750 deaths

25,850 deaths

4,330 deaths

86,560 deaths

70 deaths

3,243,860 cases

16,273,640 days

610 deaths 2,270 deaths

39,880 cases

2,056,820 days

1,560 deaths

—

4,510 deaths

3,278.740 cases

18,330,460 days

6,590 deaths

122,490 deaths

1,770 deaths

26,190 deaths

4,820 deaths

96,300 deaths

70 deaths

3,292,860 cases

17,483,880 days

610 deaths 2,380 deaths

42,750 cases

2,311,340 days

7,675 deaths

—

10,735 deaths

3.335,610 cases

19,795,220 days

6,690 deaths

123,780 deaths

4,820 deaths

96,300 deaths

1,870 deaths

27,480 deaths

9,300 deaths

289.690 cases

80 deaths

5,630,720 cases

770 deaths

62.250 cases

27,399 deaths 37,549 deaths

5,991,723 cases

34,253,290 days

21,090 deaths

586,160 deaths

.

Morbid days . . . . . . . . . . . . . . 26,064,430 days 2,610,000 days 5,578,860 days

Long-term benefit-reductions

Annual . . . . . . . . . 4,125 deaths 8,610 deaths 9,480 deaths

Cumulative. . . . . . . . . . . 76,500 deaths 320,000 deaths 189,660 deaths

Short term benefits – reduction In annual mortal~ty, etc when piograrn-ls fully op-e-ra~lve

Long term annual benefits—evenlual annual reduction [n number of cases reachtng end stage kidney disease

Long-term cumulative benef!ts– sum total of long term annual benefits

aRenal disease associated wrth hwertens(on

bcurrenl state of the art

cAdvanced state of the art

SOURCE Kfdrrey D/sease Program Analysls A Reporf 10 the Surgeon General (Washington D C DHEW JLIIY 19671
Treat men

end-stage

kidney

disease

Prevention

and

treatment

primary

kidney

diseases

of

I I Dialysis .

SOURCE. Program A Surgeon Genera/ (Washington D C DHEW July 1967)

need to treat ESRD. That this development has scientific advance in analyzing the costs and not come to pass by 1980 (as the Gottschalk re- benefits of medical care. port’s optimism about transplantation has also

failed to materialize) should be a reminder to all The final chapter of the Burton report dealt about the dangers of relying on “inevitable” with the cost of treating all patients threatened
by end-stage kidney failure, either by dialysis or

transplantation. Though this issue was not part

of the original charge to the group, the report

argued, it was a logical corollary of the previous

analysis. The policy question was stated in the

report in the following way (17):

In any consideration of possible programs for

the amelioration of the kidney disease problem,

the overall expense of treating all patients

threatened with a uremic death regardless of the

possible costs, for humanitarian reasons, represents one extreme in a broad spectrum of possible programs. It should therefore be ascertained

to serve as a maximal benchmark for any intensive attempt at program analysis or planning.

Unlike the Gottschalk committee, which took

treatment as its point of origin, the Burton committee took it as one extreme in the range of

possible programs.

The Burton committee assumed that 50,000

patients were vulnerable to ESRD year after

year, of whom 10,000 could be treated by “conservative management” (primarily dietary control). Of the remaining patients, 11,000 were

candidates for transplantation, 2,000 ideal candidates, and another 9,000 satisfactory. The

assumption was made, therefore, that 29,000

new patients were available for and would be

placed on dialysis each year.

Estimated annual outcomes for transplantation among the ideal candidates were that 80

percent would be “cured,” 10 percent would fail

and be placed on dialysis, and 10 percent would

die; the corresponding values for satisfactory

candidates were 30, 30, and 40. For the dialysis

patients, it was estimated that 50 percent would

die in the first year, and there would be a 90-

percent survival rate for those remaining in each

successive year.

Costs for the first 15 years of the program

were estimated by the Burton committee using

“present cost” figures of $16,000 for a transplant

operation and $15,000 per year for dialysis

treatment. (No home dialysis was projected. )

. .

] ‘A tuture c (wt’ pr<)]cc tl~~n, U+ I ng $12,000 t ( ~r eac h t ra n~pla n t

and !3 10,000 tor d ld ] y~l \ p~’r ~rea r wa~ a I S( ) m~de, on the a i~u m pt I{ln that c ott~ WIC)U Id dcc 1 I nt, ot,er t I mt~ t t-()117 I nc r(,d ~td et t )( It,nc I(,\

I n prov Id I ng treat men t

Based on first and successive year cohorts of

40,000 patients, the projected costs were:

1st year $611 million 40,000 patients

5th year $1,044 million 102,000 patients

15th year $2,702 million 179,000 patients

Having laid out a program for treating all

those vulnerable to kidney failure and having

developed the corresponding cost estimates, the

Burton report then limited the domain of applicability of its analysis. It noted that “supply”

constraints of trained personnel and facilities

would limit the rate of program buildup. More

significantly, it reduced the “demand” substantially from 40,000 vulnerable to an annual

cohort of 8,000 to 10,000 individuals ideally

suited for dialysis and transplantation.

Finally, on the penultimate page of the Burton

committee’s report to the Surgeon General, it

was noted that (17):

With this general framework in mind and

utilizing the elements and computations in Section V of Chapter 5, it is possible to arrive at

practical and feasible predictions concerning the

cost of such a program and the overall number

of patients that could be accommodated by i t

during each of the first few years, the number of

patients who are likely to- graduate from this

program permanently each year because of successful transplantation, the number of individuals who would have to be maintained permanently with the aid of chronic dialysis, and the

number of new patients which such a program

could accommodate each year.

Having calculated costs for the much less likely

40,000-patient annual cohort, however, the report stopped abruptly without making any calculations for the smaller, more probable, 8,000 -

to 1(),000-patient cohort!

Overall, the Burton committee report had a

number of problems, some of which were stylistic. First, there was a somewhat naive belief in

“decisions based upon a thorough, dispassionate, and logical analysis” and in the possibility

of allocating resources “on the basis of logical

priorities. ” Second, the 16 different scenarios

make the analysis entirely too complex to be of

much use by policy makers. Third, each scenario

is highly complex in its own right, built upon

numerous assumptions about the clinical feasi-
bility of the various components or forms of intervention, the appropriate “mix” of components, and the relative shares of Federal and

non-Federal funds. Fourth, the narrative tends

toward a repetitious presentation of calculations

based on certain assumptions, justified by relatively little description of clinical feasibility, and

often supported only by citations to “best estimate” or “informed medical judgment .“

The Policy and Bureaucratic Contexts

The Gottschalk and Burton committees

worked at approximately the same time; they

addressed similar subject matter; and their reports were issued simultaneously. It is worthwhile to compare and contrast the two committees, and their respective reports, and the policy

and bureaucratic contexts in which they operated.

The two committees differed in their initial

stimulus and central purpose. The Gottschalk

committee was a direct response to the existence

of expensive, lifesaving therapies developed

largely from publicly financed medical research

and to the mounting pressures to make those

treatments available to the general public. That

committee was not asked to address the question of whether treatment for ESRD should be

provided relative to alternative uses of resources; it was asked how such treatment

should be made available if the basic policy

choice was to go forward.

The Burton committee arose from the general

effort within HEW to use program budgeting,

systems analysis, and CBA for allocating resources to major programs. In general, the commissioned studies were undertaken in order to

provide guidance for HEW’s 5-year program

and financial plan and for fiscal year 1969 budget and legislative proposals. An attachment to a

memorandum from Secretary Gardner stated,

“Of particular importance this year is the question of kidney diseases. The future of Federal

support for hemodialysis, transplantation, and

prevention needs decisions based on thorough

analysis” (29). No further clarification of purpose was given to the committee, nor did any

subsequent interaction occur between the committee and the Surgeon General, the Assistant

Secretary for Health, and the Assistant Secretary for Planning and Evaluation which might

have sharpened the focus of the committee’s

study.

The two committees differed in composition.

The Gottschalk committee’s members and consultants included three renal physiologists, two

nephrologists, an immunologist, a transplant

surgeon, a psychiatrist, two economists, a lawyer, a biostatistian, and a professor of ethics.

These people came primarily from universities,

and especially academic medicine, but also from

Government and the private practice of law.

The Burton committee’s members and consultants included one nephrologist, the director of

the National Institute of Arthritis and Metabolic

Diseases’ (NIAMD) artificial kidney program,

the director of the National Institute of Allergy

and Infectious Diseases’ transplant immunology

program, two professionals from the PHS kidney disease control program, several other PHS

officials, and three operations analysts. Members were drawn exclusively from the Government, consultants from a nonprofit research

firm, Scientific and clinical competence was

greater on the Gottschalk committee.

The duration of the two committees differed

substantially. The Gottschalk committee met

first in mid-1966 and a total of seven times over

the next year. A draft report was circulated for

comment in the summer of 1967 and a final report was presented to the Director of BOB that

September. The Burton committee met initially

in late March 1967. Its final report was transmitted to the Surgeon General in late July, only

4 months later.

In substantive terms, the reports generally

agreed about the value of research, differed

somewhat on the value of prevention, and differed greatly on the treatment of ESRD. The

Gottschalk committee concluded that “continuing and expanded research in the fields of transplantation immunity, organ procurement and

storage, and dialysis is essential for optimal development of these methods of treatment” (31).

The Burton committee, less directly but more

frequently supported research as critical to dealing with kidney disease. It tended to go beyond

a limited endorsement, however, and suggested
that research was likely to generate substantial

future reductions in deaths from ESRD.

On prevention, the Gottschalk committee declared that a screening program for pyelonephritis, glomerulonephritis, and polycystic kidney disease made very little sense. The Burton

committee essentially said the same thing, but

couched its findings in language which obscured

that conclusion. The Burton committee did,

however, emphasize the prospective benefits in

reduced deaths from ESRD due to prevention of

hypertension, a matter on which the Gottschalk

commit tee was silent.

It was on the issue of treatment for ESRD,

however, that the two committees diverged

most sharply. The Gottschalk committee used

the treatment of ESRD as its point of departure.

That committee focused exclusively on patients

who were dying from chronic kidney failure,

hence candidates for treatment by hemodialysis

or transplantation. The two forms of therapy,

its report declared, were “sufficiently well advanced today to warrant launching a national

program” (31). For the Burton committee, by

contrast, a universal treatment program represented one “extreme” of policy possibilities, the

“maximal benchmark” of how far the Government might go.

The Gottschalk committee estimated 3,662

patients in the first year of a treatment program,

increasing to 18,500 in the fifth year. The corresponding costs were $40 million to $49 million

for the first year, and $157 million to $205

million in the fifth. Cost estimates were based

on the assumption that half of all dialysis pati -

nts were treated at home at an annual cost of

$4,000 (low estimate) or 5,000 (probable estimate). The estimated annual costs for center

dialysis ranged from $10,000 (low estimate) to

$14,000 (probable estimate). Roughly 20 percent of the total beneficiary population, i t was

estimated, would receive a transplant, the costs

of which ranged from $10,000 to $13,000. Estimates about the patient population ( table 8) explicitly assumed that growth would be constrained by available facilities.

The Burton committee established the costs of

a treatment program for 40,000 first-year patients at $611 million, and of a fifth-year

population of 102,000 at slightly more than $1

billion (in 1967 dollars). In fact, as noted above,

the committee’s report to the Surgeon General

indicated that an annual cohort of only 8,000 to

10,000 individuals would be serious candidates

for a treatment program “in the near future”

(17). Neither patient population nor associated

cost estimates for this most likely annual patient

cohort were developed in the report, however,

so the astronomical cost estimates based on the

unlikely 40,000 annual patient cohort stood by

implication as the committee’s contribution to

the policy discussion.

These discrepancies between the Gottschalk

and Burton committee reports might have been

unimportant t save for the circumstances of their

release to the public. Initially, BOB had planned

to keep the Gottschalk committee’s report secret

and present it only to the BOB Director. News

of the committee and its work leaked out to the

press, however, resulting in some publicity in

April 1967 and the certainty that the final report

could not remain secret (38). But BOB itself,

confronted with the fiscal implications of a national ESRD treatment program, and increasingly feeling the effect of Vietnam war demands

on funds for the Great Society programs,

walked away from the Gottschalk committee’s

report.

BOB’s retreat from the Gottschalk report was

manifested in several ways. Dr. Burton recalls

that BOB was unwilling to publish the report,

and he authorized payment for publication of

.500 copies out of the budget of NIAMD’s artificial kidney program. The cover of the report

carried only the title and date, Report of the

Committee on Chronic Renal Disease, September 1967. Inside was a transmittal letter from

Dr. Carl Gottschalk to BOB Director Charles

Schultze, but no official acknowledgment of

receipt by the Director. Finally, the manner of

the report’s release revealed BOB’s desire to put

distance between itself and the report from its

commit tee of experts.

The Burton report to the Surgeon General

was completed in late July, the Gottschalk

report to BOB in mid-September. The political
question became how to release these reports in

a way to minimize public pressures for an expanded ESRD treatment program. A “low key”

approach was agreed on, and strategy was coordinated between Joseph Califano on the White

House staff, BOB Director Schultze, and HEW

Secretary John Gardner (3). The two reports

were released simultaneously at a PHS press

conference on November 3, 1967.

The press conference itself engendered some

hard feelings. Dr. Gottschalk was notified of the

press conference by telephone in Chapel Hill,

N. C., only 12 hours before it was scheduled,

and he was unable to attend. Dr. Robert Berliner, then intramural research director of the

National Heart Institute, and technically an “adviser” to the Gottschalk committee, was present

to represent the expert committee. Since BOB

had refused to take any position on the Gottschalk report, however, Berliner was unable to

make other than perfunctory comments about

it. Dr. Burton, on the other hand, was under

fewer inhibitions regarding the report from his

committee. The reporter who covered the story

for Medical World News wrote that the feature

of the briefing was not the report of the Budget

Bureau’s expert committee, but the PHS report

to the Surgeon General which emphasized research on preventing kidney disease rather than

treating it. Dr. Burton reportedly called the

Gottschalk committee report “shortsighted.” “In

the long run, ” he was quoted as saying, “we

want to get rid of the infectious mechanisms

leading to kidney disease” (6). ”

Policy and Program Effects

What were the policy and program effects of

these two formal analyses? The Burton report

had little direct effect on PHS policies or programs in kidney disease. For one thing, the Surgeon General’s charge precluded the study

group’s making any recommendations. In general, the Burton report reinforced NIH research

programs related to dialysis and transplantation

and supported PHS efforts in prevention. It

countered, to some degree, the pressures from

‘‘Burton recalls speahlng ot Immunological” mechanl>rn~ In connection with glomerulonephrlt” i~

within the PHS kidney disease control program

to promote a greatly expanded treatment program.

The Burton report was well received by William Gorham, the HEW Assistant Secretary for

Planning and Evaluation, by Dr. Alice Rivlin,

his deputy, and by Dr. Philip R. Lee, the Assistant Secretary for Health. Others in HEW were

less responsive. Dr. Burton recalls briefing Secretary Gardner on the study for 11/2 hours shortly before the Secretary’s resignation in early

1968 and receiving only a noncommittal “Thank

you very much” in return. Robert Grosse, an

economist involved in HEW’s effort to improve

resource allocation by using formal analysis,

described the kidne y disease group’s work

favorably but uncriticall y in several papers

(11,12,13).

One effect of the Burton report, noted above,

was to engender hard feelings among some

members of the Gottschalk committee and those

in the medical community who were favorably

disposed to the Gottschalk report’s recommendations. These hard feelings arose from the

belief that the Burton study group, by its implicit attack on a national treatment program

and by the circumstances surrounding the public release of the two reports, had sought to

sabotage the report of the Gottschalk committee.

Three factors contributed to this impression

of sabotage. First, the reasons behind the PHS

study were never clear. Why study kidney disease when it was known that a BOB committee

was at work on the subject, many reasoned, if

not to prevent PHS from being outflanked on an

issue of some importance to it? PHS was not entirely clear on this point. It recognized that the

real policy problem was the treatment issue, but

did not address this matter directly in the charge

to the study group. The PHS study group,

moreover, acknowledged that the cost of a national dialysis and transplantation treatment

program was beyond its charge, but nevertheless chose to conclude its report on that subject.

The purposes and motives of PHS were thus

called into question.
Second, BOB’s motives and behavior in walking away from the report by its committee of experts were not widely understood. Irving Lewis

recalls the occasion when Dr. Gottschalk

briefed BOB Director Schultze on the report:

Schultze praised the work of the committee and

its report, but said that resources for new

domestic initiatives were increasingly scarce as a

result of the impact of the Vietnam war (22).

BOB, consequently, sought to dampen the impact of the Gottschalk committee’s report in the

ways described above.

Finally, hard feelings arose from the absence

of communication between the two committees.

Interaction between the two groups did occur

through several formal and informal means, but

these were limited in scope and duration. A

single meeting of the two committees in the

spring of 1977 would have clarified for each

other their respective missions and perhaps

would have facilitated a more clearly understood division of labor.

The Gottschalk committee and its report recommending a national ESRD treatment program had greater effects than the Burton committee and its report, because the Gottschalk

committee was a group with high status in

academic medicine, and advisory to BOB in the

Executive Office of the President. The committee’s effects were of four kinds. The first was to

neutralize opposition to dialysis and transplantation within the academic medical research

community by making clear that these therapies

were established and not experimental and by

convincing the community that the patient load,

and thus the economic burden, was predictable.

Dr. George Schreiner recalls that representatives of foreign countries who testified at the

committee’s second meeting, held at the same

time as the International Congress of Nephrology, all reported that the incidence of good dialysis candidates each year was in the range of 56

to 58 patients per million population. Certain

predictabilities existed. The committee’s work,

Schreiner remembers, “gave a much broader

vista to the scientific types like Gottschalk,

Seldin, and Berliner” (40).

The converse effect of the Gottschalk committee’s work was to sanction the work of clinicians

who were treating patients. Controversy existed

throughout the early 1960’s about whether dialysis and transplantation, especially the former,

were experimental or established treatment. The

report of the Gottschalk committee declared

that dialysis and transplantation were “capable

of prolonging life” and were “sufficiently welladvanced today to warrant launching a national

program, ” The impact of this declaration was

summarized several years ago by one prominent

clinician in this way: “It was not until 1967 and

the Gottschalk report that you had for the first

time an expression of national opinion that dialysis and cadaveric transplantation were therapy” (39).

The third effect of the Gottschalk report was

on the VA’s renal program, which had precipitated the formation of the committee. There was

created within VA a home dialysis program

which came to dialyze a significant portion of

the veteran dialysis patients. A secondary effect

on VA was to encourage the development of its

transplantation program in a select number of

VA hospitals and to encourage the advocacy of

transplantation programs within the PHS program as well.

The question arises about the effect of the

Gottschalk report on subsequent legislation,

especially upon the extension of medicare coverage to ESRD through the inclusion of section

2991 in Public Law 92-603, the Social Security

Amendments of 1972. After the committee’s

report, several bills that incorporated the report’s recommendations were proposed in Congress, but none was enacted. In 1970, the heart

disease, cancer, and stroke legislation was

amended to include kidney disease, the only legislative enactment on the subject occurring before Public Law 92-603.

Dr. George Schreiner, member of the Gottschalk committee, served as president of the National Kidney Foundation from 1969 through

1971. In that capacity, and aided by Charles

Planter Washington representative of the foundation, Schreiner used the report, in his words,

“as a two-by-four to get the mule’s attention. ” In

numerous one-on-one discussions with individual members of Congress and their staff, the

Gottschalk report was cited as evidence of the
importance of treating ESRD. That report,

therefore, helped clinicians advocating a treatment financing effort. Schreiner was emphatic,

however, that legislation would never have occurred because of the report (40).

Within the Bureau of Health Insurance of the

Social Security Administration, Irwin Wolkstein, Deputy Director for Program Policy,

remembers reading the Gottschalk report and

talking about it with Klarman. The Bureau of

Health Insurance as an organization, however,

had deep reservations about extending health

insurance coverage on a categorical disease

basis. The Gottschalk report per se generated no

advocates for its recommendation within medicare (45). Neither the staff of the House Ways

and Means Committee nor the Senate Finance

Committee had read the report at the time of the

1972 legislation.

The 1972 legislation, however, did extend

medicare coverage to those with ESRD under

the general extension of coverage to the disabled. In this respect, the statute was consistent

CONCLUSIONS

What general conclusions can be drawn from

this study about the use of formal analysis in

policy formulation? First, policy toward ESRD

was always governed by two rudimentary facts

concerning treatment for ESRD: Such treatment

was costly and lifesaving. These facts were unchanged by analysis; nor did analysis alter

perceptions of what policy ought to be. Some

shrank from the large cost implications of a national treatment program: How can we afford

such an expensive effort for so few? Others

reacted to the benefits: How can we withhold

lifesaving therapy simply because people lack

the means to pay for it? Analysis did not alter

the fact that the policy issue was a basic political

choice between scarcity on the one hand, and

the priceless value of life on the other (s).

Second, it is important to recognize that expectations of progress infuse practically all domains of science and technology, including

medicine, Indeed, in this analysis, we witness

with the Gottschalk report’s recommendation.

The statute and implementing regulations for

the medicare renal program differed in two respects, however, from major recommendations

of the report. First, whereas the Gottschalk

committee recommended a strong emphasis on

home dialysis, the medicare program inadvertently introduced disincentives to that form of

treatment (32). Second, the report recommended a Federal investment in the “supply”

side of treatment facilities and trained medical

professionals. In 1972, though the needs on the

supply side were less than those 5 years earlier,

no consideration was given to this Federal

assistance, and the statute focused exclusively

on augmenting the “demand” side by financing

patient care.

In summary, the Gottschalk committee report

had little direct effect on the 1972 resolution of

the policy question of financing patient care.

The effects on the scientific and clinical communities, of course, may have indirectly influenced the subsequent course of events.

several instances of underlying optimism about

probable developments in medical research and

practice. The Gottschalk committee was overly

optimistic about transplantation, the Burton

committee about research and prevention. If

analysis is based on limited and inadequate

data, as it usually is at the early stages of policy

formulation, it is then quite difficult to separate

realistic from overly optimistic expectations

about the future. A critical review of basic

assumptions by experts not involved in the

analytical effort may be the best corrective to

this source of bias.

Third, formal analysis on allocating resources

for lifesaving therapy cannot be done in secret.

Though the original intention of BOB was to

secure expert judgment from the Gottschalk

committee on a confidential basis, leaks to the

press, the resultant publicity about a “secret” effort, and congressional inquiries eventually

forced the analyses to be released (7). PHS, on
the other hand, always intended to release the

Burton committee’s report, and its intentions

placed further pressure on BOB to release the

Gottschalk report. It is the case, however, that

the Government has substantial discretion in

how it releases reports, and can choose to do so

in ways that enhance or diminish the impact of

recommendations.

Fourth, the absence of major policy action in

response to the Gottschalk and Burton reports

does not mean that these efforts had no impact.

Certainly, these reports did raise the consciousness of policy makers at the highest levels of

Government to the substantial cost implications

of action, Given that the Vietnam war was

absorbing increasing proportions of national

resources at the time, it is not surprising that

nothing happened.16 The effects of greater eventual policy consequence were those on the scientific and clinical communities, including

strengthening clinician advocacy on behalf of

treatment financing.

Fifth, analysts have their greatest effect when

they have direct access to key policy makers

(23). The expert advisory committee to BOB

had access to the BOB Director, to the Office of

Science and Technology, and to the White

House. The members of the PHS study group —

‘“~ottschalk recalls that BOB ottlclals told hlm early In the w’ork

()[ the corn m i t tee that the anal ySIS was undertaken, In part, to create a pol ]cy opt Ion I n the event peace arrived I n Southeast ASla.

Lewl~ has no such recollection”.

REFERENCES

1. Advisory Cc~mmittee tt~ the Renal Transplant

Registryt “The 13th Repclrt t~t the Human Renal

Transplant Re~istry, ” 7-)”a}lspl(7}lt. Proc, 9(1 ):9,

1977.

2. Barnes, B. A., “An Overview of the Treatment

of End-Stage Renal Disease and a Consideration

of Sc~me CJI the Consequences, ” in Costs, Risks,

and Benefits of Surgery, J. P. Bunker, et al.

(eds. ) (New York: Oxford University press,

1977),

3. “BOB ~HEW Studies on Kidney Disease, ” mem(~-

randum from Charles L. %-hul tze, Directc~r, Bureau <~f the Budget, to Jc}seph Califanc~, The

White House, Sept. 21, 1967.

had access mainly to the higher officials in

HEW. An additional, and closely related, point

is that analysis has its greatest effect when policymakers wish to use it and have access themselves to instruments that affect policies and

programs. The influence of the Gottschalk committee report, in large measure, was confined to

VA, because BOB could influence VA directly

through the budgetary process and because it

consciously shrank from the report’s larger implications.

Finally, it should be noted that analysis done

for purposes of policy formulation is likely to be

limited by a number of factors. The statement of

the problem will control the analysis and its outcomes. Data are likely to be inadequate, especially for issues just coming to policy prominence. Assumptions are required on critical

issues. Estimates are based on assumptions and

inadequate data. Normative preferences will be

found explicitly or implicitly throughout the

analysis. Projections over time are highly sensitive to the estimates, assumptions, and data.

Uncertainty may inhere in clinical practice

which cannot be reduced by formal analysis but

only by the increase of scientific knowledge.

Given these limitations, the large conclusions of

formal analysis are likely to be most important

to policy formulation if the estimates, assumptions, and data appear to be reasonable. Formal

analysis may augment policymaking; it cannot

substitute for it,

4. Bryan, F. A., Jr., T)le Natio)~al Dia/,vsis Registry: llex~elopr)?e)!t oj a Medical Registry c)~ Patie}lk CI)Z C\lro}zic Dialysis, Fi)lal Report, ][l)IP

1967-August 1976 (Research Triangle Park,

N. C.: Research Triangle Institute, August 1976).

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the Budget, to Charles L. Schultze, Direct(>r,

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the file frc~m K. Peltzie, Bureau t]f the Budget,

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Bureau’s Hem{xiialysis Commit tee,” memorandum from P. S. Palmer, Bureau of the Budget, to

I. J. Lewis, Bureau of the Budget, Dec. 13, 1966.

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.

39. Shapirt~, F. L., Minneapt~lisr Minn., interview, 43 .

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41. Stan~e, P. V., and Sumner, A. T., “Predicting

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interview, Sept. 10, 1973.

.I U S WV EFW MENT I

> RINTm G OFFICE 1981 341-F44 1001