What role does an economist play in healthcare?

Electronic health records and an influx of patient data has paved the way for an innovative role at healthcare systems. Alica Sparling, Novant Health VP senior healthcare economist, explains the rising demand for PhD economists in the first of a two-part series.

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Gina DiPietro 0:04
Health economics plays a role across many industries - in government, academia and major tech companies like Google, Amazon and AirBnB. And no surprise healthcare is taking note as health systems face of quickly moving landscape of complex regulations and financial challenges, while also balancing patient care. But despite what the job of a health economist might sound like, it's not just about driving down costs.

Alica Sparling 0:32
There's common misunderstanding that it is only about cost effectiveness analysis. Or other people might be thinking about economics only as concerning macroeconomic issues, such as unemployment and inflation. It can be any of the above, or it can be a combination of all. Fundamentally, economics is a study of human behavior. How we - patients, providers, hospital administrators, organizations - make decisions on how to best use our scarce resources. And by that I mean money, time, skill set ... and we want to get the biggest bang for our buck.

Gina DiPietro 1:07
Alica Sparling weighs in on her new role at Novant Health as vice president senior healthcare economist. And you're listening to Industry Insights: A healthcare podcast presented by Novant Health. I'm Gina DiPietro, your host. Welcome to part one of a deep dive into healthcare economics - a study of how resources are allocated and what incentives people respond to, with an ultimate goal of increasing the value of care for patients. So what is health economics? It's much more complex than that. It's a question best answered by the expert.

Alica Sparling 1:42
So the task of a health economist is to acknowledge that there are multiple decision makers, goals and constraints, and to design incentives accordingly. And my job is to help the healthcare system, Novant Health, to improve efficiency of existing programs and services, identify new opportunities, and design incentives that align the goals of patients, providers, and the organization itself. The ultimate goal, of course, is to increase the value of our care for the patient. So we want to improve the quality of care and lower the costs.

Gina DiPietro 2:15
It's interesting because you are a data scientist. So on one hand, health economics can be very analytical. It's data driven. But as you mentioned, it's also a study of human behavior. I just think it's such an interesting intersection

Alica Sparling 2:36
And I love that about it. I love that it's the study of human behavior. But you're really using data to study this behavior. You look for patterns and that's how you support the clinicians. And that's how you support leaders of health systems to provide better healthcare. And this is something that is possible to do only with the introduction of EHRs. And that's probably why you see now an influx of health economists, because we can do the work which was not possible to do before EHRs.

Gina DiPietro 3:05
Could you define for me EHR?

Alica Sparling 3:09
Electronic health records. There was usually a paper trail behind every visit at a doctor's office or in a hospital. But ever since we started to create electronic health records, we started to input everything that happens during patient visits. And now we have this big system of data and this wealth of information that has been accumulated over many years now. We know about the patient's history, we know about patient's care, and we know about patient's outcomes. We can actually use all this data to discover patterns and to better understand what works and what doesn't.

Gina DiPietro 3:46
This reminds me of another recent conversation with Dr. Eric Eskioglu, Novant Health executive vice president and chief medical officer, on how health systems are using artificial intelligence to put all that patient data to good use. Listen to our discussion on how AI is improving health outcomes, and also lowering costs on the Industry Insights podcast channel. Health economics is another piece of that AI puzzle and the new role at Novant Health.

Alica Sparling 4:16
I'm so grateful and thrilled that Novant Health CEO Carl Armato and Dr. Eric Eskioglu, who actually hired me, had the vision to create the position. And I have now the opportunity to help mold it and fine tune the scope - something that will work both with Novant Health's culture and also be responsive to the changing world of healthcare. And I view this position as one of these new innovative positions that health systems have and it is really important to have positions like that in this current world of constant change. I hope that this will help us set a standard in the industry and maybe we can become a role model for others and share from our experiences.

Gina DiPietro 4:55
While she reports to Dr. Eskioglu, Alica's job requires flexibility and collaboration across the organization - functions like finance, diversity and inclusion, supply chain, payer strategy and consumer engagement. Think of her as an internal economic consultant.

Alica Sparling 5:13
A lot of my time is spent in the group that's called the Economic Value Enhancement group. So, this is a group of senior leaders from the organization with a lot of experience. Every person has at least 20 years of experience in the healthcare industry. And all of our initiatives and projects start with the imperative of ensuring safety and quality, and health equity. This group aims to increase value to our patients by improving clinical outcomes and reducing cost of care. And we do this right now by focusing on identification and elimination of unwarranted clinical variation. So, once we identify variation in how our providers order imaging, order drugs, or order labs - what we want to do is to design programs and interventions that align incentives.

Gina DiPietro 6:05
This role is complex. So let's pause to clarify. All PhD economists are trained in econometrics, which is basically advanced statistics and data science. Think of Alica as a link between the data people and decision makers, like clinical leaders or administrators. Together, they apply this knowledge, this data, to find solutions that improve patient care.

Alica Sparling 6:29
And all of this work, again, is done using data. So we use the data science tools - artificial intellience (AI) and machine learning (ML) - to both identify the variation and also help us design these programs and interventions. The design of interventions is led by the clinicians, and our group supports them. Then, we want to evaluate all of these new interventions. Again, health economists can help step in with the proper methodology, whether it's the budget impact analysis, or cost effectiveness analysis. Ultimately, limiting unwarranted clinical variation improves efficiency of care, and it helps us also drive down the cost of care. That, in turn, improves access to medical care for vulnerable populations, and can help reduce disparities in health. I can help for example, to design health equity metrics for a provider-peer comparison tool, and again, drawing on literature and drawing on evidence. So, in some cases, what's needed is not just a consultation, but actually a data analysis deep dive. Because I am a trained data scientist, and I am trained in econometrics and statistical methods, I can actually roll up my sleeves and I can get the data. And I can conduct the regression analysis that's needed and interpret the data. That kind of work. Even the short time since I've been here, this has been needed both in the area of health equity and in the area of value-based care. So, I have been engaged in a couple of projects where we are actively conducting statistical analysis, regression analysis and interpreting the results.

Gina DiPietro 8:07
It's interesting that you mentioned the health equity and disparities research. I think a lot of the focus in the industry has only been on cost effectiveness. And that doesn't take into consideration how diverse the populations that Novant Health serves and provides care for are.

Alica Sparling 8:25
You are very correct, Gina. I really like the focus on health equity, and the social impact that I see in the health industry right now. When we think about costs, and when we think about effectiveness, you cannot be thinking about the whole patient population as being one big homogenous group. We have patients with different constraints and different backgrounds. And it's a very diverse, heterogeneous group. And when we make improvements, we need to be paying attention to who is benefiting and who is being left behind. Don't look only at cost effectiveness for the overall patient population, but break it down. So, look at how the new drug, or how the new implant, or how the new service is going to affect not only cost and effectiveness, but also equity. In other words, what is their effect separately on vulnerable populations (whether we define them by race, ethnicity, by socioeconomic status, or some kind of combination) versus the majority.

Gina DiPietro 9:29
Thank you for listening to this episode of Industry Insights: A healthcare podcast presented by Novant Health. In part two, Alica and I take a deeper dive into her health disparities research, how incentives can change people's behavior, and the role of health economics as organizations navigate a large-scale crisis like a pandemic. Until then, find other episodes on Apple, Google, Spotify, or anywhere you listen to Novant Health podcasts.