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Health Economics Resource Center (HERC)

The Health Economics Resource Center (HERC) is the economic coordinating center for the Cooperative Studies Program (CSP). HERC conducts the cost-effectiveness component of CSP studies. These evaluations consider if new health care interventions yield sufficient improvement in health care outcomes to justify their cost.

These studies have yielded a number of notable findings:

  • Buprenorphine treatment, a long-term therapy for opiate dependence, can help prevent the transmission of HIV by reducing HIV risk behaviors. An economic model found the effect to be so significant that the treatment will be regarded as cost-effectiveness across a range of prices, as long as it does not substantially reduce the use of methadone (CSP 1008).
  • Geriatric Evaluation and Management (GEM) units do not save money, but patients randomized to this type of care had significantly fewer nursing home admissions (CSP 006).
  • Small reductions in the symptoms of Post Traumatic Stress Disorder (PTSD) were associated with higher rates of employment, suggesting that treatments that are only partially successful will help patients achieve more employment and more income (CSP 420).
  • Positron Emission Tomography (PET) can be an appropriate part of cost-effective diagnosis and managements of patients with a solitary pulmonary nodule (CSP 27).
  • Patient with stable angina are often treated with a percutaneous coronary intervention (PCI) (such as angioplasty with stenting). Among patients who receive optimal medical care, PCI does not prevent mortality, but it does result in a small but short-term improvement in quality of life. This ratio of cost to benefit was too large for PCI to be cost-effective (CSP 424).
  • Patients who have mild, non-Q-wave heart attacks do not receive appreciable benefit from an invasive management strategy. A more conservative strategy was more cost-effective (CSP 368).
  • High risk patients who need coronary revascularization did equally well with coronary artery bypass grafts (CABG) or a percutaneous coronary intervention (PCI). CABG was more expensive and not cost-effective (CSP 385).

Facilities and Staff

HERC was established in 1999 by economists at the Palo Alto Cooperative Studies Program. It became the economics coordinating center for CSP in 2002. HERC economists also conduct research with the support of the VA Health Services Research & Development (HSR&D) Service, the National Institutes of Health, the Robert Wood Johnson Foundation and other sponsors.

HERC staff includes eight PhD economists, statistical programmers, project managers, and an administrative officer. Todd Wagner, PhD, is the HERC director. Ciaran Phibbs, PhD, is the Associate Director. Yoko Ogawa is the HERC administrative officer.

HERC publishes guidebooks and working papers on health economics issues, creates a comprehensive dataset with estimates of the cost of VA health care, and conducts classes and seminars for VA health economics researchers.

HERC completed a guidebook for preference measurement in economic analysis for CSP economists, biostatisticians, and planning committees. The guidebook provides a summary of CSP experience in preference measurement, a summary of the literature using various measurement systems and an algorithm for selecting the method and measures in future studies.

Key Personnel

Todd Wagner, PhD

Ciaran Phibbs, PhD
Associate Director

Yoko Ogawa
Administrative Officer


VA Palo Alto HCS
795 Willow Road (152MPD)
Menlo Park, CA 94025-2595

Phone: (650) 617-2630
Fax: (650) 617-2639

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Any health information on this website is strictly for informational purposes and is not intended as medical advice. It should not be used to diagnose or treat any condition.