We’ve blogged before about the role of waste in the U.S. healthcare system ($700 billion and counting). A new article on the Atlantic blog offers a useful visual representation of the sources of said waste.
A circle of waste
Source: Howard, Philip K. “The case for a cost containment commission.” The Atlantic, Nov. 11, 2009. Note that, due to overlap, the sum of these percentages exceeds 100%.
This waste will continue to be a concern, especially as long as health costs continue to increase at their recent rate.
Cost, Efficiency
Efficiency, waste
The White House is deflecting criticism that cost-reduction plans are actually care-rationing plans.
We’ll leave the details of the policy to those championing it. The question of what is meant by “cost effective,” though, is of interest. Ron Harris and Clark Slipher offer their perspective on issues of healthcare cost and capacity in their recent article framing the health reform challenge:
Some would argue that cost must not enter into the discussion of how the healthcare system should operate, but this is simply not realistic. All societies have limited resources and, proportionally, the United States already spends much more on healthcare than any other Western nation, with outcomes that too often are inferior. The notion of limited resources is a harsh reality with which we, as Americans, are just now coming to grips. Choices must be made. As a 21st-century society, we want quality healthcare coverage to be available and affordable for all our citizens. In order for that to happen, we must make difficult choices.
One way to reduce costs is through strict, centralized budget controls—thereby fixing supply and effectively producing mandated prioritization and rationing of care. Another way is to identify and substantially reduce the inefficiency and waste that is embedded within the system. Improvement in efficiency and elimination of waste are much more acceptable and enduring strategies within a U.S. context than budget controls and rationing.
Read more…
Affordability, Cost, Economy, Efficiency, Reform
Clark Slipher, Cost, Efficiency, rationing, Ron Harris
The third systemic problem with the current system–alongside cost and access–is of course quality. Just look at where the U.S. ranks alongside other systems in terms of outcomes and the problem becomes clear. These quality problems can be traced to a variety of sources, as outlined by Ron Harris and Clark Slipher:
Our present quality-related shortcomings, coupled with the comparatively high level of spending on healthcare in the United States, point to a healthcare delivery system that, as a whole, is not performing effectively. Some of this failure is patient and lifestyle driven; some is provider, supplier, and technology driven; some, reimbursement-structure and payer driven; some, government, litigation, and regulation driven—and almost all of it is affected by incentives that are often not productively aligned among the parties or structured to promote optimal performance.
We’ll be offering solutions to these problems in the coming weeks.
Efficiency, Fragmented system, Quality of Care
Clark Slipher, Efficiency, Fragmented system, quality, Ron Harris
The challenge facing health reformers is nicely framed in a new article by Milliman principals Clark Slipher and Ron Harris. Quoting from the article:
No system is perfect and there is no single pathway to success. Geographic, financial resource, and population disparities (among others) preclude adoption of a single methodology to achieve “well managed” status universally. Still, we have concluded that a reduction in overall healthcare costs in excess of 25% would be possible if care were delivered under best observed practices.
As we discussed a few weeks ago, this number squares with the waste estimates posited by Peter Orszag. Where are the opportunities for greater improvement?
Our experience with top-performing systems does show opportunities for efficiency improvements in practically all service categories, but especially in facility-based care. With shifts in the types of treatment and places of service under best-observed clinical practices, certain categories would increase accordingly.
Cost, Efficiency, Reform, Value
Clark Slipher, Cost, Efficiency, Reform, Ron Harris
NPR interviewed Peter Orszag of the White House Office of Management and Budget this morning. While the entire interview is worth a listen, one quote jumps out:
Estimates suggest that as much as $700 billion a year in health care costs do not improve health outcomes. It occurs because we pay for more care rather than better care. We need to be moving towards a system in which doctors and hospitals have incentives to provide the care that makes you better, rather than the care that just results in more tests and more days in [the] hospital.
That $700 billion in waste squares with estimates from “Imagining 16% to 12%: A vision for cost efficiency, improving healthcare quality, and covering the uninsured.”
Read more…
Cost, Economy, Efficiency, Reform, Value
16 to 12, Bruce Pyenson, Efficiency, Kate Fitch, Peter Orszag, Sara Goldberg
The latest post at The Health Care Blog features an article by Bruce Pyenson, Kate Fitch, and Sara Goldberg about their recent healthcare reform report, “Imagining 16% to 12%,” which provides an actuarial yardstick for health reform proposals and efficiency targets for the US healthcare system.
Cost, Economy, Efficiency, Electronic Health Records, Evidence-based Requirements, Fragmented system, Portablity, Reform, Research
16 to 12, Bruce Pyenson, Efficiency, Kate Fitch, Sara Goldberg
Recent Comments