|"A Case for Healthcare Reform" By Allen Weiss, MD, MBA, President and CEO|
January 1, 2009 - Healthcare expenditures have grown 2.8 % per year faster, on average, than the rest of the economy. At this rate of increase, health care expenditures will become 30 % of the gross domestic product by 2035—according to a recent New England Journal of Medicine editorial.
Why this increase is a concern and what should we do about it? The rapidly rising cost is a problem for two reasons: 1. Other areas of the economy, such as education, national security, or capital improvements will be starved for resources; 2. Globally, the United States will not be able to compete because the costs of our manufactured goods or services will be inflated by healthcare costs.
The cost of care, over the long term, should be the primary focus going forward. Currently, the United States spends about twice as much per person on healthcare as do other countries. Unfortunately, even though we have some of the best healthcare in the world our overall statistics on life span, infant mortality and avoidable deaths before age 75 are all lagging behind other developed nations.
To understand the relationship between quality and cost, I find it useful to use the model of a fraction with the numerator (top) being quality as measured by any measure such as mortality (death rate), morbidity (sickness which occurs in a hospital setting), errors, unexpected infections, etc. The denominator (bottom) is cost as measured by the amount of money spent, care givers needed, supplies used, etc.
This hypothetical fraction equates to value. The value goes up when the numerator (top) increases or the denominator (bottom) decreases.
Lowering costs has been tried many times without success, primarily because for every dollar spent someone else is profiting. Administrative costs vary widely and one has to ask, “Why is it that some insurance carriers can process a healthcare claim for a fraction of what others charge?” What would happen if all insurance carriers were as efficient as the most efficient and effective ones?
Advances in health care treatment have helped to improve the system, but have also added to the cost. The problem is that many new and some older diagnostic and therapeutic procedures have not been proven to be effective. A better plan would be to have any new test or treatment studied in the right setting with the appropriate clinical studies to confirm value as defined in the previous paragraphs. Evidence based medicine (EBM) is actually the term for this concept. It has been estimated that one-third of all care would not be necessary if care givers understood and practiced EBM.
At the NCH Healthcare System we are using EBM more and more as we implement computer based provider entry (CPOE). About 200 common diagnoses have specific care plans and order sets, which any of the 560+ physicians and their assistants (mid-level providers) can use. This standardization reduces errors, adds value and is the right thing to do.
About half of Americans receive health benefits from their employer. Even though some may think this doesn't cost the employee, in reality it does. The employer can raise the money to cover the cost of health insurance in one of three ways, according to the editorial from the New England Journal of Medicine referenced above. The first is by reducing wage increases. The second is to raise prices for the product it sells, and the third is by accepting lower profits. This can indirectly affect the employee in the area of bonuses or other company benefits. The reality is that most often wages suffer as health costs rise.
Recognizing, examining and subsequently controlling the rise in healthcare costs are fundamental for the economic health of the United States. Employing Evidence Based Medicine and controlling administrative costs are two healthy choices for starters.
The sooner we start the better.
Dr. Allen Weiss is CEO & President of the NCH Healthcare System. He is board certified in Internal Medicine, Rheumatology and Geriatrics, and was in private practice in Naples, Florida from 1977 - 2000. Dr. Weiss is active in a variety of professional organizations and boards, and has been published in numerous medical journals, including the American Journal of Medicine and the Journal of Clinical Investigation.