The truth about health care costs

The Truth about Health Care Costs Neither a liberal single payer system nor a conservative voucher system will much affect the costs of health care. For good or bad, they are simply reorganizations of health insurance administration and do not reduce the true costs. The true cost of health care comes from what we spend on hospitals and doctors, drugs, imaging centers, nursing homes, etc. and that spending continues to rise. The cost drivers include new treatments and technology, specialized drugs, multi-layered administrative inflation, and higher usage from an aging population with chronic illnesses. We need structural, strategic, and cultural solutions to reduce health care costs. Structural solutions include speeding up the effort to shift away from fee-for-service and toward results based payment structures such as Accountable Care Organizations (ACOs) which are now being piloted around the country. Other programs include the ‘medical home’ and ‘medical neighborhood’ models of highly coordinated patient care. These collaborative structures are captained by clinical professionals and involve health navigators, case managers, home aides, community services, and others. By managing a population of patients, these structures insure they receive the right level of care at the right time and at the most efficient place. Medicare and the other insurers need to continue to work with providers to align incentives that reinforce these important cost reduction programs. Health Information Technology (HIT) right now is a paradox. HIT holds the promise of easy, accurate data flow and improved patient care but what we have is a complex and expensive tangle of integration and implementation problems. Hospitals, insurance companies, benefits managers and physician practices report spending millions trying to make administrative systems compatible. A national “Super HIT Panel” could be formed to set system and software standards. Strategic solutions must include managing chronic illnesses such as heart disease and diabetes. Alzheimer’s and cancer care are growing cost drivers. These solutions should specifically embrace the small percentage of people who account for the bulk of expenditures. The core of this strategy requires finding the most effective and efficient treatments using sound evidence about what really works. Extreme variations in care for the same condition around the country imply both substandard care and waste. We also need evidence that newer, usually more costly, treatments actually help patients and extend life. Other cost reduction strategies can be drawn from industrial models. Address the need for reorganization of professionals and care givers by evolving new roles for scarce doctors, physicians’ assistants, nurses, home health aides, case managers and even patients’ families. Clinic networks and health availability in drug stores and malls can divert care from more expensive venues, but they should be integrated into the “medical home” structure mentioned earlier. Reorganization will produce new strategies for prevention, care, and follow up. Conduct industrial type research and make breakthrough investments to reduce cost. Digital radiology replacing film was such an investment. We may soon see investments in e-healthcare, including smart phones and mobile apps. Research into cellular level medicine may produce more breakthroughs. Aspects of diagnosis and treatment will be outsourced for both quality and cost reasons. Though seemingly mundane, rigorous work redesign, simplification, and standardization can continually yield cost benefits. Employing competition as a strategy to drive prices down will take time. For patients to make informed choices about doctors and hospitals they must be able to evaluate both price and quality neither of which is easy to do today. Cultural solutions, such as past efforts on smoking reduction and seat belt use, hold significant long term possibilities to shift the health care cost curve. Our present cultural focus on obesity suffers from frayed calls for personal responsibility and subversion by segments of the food industry. We need incentives to modify behavior. Employers and insurers are introducing financial incentives and penalties for people who modify (or refuse to modify) behavior to improve their health. Culturally we already accept taxes and tax relief as incentives. Whatever the malpractice malaise adds to healthcare costs, it needs to be fixed. Addressing malpractice and tort reform requires that society decide what it wants and direct action from the legal and political elements of our culture. End of life care presents a special cultural issue, consuming perhaps as much as 30% of Medicare’s annual spending. Evidence based medicine and best practices cannot by themselves address the issue. The answer will require the interplay of economics, politics, and societal values. The U. S. spends approximately $2.7 trillion on healthcare each year and the amount is now growing at about $100 billion a year. To avoid an economic and societal catastrophe we need all the workable solutions we can find.