A few years ago Massachusetts opted for universal health-care. At the time they passed the bill, there was no word of cutting costs. Just like a diner at a nice restaurant who ends up getting a large bill after an enjoyable meal, Massachusetts is finding out after a few years it must do something about enormous costs.
BW asked the practical question, what can be done about costs right now? More importantly, they estimate that if half of all the waste, fraud and unnecessary spending were cut, it would be possible to provide health insurance for all. Thomson Reuters just released an extensive report about health-care spending in the U.S. which the BW article is based on.
What is the basic problem with the health-care system right now?
First of all, American health-care uses a fee-for-service plan. This means we pay for quantity of care, not quality. Doctors do not have any financial incentive to eliminate waste. In fact, if they do cut costs, they earn less. BW predicts that health-care spending will double over the next 10 years. Because Congress is doing nothing to cut costs in the current health care bill, we will all end up paying for it.
The private sector cannot wait around for costs to increase. Businesses are having enough trouble in this difficult economy and higher health-care costs are more painful to the bottom line than ever before.
BW emphasizes that the most impact will come from a comprehensive Federal health-care bill, but there are still some things that can be done right now to save real dollars.
1) Crackdown on Fraud & Abuse
The FBI estimates that 3% to 10% of total health spending is fraudulent billings to Medicare and Medicaid. That is $125 - $175 billion, a substantial sum. Law enforcement used to help out private insurers, but now they are taking matters into their own hands.
One common scheme is phony providers of medical equipment who are the recipients of claims. Anthem Blue Cross of California decided to investigate and found 10% of newly registered companies were non-existent, but still accepting reimbursement claims.
2) Develop a Healthy Workforce
Johnson & Johnson has offered comprehensive wellness programs since 1995, and saved $225 per employee from 1998 – 2002. Multiply that by 100,000 employees and the result is $22.5 million saved in four years. Even for a company the size of J&J, that’s substantial. In the past, conventional wisdom thought it would take decades for wellness programs to pay off, but J&J saved money after only three years.
3) Coordinate Care through Family Doctors
Uncoordinated care is a huge reason for unnecessary treatment. The U.S. does not have electronic healthcare records, which means duplication of treatment, testing and no cross-checking of prescriptions. BW estimates this costs $25 to $50 billion a year. They suggest a primary care physician as the center for communication and coordinator of care. North Carolina has implemented this kind of program resulting in $161 million savings in 2006.
4) Make Health a Community Effort
Haven’t we all heard about the benefits of exercise and eating right? The City of Rochester, NY has a number of large companies who have gotten together to set up a health & fitness program for the metropolitan area. Rochester may not be New York City, but it is still a fairly sizable area, so I view this as an impressive step forward. The program addressed fitness, eating fruits and vegetables and managing prescription drugs. Rochester’s health care costs went from 5% below the national average in 2005 to 15% below the national average in 2009.
5) Stop Infections in Hospitals
BW reports, “Every year 1.7 million patients develop infections while in hospital and 99,000 die as a result”. Sounds pretty terrible to me – we generally go to a hospital to get treated, not to pick up a new infection.
What can be done about this? Apparently, it’s as simple as washing hands, clothes and tools. John Hopkins Hospital in Baltimore has a five-item checklist to follow. The Keystone project is a collaboration of 77 hospitals. They followed the checklist and “reduced catheter-related infections to zero” saving 1700 lives and $246 million. Does your hospital use this checklist?
6) Get Patients to Take their Medicine
What happens when people don’t follow doctor’s orders? More doctor visits, hospitalizations, additional treatments to the tune of $177 million a year. The National Council of Patient Education did this study. Why don’t people listen? They think the drugs don’t work, they can’t afford the co-pays, they forget, and so on.
Various programs have been started to get patients to comply. These programs cost money, but deliver a solid return: for every $1 spent on a program can save $7 on diabetes, $5 for high cholesterol and $4 for high blood pressure. That beats most investments these days – and people get healthier, too.
7) Discuss Options Near End of Life
Most people don’t want to be poked and prodded with “unneeded test and futile treatments” when they are in the last year of their life. Instead they want more “nursing care, pain management and psychological support”. Given that one-quarter of Medicare dollars are spent in the last year of life, cutting down on treatments that patients don’t want could save some funds. What about the argument that anything should be done to save a person? Exactly, everything should be done, but note the word “unnecessary”. Dr. Elliott Fisher at Dartmouth Medical School says “this is about better care aligned with what patients want”.
8) Use Insurance to Manage Chronic Diseases
Not all diseases are created equal, and different diseases require different treatment plans. Value-based insurance design keeps costs down by giving patients financial incentives to manage their treatments. The estimate on this one is $174 billion a year.
9) Let Well-Informed Patients Decide
Patients need to know the risks and benefits of medical treatments they may or may not need. Sometimes they don’t need treatments they may insist on. BW doesn’t give a number, but emphasizes that “37% of health spending is wasted on unnecessary care” and this would go a ways toward reducing that figure.
10) Apologize to the Patient
“I’m sorry”. Such simple words, such powerful results. Laws can limit malpractice awards but it would be better not to have litigation in the first place. An attorney once said, “half of all lawsuits could be avoided with an apology”. Errors can and do occur, and in 2005 the SorryWorks! Coalition was formed by a man who lost a family member as a result of a medical error. The SorryWorks! Coalition has a policy that when an error is discovered by the hospital, the patient is informed and actions are taken.
The most dramatic example is at the University of Illinois Medical Center in Chicago, which started a formal apology program in 2006. Claims are down 40%, even though clinical activity is up 20%.
Overall, this BusinessWeek article is the most sensible approach to cost reduction I have seen yet. I’ll let Congress duke it out over the health care bill, and I wouldn’t be surprised if what emerges is so watered down it will be barely effective. Certainly I don’t expect Congress to cut costs; they are champs at spending money. Let’s hope that these sensible, practical measures which actually work are implemented further to cut costs.
I read a great blurb that seems to say it all. From N.A.R.F.E. (National Active & Retired Federal Employees) Marion Payne Chapter 1309 newsletter Nov. 11, 2009:
ReplyDelete"Let me get this straight: We're going to pass a health care plan, written by a committee whose head says he doesn't understand it, passed by a Congress that hasn't read it but exempts themselves from it, signed by a president who also hasn't read it, and who smokes, with funding administered by a treasury chief who didn't pay his taxes, overseen by a surgeon general who is obese, and financed by a country that's nearly broke.
What possibly could go wrong?"