I HATE TO SAY I TOLD YOU SO …

Well, maybe not. There is a perverse pleasure in seeing one’s assessment, even when it comes to bad news, validated. It’s human nature. To that end I present a recent excerpt from the ACC News Digest that references several sources analyzing our health care spending:

IOM Says US Health System Wastes $750 Billion Annually.

The AP (9/7, Alonso-Zaldivar) reports that yesterday the Institute of Medicine issued a report finding that “the U.S. health care system squanders $750 billion a year – roughly 30 cents of every medical dollar – through unneeded care, Byzantine paperwork, fraud and other waste.” The conclusion drawn is that while both “President Obama and Republican Mitt Romney are accusing each other of trying to slash Medicare and put seniors at risk … deep cuts are possible without rationing, and a leaner system may even produce better quality.” That’s because the IOM’s “one-year estimate of health care waste is equal to more than 10 years of Medicare cuts” under the ACA and “more than enough to care for the uninsured.” The report also “identifies six major areas of waste: unnecessary services ($210 billion annually), inefficient delivery of care ($130 billion), excess administrative costs ($190 billion), inflated prices ($105 billion), prevention failures ($55 billion) and fraud ($75 billion).”

The Washington Times (9/7, Cunningham) reports in its “Inside Politics” blog, “The report highlighted flaws that have long plagued the U.S. health care system, which is relatively slow to adopt new technologies, lacks incentives for doctors and hospitals to keep costs down and doesn’t encourage all of a patient’s providers to coordinate care.”

ABC (9/7, Wong) in its “Medical Unit” blog says that “the money squandered on services that failed to improve Americans’ health could have provided health insurance for more than 150 million workers or covered the salaries of all of the nation’s first responders for more than 12 years.” Author Dr. Mark Smith, president of the California HealthCare Foundation, said, “We’re spending money in ways that don’t seem to improve people’s health.”

I began this blog a few years ago with the health care system as its initial focus. My estimates were based on my personal experiences but I suspected, correctly it seems, that my observations were generalizable. There is a silver lining to this bad news: With this much waste, theoretically we can dramatically improve our health care delivery and its cost by waste cutting alone. The devil’s in the details of ferreting out the problems and realigning the incentives.

In early 2010 I whittled down my 15 recommendations for a healthier health care industry to what I felt were the most crucial 5:

  1. Tort reform. Without it we’re banging out heads against an endless testing and retesting wall.
  2. Increase competition by allowing patients to obtain coverage from out-of-state insurers, possibly in conjunction with nonprofit health cooperatives owned by the patients. Mandatory minimum coverage for those that can afford it has to be part of this.
  3. Establish a centralized medical records database.
  4. Immediately halt the arbitrary reimbursement cuts (actually, they seem to be based solely on volume and cost, rather than utility and appropriateness).
  5. Notify physicians and providers that are utilization outliers (and by that I mean beyond two standard deviations from the mean) of their status, without penalties.

Since then I’ve become less sanguine about the value of tort reform as a means of reducing cost, considering its impact (or lack thereof) in California, where we’ve had it for decades. Its benefit lies in its ability to bolster physician access by limiting the bloated malpractice insurance premiums that drive doctors away from essential specialties. In any case, little has progressed in this arena. Likewise, numbers 2 and 3 have seen little change, although isolated EMRs are springing up like poorly programmed weeds due to government incentives, which is a first step toward more universal connectivity. Reimbursement cuts are proceeding, although haltingly, so as to keep physicians from bolting from Medicare. I haven’t seen even a mention of number 5.

Will Obamacare be the answer? I know people who think so. I’m skeptical that a complex law no one fully understands, and which the legislators haven’t even read, can increase the extent and scope of medical coverage by increasing taxes without further driving us to the brink of bankruptcy, but we’ll see. Unless it’s repealed.

The only thing for certain is that the only road to “something for nothing” is waste management.

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