CH 14 HA 3308

Waste in Healthcare

-Unnecessary services -Excess administrative cost -Inflated prices -Fraud -Avoidable errors

One study showed that about

10 percent of the US population did not seek medical care and 25 percent lacked dental care in 2016 because of high costs

The United States spends about

18 percent of its gross domestic product (GDP) on healthcare, whereas other industrialized countries spend an average of 10 percent. In addition, almost 25 percent of the US federal budget is allocated to healthcare

bout 60 percent of all people in the United States suffer from at least one chronic illness.

42 percent of the US population, or just over 100 million people, have two or more chronic diseases. The incidence of multiple chronic disease increases with age, rising from 18 percent among 18- to 44-year-olds to 81 percent for people over the age of 65.

Drug misuse costs the United States more than $1 trillion per year.

Although illegal drugs remain a problem, about 60 percent of overdose deaths involve prescription drugs

Financial waste in healthcare occurs far too often.

Estimates suggest that about 30 percent of total healthcare expenditures, or about $765 billion—more than the United States spends on defense—may be wasted

Technology can automate and refine tasks and actions that normally are performed by humans.

For instance, before infusion pumps were invented, nurses had to give patients injections on a regular basis

President Obama declared that year that "healthcare should be a right for every American" and pushed for the passage of the Affordable Care Act (ACA) of 2010. That law reduced the number of uninsured to 12.7 percent by 2016.

However, as a result of changes in the ACA implemented under President Donald Trump, the number of uninsured began to rise, and by 2018, the share had reached 15.5 percent

Employees and employers often choose high-deductible plans to lower their monthly healthcare premiums.

In 2018, 70 percent of all large businesses offered high-deductible plans. Many employees choose high-deductible plans because their premiums are about 42 percent lower than health insurance coverage with lower deductibles.

New technology drives change in healthcare, but it is often costly and may require significant training.

Investments in new technology account for 40 to 50 percent of total healthcare cost increases

in most areas, a single health system controlled more than 50 percent of hospital admissions.

More physicians now work for hospital systems, and the concentration of hospitals in markets has increased substantially

the main factor that sustains the focus on acute care and treatment rather than prevention is the fee-for-service payment model.

Most healthcare payments are made through a fee-for-service arrangement, which promotes the overuse of services and discourages prevention

Healthcare in the United States is delivered through a fragmented system.

Patients often seek care from both specialists and primary care physicians who frequently do not communicate with each other

Little financial transparency exists in healthcare pricing. Most patients do not know—and cannot find out—the costs of healthcare services until long after the service has been received.

Providers typically charge different payers, such as Medicare, insurance companies, and private payers, different prices for the same services. Many including federal legislators are seeking solutions to increase transparency and reduce variation in healthcare prices

Providers who deliver more cost-effective treatment and keep their patients healthy should also share in the savings of healthcare dollars.

Some healthcare systems, such as Kaiser Permanente, already practice this type of medicine.

The prevention of disease needs to become a higher priority. Healthcare in the United States faces a key challenge to shift emphasis from acute care and treatment of disease to the prevention of disease.

The US healthcare model has long emphasized acute care over prevention and public health. Just three diseases—heart disease, cancer, and diabetes—account for almost three-quarters of US healthcare expenditures.

Health disparities persist in the areas of race/ethnicity, socioeconomic status, age, location, gender, disability status, and sexual orientation, resulting in poorer quality of care and healthcare outcomes.

These disparities create an additional $93 billion in unnecessary healthcare costs and $42 billion in lost productivity

Social determinants of health are factors in the social and physical environment that influence a person's health.

These include socioeconomic status, education, food security, housing, employment and social support functions.

Under fee-for-service payment, physicians are rewarded for ordering more tests and performing surgeries.

They are paid more when they provide more services. As a result, they may provide more care than is needed

•Dan Polsky—

Wharton Institute of Health Economics

about 25 percent of patients admitted to a hospital for a medical or surgical diagnosis also suffer with a

behavioral health problem

Most healthcare policymakers believe that healthcare providers should be given

financial incentives to promote health and wellness and provide preventive interventions.

the Virginia Mason Health System in Seattle, Washington,

has been recognized as a pioneer in integrating patient care, increasing quality, and reducing costs. Its efforts have led to more standardized treatments, elimination of unnecessary care, and lower costs

The US Census Bureau predicts that more than 20 percent of the population will be over the age of 65 by the mid-2030s, and for the first time there will be more older people than children in the United States

he aging of baby boomers means that within just a couple decades, older people are projected to out-number children for the first time in U.S. history,"

Fee-for-service payment for healthcare has been

likened to paying carpenters by the inch of lumber they use, or plumbers by each foot of pipe installed.

Medicaid and Medicare are now giving providers the ability to meet patients' needs

outside their medical offices by paying for services that address social determinant of health needs.

Minority racial/ethnic populations have been shown to receive lower-quality care because they tend to go to

poorer-quality institutions (hospitals and clinics) that have higher proportions of Medicaid patients and receive less financial support. However, many of the differences could be eliminated if these populations had stable health insurance and primary care medical homes

If healthcare is a right,

then the government has a responsibility to ensure that each citizen has access to a certain level of healthcare. Citizens should reasonably receive equal levels in terms of quality and access to healthcare services

if healthcare is a privilege,

then the government should have a limited role and allow the marketplace to provide different levels of care to those who can afford it.

Very soon, a majority of patient interactions with healthcare facilities may occur through mobile devices,

thereby improving doctors' efficiency and making primary care more accessible

Health Competition Expands

•Amazon, Google, Apple• Walmart •CVS

Advancing Technology

•Artificial intelligence •3D printing •Drones •Wearable monitoring devices •Virtual and augmented reality •Medical tricorders •Genome sequencing •Nanotechnology

Fragmented Delivery

•Care sought from primary care providers and specialists •Lack of communication and coordination •Higher costs •Lack of incentives moving from a private system to a public system

The Challenge of Substance Abuse

•Cost > $1 trillion annually •60% of overdose deaths involve prescription drugs •45,000 opioid deaths in 2017

Tackling Substance Abuse

•Decriminalize some drug possession •Increase funding for treatment •Increase education

Right or a Privilege

•Democrats •Right = access for each citizen •Affordable Care Act of 2010 •"Medicare for All" •Republicans •Privilege = limited role for government

Recommendations for Transparency

•Focus on goods and services that can be compared •Groups costs into episodes of care •Combine price with quality and outcomes •Use the same format •Provide information in a centralized location •Provide price information to providers •Encourage shared decision-making regarding treatment

Integrating Social Determinants

•Healthcare must expand beyond the walls of hospitals/clinics •Address social determinants of health

Introduction

•Payment reform to reduce waste and reduce cost. •Comprehensive Primary Care

Lack of Transparency

•Price shop •High-deductible insurance plan growth—3 m to 20 m •Price vs. reference price vs. effective price

Health Disparities—at risk populations

•Racial/ethnic •Socioeconomic status •Age •Location •Gender •Disability status •Sexual orientation

Aging and Chronic Illness

•US population is aging •60% suffer at least one chronic illness •42% suffer from multiple chronic illnesses

Prevention vs. Treatment

•United States emphasizes acute care •Payment emphasizes acute care (fee-for-service) •Policy should incentivize prevention •Pay providers to keep people healthy

Many other technological advances may have significant impacts on healthcare in the near future, including the following:

◆3D printing could allow for low-cost, custom-built implants, joints, bones, and blood vessels, greatly lowering costs and improving outcomes.➤ ◆Drones could be used to facilitate deliveries of medical supplies and testing samples, drastically reducing wait times.➤ ◆Wearable health monitoring devices could transmit information about patients' conditions and tests to providers for continuous monitoring.➤ ◆Virtual and augmented reality could be used for treatment in physical and occupational therapy, in addition to pain management and medical training.➤ ◆Medical tricorders (palm-sized health tools) could be used measure ECGs (electrocardiograms), heart rate, oxygen saturation, temperature, blood pressure, and other functions. ➤ ◆Genome sequencing could be used to provide data on drug sensitivity, medical conditions, better diets, and vitamin needs at a low cost.➤ ◆Nanotechnology could be use for precise drug delivery, wound monitoring, and diagnoses (The Medical Futurist 2020; Palmer 2018).

Solutions to increase coordination among providers include the following

◆Change the payment system to pay for integrated care. Pay providers a lump sum for overall care for a period of time under some form of capitated payment model.➤ ◆Standardize work and clarify the roles of providers.➤ ◆Create universal electronic health records to allow better communication across providers.➤ ◆Reduce dependence on specialty care by increasing the number of primary care physicians to coordinate care.

To combat substance abuse, the following measures have been recommended:

◆Decriminalize some drug possession. About 1.5 million arrests are made annually for drug violations. Decriminalization would keep many people out of prison and better facilitate treatment. ◆Increase funding for treatment. Many people with substance abuse disorders lack the resources to obtain treatment. Outpatient treatment services may not be accessible because of financial or transportation barriers.➤ ◆Increase education to diminish substance abuse. Patients especially need to understand the addictive potential of some prescription drugs.

To help, some have suggested implementing reference pricing, which would set maximum prices that insurance companies would pay for services . Others have recommended the following actions:

◆Focus transparency efforts on goods and services that can be compared, such as prescription drugs and diagnostic imaging.➤ ◆Group costs into episodes of care, procedures, or annual costs of care.➤ ◆Combine prices with quality and outcomes.➤ ◆Use the same format and provide information in a centralized, convenient location that people can access.➤ ◆Provide price information to doctors and other healthcare providers.➤ ◆Encourage shared decision-making regarding treatment options.

Many healthcare leaders believe that continued consolidation of healthcare providers will occur, triggered by the need for capital to invest heavily in technology and prepare for an uncertain future. Mergers and acquisitions and consolidation of markets are expected to continue in all segments of healthcare, but primarily in the following:

◆Long-term care➤ ◆Physician practices➤ ◆Healthcare information technology and software➤ ◆Pharmaceuticals➤ ◆Hospitals and healthcare systems➤ ◆Medical device firms➤ ◆Home care and hospices

there are many things that need to be done to improve mental health treatment

◆Screenings and prevention services➤ ◆Coordination and integration➤ ◆Community partnerships➤ ◆Workforce development➤ ◆Infrastructure development➤ ◆De-stigmatizing behavioral health

Waste occurs in the following areas:

◆Unnecessary services. Unnecessary services occur as a result of nonstandardized clinical protocols. A lack of proper protocols leads physicians to order low-value tests and services that provide little or no value to the patient ◆Excess administrative costs. About one-quarter of medical spending goes toward administrative costs (Cutler 2018). The United States spends about 8 percent on administration, whereas most nations spend only 1 to 3 percent (Knox 2018).➤ ◆Inflated prices. Prices for prescription drugs, doctors, and hospitals are dramatically higher in the United States than in other countries. For instance, the average cost of a CT scan in the United States is $896 compared with $97 in Canada (Knox 2018).➤ ◆Fraud. Healthcare fraud exceeds $68 billion each year in the United States, with the federal government winning fraud judgments of over $2.6 billion in 2019 (McGrail 2020). ➤ ◆Avoidable errors. Medical errors increase healthcare costs and injure many people every year. Research suggests that 250,000 to 440,000 people per year die in the United States from a medical error, making it the third-leading cause of death in the nation