Healthcare Costs 101

There's an excellent article out today on the Health Affairs GrantWatch Blog by Rosemary Gibson.  You can read the full article here.  Here's a quote,

"The mantra in health care today is volume, volume, volume. In this highly caffeinated system, many doctors are required to meet productivity targets for diagnostic tests, surgeries, and office visits. As payers ratchet down payment per unit of service, the incentive exists to increase volume, and the cycle perpetuates itself."

Gibson talks about several studies and ongoing research efforts that track disparities in healthcare practice, and provides some links that are key for anyone who wants to gain an understanding of why healthcare costs in the U.S. have been spiraling out of control.  Here are the links:

The Dartmouth Atlas of Health Care

New Yorker article on health costs in McAllen, Texas

The Perfect Storm of Overutilization (full article requires $, but free introduction makes the point) 

Commonwealth Fund Survey about the U.S. healthcare system which finds, among other interesting points, "that 32 percent of Americans say they have had medical care they thought was unnecessary or had little benefit." As Gibson understatedly observes, "This remarkable finding merits greater understanding."

Gibson's article is focused on how foundations can spend money to improve healthcare.  She draws three key conclusions:

1. Foundations can fund the development of new payment models [and] delivery models that help organizations learn how to reduce waste in care delivery processes and curb overuse of tests and treatments that don’t benefit a patient,
2. Support research that sheds light on patient experience of overtreatment, and
3. Accelerate the adoption of shared decision making [between the healthcare system and the patient]

Her final point is worth thinking about, because as individuals we can do more to become informed on our own without any funding:

"When patients are informed of the risks and benefits of treatment options, they tend to shy away from the storm of overutilization. It’s always a good thing to stay out of the path of a storm."

A Humpty Dumpty of a Healthcare System

In a recent presentation at the Seventh Annual Healthcare Unbound Conference held mid-July in San Diego, health management company Alere's (NYSE:ALR, Market Capitalization = $2.5 billion) Chief Innovation Officer Gordon Norman, MD, made some interesting comments (see press release here).

In addition to using the analogy that the U.S. healthcare leaders are like "all the King's men" in Humpty Dumpty (...all the King's men couldn't put Humpty together again...), Dr. Norman noted that:

1) U.S. Medical cost inflation is two to three times that of general inflation,

2) Chronic conditions such as diabetes and heart disease are proliferating for adults, and for the first time in history, children and adolescents may have a shorter lifespan than their parents (emphasis added), and

3) Two-thirds of the U.S. population is overweight or obese; poor habits and lifestyle choices account for 60% of all deaths (citing a September 2008 article in the BMJ).

Dr. Norman had some suggestions for the healthcare industry, including providing people with "empowering technologies like remote monitoring...(and) home diagnostics" (the provision of which is part of Alere's business), and paying care teams for outcomes as opposed to discrete services, and "linking patient out-of-pocket costs to healthy decisions and actions."

And while I think Dr. Norman is on the right track, I don't think the solution to the health care problem in the U.S. is going to come from the "system" itself in any way; I don't think the "system" is really the problem and therefore is not going to be the source of the solution.  Diabetes and heart disease are not accelerating because of the U.S. healthcare system, they are accelerating because over 66% of Americans are overweight or obese.  The healthcare system can't solve this problem and we shouldn't expect it to.

But I think the internet can help.  The access to information that the internet provides, some of which I will put forth in this blog, has the power to spur a cultural revolution of sorts whereby individuals take charge of their own health as much as humanly possible.  And by doing so, unburden the "healthcare system" and enable us to stop spending what are really ridiculous amounts of money and time on the provision of healthcare.  I'm aware that this is a little bit of a radical idea, although from my perspective it is a lot less radical than living lifestyles that require us to obtain expensive "healthcare" treatments, drugs and procedures that are really completely avoidable.

I'll step off my soapbox, for now...