Addressing Health Care Costs — The Right Way

Stanley Feld M.D.,FACP,MACE

The AMA has put forward four broad strategies to reduce health care spending and improve the value of medical care. The facilitator stakeholders have not asked practicing physicians what they think should be done to improve the quality of medical care and decrease the cost of the healthcare. I must confess that I am proud of the AMA for publishing this opinion editorial. Maintaining the status quo and focusing on price transparency using inaccurate methodology is simply the wrong way to control cost. The result will be another complicated mistake.

Is it possible to change the status quo? The editorial’s initial statement is; “A fundamental first step is to properly address the issues of cost, value and efficiency in the U.S. health care system.”

The latest rise in health insurance premiums and the $2 trillion annual health bill is a timely example of why attention turns so quickly to rising health care costs. “The figures, compiled by the Kaiser Family Foundation, represent the smallest rate of premium increase since 1999. But that’s a dubious distinction given that the rise is more than twice the overall inflation rate of 2.6% and far ahead of the 3.7% increase in wages.”

As insurance costs go up at that rate, we can expect a rise in the number of uninsured Americans.
“Another of our page one headlines, only two weeks before the premium news, announced a dramatic increase in the latest U.S. Census Bureau tally of the uninsured — to 47 million.”

“When insurance rates rise, according to researchers, fewer workers can afford to pay premiums and medium- and small-size firms give up offering coverage. One striking figure: In 2001, 68% of firms smaller than 200 workers offered health benefits; at last count it was 59%”.

“It’s essential to note that much of the increase in what’s spent on health care in America is for necessary care.”

The meaning of necessary care is when someone is sick and needs to be treated rather than preventing them from becoming ill.

“ By one count, from a 2004 study in Health Affairs, treated prevalence of disease — basically, the underlying prevalence of illness and often evolving treatment resources used to address it — alone accounts for an estimated two-thirds of the recent growth in health costs. But there are a number of studies indicating inefficiencies due to overuse and under use of services. On top of that is non-clinical waste, including bureaucratic burdens and excessive third-party profits.

The answer is not willy-nilly hacking away at costs, but defining and moving forward with a focus on better value in our health care spending. Focusing on value would likely lead to a slower growth of costs.”

“Value can be thought of as the best balance between benefits and costs (i.e., efficiency, in economic terms), and better value as improved clinical outcomes, quality, and/or patient satisfaction per dollar spent.” AMA Delegates adopted four broad strategies, presented in the report, to contain health care spending and improve value:
• Reduce the burden of preventable diseases. This includes preventing the onset of chronic illnesses such as diabetes and improving patient compliance with medications.
• Make health care delivery more efficient. Better coordination of care and reducing unnecessary services fall into this category.
• Reduce non-clinical health system costs that do not contribute to patient care. For example, reducing excessive spending on administration, profits and marketing.
• Promote “value-based decision-making” at all levels. This involves improving the process used to make decisions so that cost and benefit — particularly clinical outcomes — are taken into account.

Do any of these proposals sound familiar to readers of this blog? A lot of physicians know what to do. The changes necessary are counter to the vested interests of the facilitator stakeholders who control the healthcare system. The facilitator stakeholders do not ask the practicing physicians’ opinion because it might decrease their profitability.

“Patients and stakeholders inside and outside of the health care arena will be needed to bring about the transformation to a more value-driven system. And physicians have an opportunity to be a key component in the change. Physicians have the most contact with members of the public every year, putting them in a unique position to help patients help themselves, such as by adopting healthier lifestyles.”

With some effort, motivation and sincerity on everyone’s part, headlines on future stories could proclaim health care costs under control and improved health care for all Americans.

If we could focus on these four principles and align all stakeholders’ incentives so that there was mutual trust, respect, and effort, using American ingenuity we could repair the healthcare system. Developing processes such as P4P, report cards, evaluation of physician care using artificial and inaccurate data can only lead to a more dysfunctional healthcare system.

No one has asked for practicing physicians’ input or put practicing physicians in a position to offer advice on the Repair of the Healthcare System. There are many physicians out there who know what to do. The tools to do it must be provided to them to make it happen.