Tag: Cost

Cost Containment Through Health Improvement

Jun 6, 2024

By BEN WHEATLEY

The U.S. is in the midst of an ongoing—and still expanding—health care cost crisis. Even among people with health insurance, medical debt has become a persistent problem. Top executives at nearly 90% of large employers believe the cost of providing health benefits to employees will become unsustainable in the next 5-10 years. And the nonpartisan Congressional Budget Office (CBO) is warning that expanding federal debt—driven largely by health expenditures and compounding interest payments—indicates that a major fiscal crisis is looming.

On this last point, it is true that reputable people have been predicting fiscal collapse for many years. In 1988, Benjamin Friedman wrote that we’re facing a Day of Reckoning. Pointing to the rising federal debt, he said: “we are living well by running up our debt and selling off our assets. America has thrown itself a party and billed the tab to the future.”

Peter G. Peterson wrote a book in 1993 called Facing Up: How to Rescue the Economy from Crushing Debt and Restore the American Dream. In it, he said that “runaway medical costs are the single most important reason that federal spending and federal deficits have now become ‘uncontrollable.’”

Not everyone agreed that deficits and debt were problematic. In 2003, as Republicans were pursuing further income tax cuts, Vice President Dick Cheney declared: “Reagan proved that deficits don’t matter.”

David Stockman was Ronald Reagan’s first budget director and one of the chief architects of the Reagan Revolution—a plan to cut taxes and reduce the size and scope of government. He wrote in The Triumph of Politics that the Reagan Revolution failed because the administration had not been able to control spending, leading to massive increases in the federal debt.

In 2013, Stockman wrote a book called The Great Deformation: The Corruption of Capitalism in America. He said that during the Great Recession, the Federal Reserve Bank had carried out “the greatest money-printing spree in world history.” Between 2004 and 2012, 70 percent of rising U.S. debt was absorbed by central banks. He said that “the world’s central banks have morphed into a global chain of monetary roach motels. The bonds went in, but they never came out.” He concluded that it was easy money, which the Federal Reserve System had supplied for decades, that was responsible for “deficits without tears.” “American politicians…had essentially died and gone to fiscal heaven.” They were able to spend money “without the inconvenience of taxing.” Both Democrats and Republicans have taken advantage of this changed reality.

In 2020, Stephanie Kelton wrote a book called The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy. In it, she called for a paradigm shift: since the U.S. has the ability to print its own money, we should recognize that federal spending is not financed by tax revenue or borrowed funds. Whenever the need is pressing enough (e.g., warfare), we can and do supply whatever money is needed. The real deficit, she said, is not the fiscal deficit, but societal needs that are going unmet. Regarding health care, “our failure to provide proper insurance and care for every American is not because the government cannot ‘afford’ to cover the cost.” It’s just that we are operating under the wrong budget paradigm.

Importantly, though, Kelton wasn’t saying that there is a free lunch. She wrote, “It is possible for the government to spend too much. Deficits can be too big. But evidence of overspending is inflation, and most of the time deficits are too small, not too big.” This dovetails with David Stockman’s concerns about unsound money. And it mirrors the concerns of the CBO, which has said that a fiscal crisis would involve higher rates of inflation and an erosion of confidence in the U.S. dollar.

Containing Health Care Costs

If the CBO is to be believed, deficits and debt do matter. And although there have been “Cassandras” saying the sky is about to fall for many decades now, there may come a point in time when the need for cost containment becomes immediate and vital. (Some would argue that we’re already there.) Health care is a primary driver of fiscal deficits and, in an emergency, it would become a primary target for budget savings.

In this context, cuts to Medicare and Medicaid become a central focus.

Why Data Handoffs Matter

Mar 9, 2015• 12

By JORDAN SHLAIN, MD

Chief information officers (CIOs) and chief medical information officers (CMIOs) have spent the better part of two decades on a quest for interoperability; yet, their Achilles heel lies in the “information” part of their titles. If information is the sole beacon of efficiency and value, the invaluable contours of human suffering, personal preferences and humanity itself are lost.

Information is the first step to developing knowledge and understanding, but what physicians and patients rely on in the real clinical setting, rife with changes, are knowledge, understanding and empathy. The cold, hard calculus of a=b does not always apply when dealing with people because they are much more complex and complicated than binary machines with screens. If it were so easy, there would be no problem reaching 100% compliance with medication or a plan of action.

Sadly, all data lives in a database; which might as well be called a wait-a-base; after all, the data just sits there and waits for someone to look at it.

The fundamental problem with today’s information architecture is that all data are not created equal. Data, information and knowledge degrade with each new doctor that becomes involved. In addition, systems design lacks an understanding of how the human computer works in the context of illness, anxiety or uncertainty. Healthcare is a people business in need of data, not a data business in need of people. Data are the means; people are the beginning and the end.

A Time For Revolutionary Thinking

Aug 13, 2014• 53

By JOHN HAUGHOM, MD

We need to design a system of health care that optimally meets the country’s needs while also being affordable and socially acceptable. Clinicians should be at the center of this debate if care delivery is to be designed in a way that puts quality of care before financial gain.

This challenge is too important to be left to politicians and policymakers. There is an urgent need for clinicians to step up, lead the debate and design a new future for health care. Placing professional responsibility for health outcomes in the hands of clinicians, rather than bureaucrats or insurance companies with vested interests, must be an ambition for all of us. We need to find the formula that meets the needs of the patients and communities we serve. A sincere collective effort by committed clinicians to design an effective system will lead to a health care system that has a democratic mandate and the appropriate focus on optimizing the outcomes patients and society need.

As clinicians enter the debate, they should keep three things in mind.

Promote the leadership role of clinicians

We need to help politicians and policymakers recognize the role of clinical leaders in shaping a transformed but effective health care system. Clinicians must redefine the debate so that it focuses first and foremost on patients and health outcomes. Cost effective care can and should be a byproduct of optimal care. Accomplishing this will provide a strong common purpose for efforts to address the challenges of designing outcome-based funding structures and improving access to care.

The Cost-Response Curve

Jul 11, 2014• 9

By LEONARD KISH and KEVIN O’BRIEN, MD

“Drugs don’t work in people who don’t take them.” C. Everett Koop, former US Surgeon General

Cost-based non-adherence, like any lack of medication adherence, leads to further complications and hospitalizations that could have been prevented. CMS appears to have recognized this when they announced that a new ACO measures on whether “providers have educated patients about the cost of medications” in the 2015 fee schedule. Cost and quality conversations between doctors and patients are becoming a cornerstone to value-based care.

The most expensive drugs are the ones that the patient never takes. Nearly one third of prescriptions go unfilled. When patients cannot afford a medication, and only discover the price or out-of-pocket cost at the prescription counter, it’s a big risk to long-term outcomes.

“It has been well established that a lack of affordability can drive a lack of adherence to a course of medications. Patients who do not take their medications cost the U.S. healthcare system an estimated $300 billion in avoidable medical spending annually due to poorer health, more frequent hospitalizations and a higher risk of mortality”, according to The Center for Health Value Innovation and the Network for Health Value in Innovation.

A lack of medication adherence drives further costs for the system and suffering for patients. Estimates are that more than a third of medicine-related hospitalizations happen because people did not take medicine as directed, leading to over 125,000 deaths.

Medication non-adherence, of course, can have many reasons: side effects, difficulty in administering the drug, and others, but there is clear evidence that cost is a factor driving non-adherence. 27% of Americans did not fulfill a prescription due to financial hardship in 2012 according to a Kaiser Family Survey. As copays, deductibles and out-of-pocket expenses go up, so, likely, will non-adherence, and value-based care, and value-based benefits must understand the costs related to non-adherence.

Health Insurance Exchanges Will Transform Health Care. Magically Increase Transparency. Improve Access. And Maybe Even Lower Costs. But Only if We Get it Right …

Dec 8, 2012• 46

By Ann Mond Johnson

NPR ran a story recently about how some retailers are retooling efforts to appeal to consumers in light of increased competition, particularly from online vendors.

Many are striving to be more “customer friendly”; Kohl’s department store was mentioned for adopting a “no questions asked” return policy with the idea that customer loyalty could be enhanced as the retailer made itself easier to do business with.

Comparisons between health care and retail abound, and while we say it is ideal for the consumer experience to be the same in both industries, in fact they are much different. The gap between the two industries was well-illustrated in this video of a shopper in a grocery store. We see them at the counter having their items rung up. But they aren’t told the prices and when they are given the receipt at the end, they’re told the final amount due may actually differ from what they see on the receipt.

Let’s take the analogy a step further: what if the customer expected the same “no questions asked” return policy from Kohl’s? Or a money back guarantee? In health care, only recently has the federal government taken steps to impose financial penalties in instances of poor care (which is the health care system’s equivalent of a “return policy” from providers).

When our team was at Subimo we initially focused on cost and quality (outcomes) information on hospitals. It was clear that – for the same procedures – there were both low cost and high quality providers as well as high cost and poor quality providers. Our efforts with transparency were designed to help people sort through the information so they could make more informed decisions and understand what quality outcomes might mean to them. We knew there was much variation in outcomes with certain procedures (e.g. aortic aneurysm repair) and less variation with others (e.g. normal vaginal delivery). Helping people understand when a poor outcome was more likely to occur helped them with their decisions (and presumably made them better shoppers).

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