Tag: Stephen Shortell

Controlling Health Care Costs: How to “Bend the Curve”

As Congress nears passage of the first substantial health care reform in decades, there is an ominous challenge: No reform will be sustainable unless we slow the rapid growth of health care spending.

Health care costs are rising at a staggering pace.  Expenditures have been increasing at 2.7% per year faster than the rest of the economy over the past 30 years. In 1980 the US spent about 8% of GDP on health care. We now spend over 17%.  We need to rein in growth of health care spending to levels no higher than overall economic growth — or ideally “bend down” the growth curve to an even lower figure.

How do we “bend the curve”? What are the best ways to slow the growth of health care costs, thus making other reforms sustainable?There are three major areas in which  reforms will help bring health care spending under control.Prevention: US health care is burdened by diseases that are preventable. If we can improve lifestyle issues – nutrition, exercise, obesity, tobacco use – we will lower the future incidence of diabetes, heart disease, cancer, and other costly maladies. Current health reform proposals that allocate $10 billion for a Prevention and Wellness Fund represent a major step in the right direction. Disease prevention likely provides the greatest return on investment regarding health care costs of anything we do.

Hospital and Physician Behavior: Hospitals have no incentives to prevent unnecessary hospitalization. Physicians, paid mostly by fee-for-service, have every incentive to order more tests and procedures. Neither is  rewarded directly for making – or keeping – patients healthy. Key to controlling health care costs in the future will be to realign these incentives.

This will require performance measurement and public reporting for both cost and quality. Provided that predetermined quality criteria are met, hospitals and physicians who can provide better care for less money would share in the savings.

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