Eliminating Waste in US Health Care: Wise Words from Don Berwick

The United States spends more on health care than any other country. By far. Yet life expectancy in the United States is about the lowest among Western industrialized countries. While I can’t prove it, I am coming to believe these is at least a partial cause and effect relationship between these facts.

How can that be? How can spending so much on health care actually be bad for the health of our country? There are several possible links:

1. Many tests and procedures that are performed are unnecessary. Unnecessary tests and procedures cost a lot of money and harm patients.
2. The dysfunctional primary care system in the US leads to uncoordinated care, less opportunity for preventive care, and more care in expensive acute care settings instead of from primary providers. This leads to both higher costs and poor health outcomes.
3. The high cost of US health care makes both individuals and society poorer. Wealth is one of the strongest predictors of life expectancy–a fact that has been known for over 100 years. When an individual becomes poor because of their health costs, poverty may result in a decline in life expectancy. When health care increasingly robs the public purse, there is less available for other goods like education, which may have as much impact on life expectancy as health care.

In the most recent JAMA, there is a must read perspective from former (this word used with a mix of sadness and outrage) CMS head Don Berwick and Andrew Hackbarth that provides important insights into how we can reduce the cost of health care in the US.

Berwick suggests that is possible to markedly reduce the costs without depriving any patient of any needed service. No rationing needed at all. We just need to get serious about examining all the ways US health care spends money without benefiting patients.

Berkwick suggests we focus on 6 categories of waste that collectively cost hundreds of Billions of $$ a year:

1. Failures of Care Delivery: Much of this is the costs of medical error
2. Failures of Care Coordination: The costs when patients fall through the holes in our fragmented care system
3. Overtreatment: The costs when patients are subjected to “care” that can not possibly help them (and likely hurts them)
4. Administrative complexity: Costs from misguided policies and rules (such as complex billing procedures requiring doctors and hospitals to hire armies of coders)
5. Pricing failures: Costs resulting from the absence of transparency and complex markets (i.e., why is the cost of a MRI in the US cost several times the cost in other countries?)
6. Fraud and abuse: The costs of fake billing and health care scams

Berkwick estimates that getting serious about these 6 causes of waste at a minimum could save 21% of US health care costs (thats $558 billion dollars–$558,000,000,000). This is his conservative estimate. The actual savings are likely to be even greater.

The costs of the US healthcare system are unsustainable and if we don’t do something they will bankrupt individuals, businesses, and our government. If we wait for bankruptcy, a slash and burn approach will probably result that will be bad for patients and providers. Berwick’s wise counsel offers an approach that over the long term can cut costs and improve care. We should listen.

by: Ken Covinsky @geri_doc