How Do we Spend on Health Care

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    Patel is a professor of medicine and health care management at the University of Pennsylvania’s Perelman School of Medicine and Wharton, and a senior fellow at the Leonard Davis Institute of Health Economics.

    “If I go to buy a pair of jeans, we know the jeans are $50. The person selling them knows it cost them $30 to make or obtain.” Is it really a doctor’s job to think about cost? After all, getting proper medical treatment is a little more complicated – and consequential – than shopping for the latest fashions.

    By most estimates, the United States spends between $3 and $4 trillion on health care annually, a sizeable 17% of our GDP. According to a 2015 Bloomberg report, the U.S. is the third most expensive country for medical care, surpassed only by Norway and Switzerland.

    When the report ranked 55 developed nations in terms of health care efficiency – based on life expectancy, healthcare costs per capita and costs as a percentage of GDP – the U.S. fell near the bottom at number 50.

    In a 2012 Journal of the American Medical Association paper, Donald Berwick and Andrew Hackbarth estimated that health care waste, which includes unnecessary treatments, overpriced drugs and procedures and the under-use of preventive care that can fend off more serious illness, makes up a whopping 34% of the U.S.’s total health care spending.

    When the report ranked 55 developed nations in terms of health care efficiency – based on life expectancy, health care costs per capita and costs as a percentage of GDP – the U.S. fell near the bottom.

    “What we’re trying to do is reduce unnecessary spending. It’s estimated that a third of health care spending is unnecessary.” Patel says that some tests and treatments are known to be of low value and should be used only in cases where a patient has specific red flags or symptoms.

    “The test is not very good and leads to a lot of unnecessary treatment.” Other examples of low-value care are cited by Kira Ryskina, who like Patel is a professor at the University of Pennsylvania’s Perelman School of Medicine and a senior fellow at the Leonard Davis Institute.

    “We have good research to demonstrate that when used in the appropriate population, these tests and treatments actually work.” He adds that professional medical societies have classified such tests as “Grade A”, and that the Affordable Care Act promotes their use by eliminating any out-of-pocket cost to patients.

    “The movement has really helped to push this forward.” In addition to providing recommendations for physicians, the campaign has partnered with Consumer Reports to provide over 100 free brochures for patients.

    Examples are people asking for allergy testing when they don’t have allergy symptoms, requesting a brain scan for Alzheimer’s as soon as they think they’re having memory problems, or asking for an antibiotic for an upper respiratory infection.

    “A lot of the tests and treatments patients get – in fact, most of them – are prescribed based on habits [from] training.” Add to this the aforementioned pressure from patients to get certain therapies, the genuinely frightening prospect of “Missing something” and the looming threat of malpractice suits.

    “With every patient visit, it’s easier to click a box and order a test than to have an extended conversation about the benefits and risks of various procedures.”-Kira Ryskina “I think that’s been the tradition, is saying, ‘We’re going to look for all 25 things that could be causing this patient’s problem, rule out 24 of them, and come up with the one,'” he says.

    He continues, “Once every now and then, you will do an obscure test, and it will come up positive, and you’ll find something, some crazy diagnosis. Those are often very celebrated.” But “Nobody hears about” how a particular resident is now prescribing 100% generic medications, how all of their patients are getting high-value vaccinations and how they are avoiding ordering unnecessary PSAs.

    “Those sorts of things don’t get talked about, and I think that really needs to change.” How much could the health care system recoup by altering the way doctors are educated? Referring back to the JAMA paper that said a third of healthcare costs are unnecessary, Patel comments, “I can’t specifically say that a trillion dollars could be saved by changing residents’ behavior. But [the paper] demonstrates that that number is quite large, and that not only would we save money today but moving forward, if we can train physicians to practice more cost-consciously.”

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