Health Costs and Quality
My proposition is that the cost of health treatments and their quality in terms of patient outcomes do not necessarily bear any relationship to the other, with many inverse relationships apparent.
This is true across much of the more developed countries of the G20 or OECD whose health outcomes for its populations are approximately similar. They spend about 10% of GDP on average.
If I take my own country, Australia, and the USA to make a few comparisons it’s firstly noteworthy at the macro level that total health expenditures in Australia are 9.5% of GDP closer to OECD average, while in the USA it’s an astonishing 18%. To put things in perspective the US level of GDP spent on health is equal to the entire GDP of the US manufacturing industry sector and 5 times the defense budget. Despite this, there is no noticeable difference in the health of Australians compared to Americans. So the USA is spending nearly double per person to achieve no better outcome. I am aware of this personally very much as I needed a pacemaker fitted by emergency surgery in Lennox Hill Hospital whilst in New York on holiday 4 years ago. A well-known Medtronic pacemaker was inserted. The surgeon said it was fitted at a cost of US$70000. On return to Sydney Australia, when visiting my own cardiologist and being assessed by the local Medtronic technician, I now asked how much would it cost if done in Australia, they said about A$30000, well less than half even ignoring the exchange rate. I have heard similar stories from Australians with skiing injuries from their favored slopes of Vail or Aspen who preferred to limp, strapped up onto to the plane home for anterior cruciate ligament surgery rather than threaten their bank balance with an American surgeon and the US system.
Enough of beating up on America, there is room to improve every country’s health outcomes as well as improving cost efficiency. It’s very necessary that Governments, industry participants, patients, and taxpayers focus on this due to the continual growth in national health costs at well above inflation. This cannot be sustained long term. The biggest burden is falling on governments of all levels and of all persuasions and as a consequence on the taxpayer – you!!
There are many areas that need targeting – I have selected three to discuss, which are all under done by the health industry in almost all countries.
• In every industry or activity that I know of, the best way to improve performance is to transparently measure and publicly report performance without fear or favour. This is true for health performance in terms both of patient outcomes and costs but it is not being performed well or anywhere near the extent necessary by almost any country at present. The need to be open and transparent about performance is currently hampered somewhat by inward thinking so-called self-regulatory controlled approach of the medical industry. This needs to change for progress to be made.
• Prevention in all forms needs to be addressed. While primary initiatives such as increased education for healthier living styles, diets, and substance abuse etc., as well as public health and safety measures need to be stepped up, it is secondary prevention particularly for chronic hospital treatment (the single largest health cost) whether on an elective or emergency basis that offers the highest potential for cost reduction and improved patient outcomes. All preventative measures to correctly inform the pre-admission and treatment and following treatment, prevent re-admittance and complications so delivering high-quality recoveries for virtually all patients.
• The use of integrated electronic patient health records to comprehensively populate an individual’s health record from birth to grave needs to be put place to avoid possible treatment errors and get efficiency gains. However the additional long-term benefit of such vast standardized fields of meta-data, is that it could be used or mined to improve diagnosis, aid medical research and help with treatment efficiency.
All three of these target areas would benefit by a universal uptake of electronic health records (EHR) and significantly increased innovation and adoption in terms of IT, communications platforms and apps that are similarly transforming other industries in terms of quality and costs. This has not happened in the medical industry like it has elsewhere. It is surprising as we are all living longer because doctors and health enterprises have been leaders in adopting new high-tech solutions for treatments whether by changed/advanced procedures, devices, and prostheses, equipment of all sorts, drugs and biotechnology to name but a few. However, it is then ironic that IT and communications solutions in the health sector are so under-done, ignored or even feared. The age of the IT disruptor has not quite dawned on the medical industry but when it does, it will to the benefit of both patient outcome and cost.
It has to change and be taken up as an opportunity. In his recent book “Reinventing American Health Care”, Ezekiel Emmanuel notes when discussing the Affordable Care Act (ACA), that:
“Maybe the most important impact of the ACA is psychological. It marks a point of no return on quality. The various provisions that improve the measures and require more reporting on quality shattered the idea that somehow physicians and hospitals could avoid objective assessment and public reporting on the quality of their care.”
Further in his book, Emmanuel highlights that while the ACA, was principally introduced to increase the coverage of citizens who were uninsured for their health treatments, it has however, also introduced measures under pressure to get it passed by both houses of Congress to improve efficiency, costs and quality by the use of IT. They are scaled in overtime particularly from about now onward through to 2018 and will include the following, which should improve patient outcomes:
• Incentives to providers and doctors to take up EHRs and disincentives if they don’t.
• Incentives to form Accountable Care Organizations (ACOs) to provide a charge for complete care and not on a fee for service basis. A minimum cohort of 5000 patients is needed to qualify for ACO status and incentives. There are disincentives for lack of performance by ACOs.
• Incentives to reduce re-admissions and conversely dis-incentives if providers exceed set levels. It should be noted that re-admissions are a very pertinent monitoring point of quality, as they are costly and show poor patient outcome. It is reported in the US that they are running at staggering 20% of all hospitalizations. The ACA has made some small inroads and re-admissions are trending <20% in latest figures. Such a high product return or service fault rate would not be acceptable in any other industry.
• Within the systems of EHRs implemented there has to be platforms for monitoring the quality of care.
• “There will be more quantitative data information with which to compare the performance of hospitals physicians … and other providers” (p239 “Reinventing American Health Care” E. Emmanuel, 2015)
As Emmanuel mentions in his book reducing the staggering level of hospital re-admissions in the US is a major goal under the ACA. Twistle is providing an avenue to focus on secondary prevention. The result is better patient outcome, lower cost and probably less litigation and insurance premiums.