Report: US health care system wastes $750B a year
Posted Sept. 06, 2012, at 7:11 p.m.
WASHINGTON — The U.S. health care system squanders $750 billion a year — roughly 30 cents of every medical dollar — through unneeded care, byzantine paperwork, fraud and other waste, the influential Institute of Medicine said Thursday in a report that ties directly into the presidential campaign.
President Barack Obama and Republican Mitt Romney are accusing each other of trying to slash Medicare and put seniors at risk. But the counterintuitive finding from the report is that deep cuts are possible without rationing, and a leaner system may even produce better quality.
“Health care in America presents a fundamental paradox,” said the report from an 18-member panel of prominent experts, including doctors, business people, and public officials. “The past 50 years have seen an explosion in biomedical knowledge, dramatic innovation in therapies and surgical procedures, and management of conditions that previously were fatal …
“Yet, American health care is falling short on basic dimensions of quality, outcomes, costs and equity,” the report concluded.
If banking worked like health care, ATM transactions would take days, the report said. If home building were like health care, carpenters, electricians and plumbers would work from different blueprints and hardly talk to each other. If shopping were like health care, prices would not be posted and could vary widely within the same store, depending on who was paying.
If airline travel were like health care, individual pilots would be free to design their own preflight safety checks — or not perform one at all.
How much is $750 billion? The one-year estimate of health care waste is equal to more than ten years of Medicare cuts in Obama’s health care law. It’s more than the Pentagon budget. It’s more than enough to care for the uninsured.
Getting health care costs better controlled is one of the keys to reducing the deficit, the biggest domestic challenge facing the next president. The report did not lay out a policy prescription for Medicare and Medicaid but suggested there’s plenty of room for lawmakers to find a path.
Both Obama and Romney agree there has to be a limit to Medicare spending, but they differ on how to get that done. Obama would rely on a powerful board to cut payments to service providers, while gradually changing how hospitals and doctors are paid to reward results instead of volume. Romney would limit the amount of money future retirees can get from the government for medical insurance, relying on the private market to find an efficient solution. Each accuses of the other of jeopardizing the well-being of seniors.
But panel members urged a frank discussion with the public about the value Americans are getting for their health care dollars. As a model, they cited “Choosing Wisely,” a campaign launched earlier this year by nine medical societies to challenge the widespread perception that more care is better.
“Rationing to me is when we are denying medical care that is helpful to patients, on the basis of costs,” said cardiologist Dr. Rita Redberg, a medical school professor at the University of California, San Francisco. “We have a lot of medical care that is not helpful to patients, and some of it is harmful. The problem is when you talk about getting rid of any type of health care, someone yells, ‘Rationing.’ “
More than 18 months in the making, the report identified six major areas of waste: unnecessary services ($210 billion annually); inefficient delivery of care ($130 billion); excess administrative costs ($190 billion); inflated prices ($105 billion); prevention failures ($55 billion), and fraud ($75 billion). Adjusting for some overlap among the categories, the panel settled on an estimate of $750 billion.
Examples of wasteful care include most repeat colonoscopies within 10 years of a first such test, early imaging for most back pain, and brain scans for patients who fainted but didn’t have seizures
The Fraying Hospital Safety Net
By PAULINE W. CHEN, M.D.Slender and in his 60s, the patient had been short of breath for several days, a result of untreated heart failure causing fluid to build up in his lungs. Despite his wife's entreaties, he had refused to go to the hospital, one of the biggest in the city, and waited at home, gasping, until his appointment at our clinic.
When I asked him why, he looked disgusted. "Have you ever been in that hospital?" he snorted, rolling his eyes. The halls were dingy, he continued; security guards were everywhere, accompanied occasionally by a shackled patient from the local prison; and the waiting rooms were veritable dens of human misery, filled with patients and their families stuck in endless holding patterns.
"Who knows what kind of care I would have gotten in one of those hospitals," he said with a shudder.
My patient was describing a so-called safety-net hospital, a place known for taking in those who have no insurance and cannot afford to pay for their medical care. Safety-net hospitals have long been considered the ugly stepchild of the American health care system. A heterogeneous mix of religious or public hospitals and academic teaching institutions, these medical centers have traditionally faced tremendous budgetary constraints that have forced many to forgo renovations and even routine maintenance to keep their doors open.
The assumption for many patients and doctors has been that the quality of patient care, like the ambience, suffered as a result. And while several early studies comparing patients' outcomes confirmed those suspicions, a recent study published in the journal Health Affairs validates what those who have actually worked in safety-net hospitals have long believed: Just as you can't judge a book by its cover, you can't assess the quality of a hospital's care by its decor.
The Arkansas Innovation
By EZEKIEL J. EMANUELPhiladelphia
MENTION medical innovation, and you might think of the biotech corridor around Boston, or the profusion of companies developing wireless medical technologies in San Diego. But one of the most important hotbeds of new approaches to medicine is ... you didn't guess it: Arkansas.
The state has a vision for changing the way Arkansans pay for health care. It is moving toward ending "fee-for-service" payments, in which each procedure a patient undergoes for a single medical condition is billed separately. Instead, the costs of all the hospitalizations, office visits, tests and treatments will be rolled into one "episode-based" or "bundled" payment. "In three to five years," John M. Selig, the head of Arkansas's Department of Human Services, told me, "we aspire to have 90 to 95 percent of all our medical expenditures off fee-for-service."
The change will encourage doctors and hospitals to work together to provide patients with the highest quality care, while at the same time lowering costs by eliminating unnecessary tests and treatments. It has been done before, in small-scale experimental pilot programs. But as the Arkansas officials make clear, this change will now be made in every corner of the state, for every hospital, and physicians in almost every specialty: surgeons, anesthesiologists, obstetricians, pediatricians, primary care physicians. For policy makers and the public, the Arkansas experiment is fascinating.
This is how it will work: Medicaid and private insurers will identify the doctor or hospital who is primarily responsible for the patient's care - the "quarterback," as Andrew Allison, the state's Medicaid director, put it. The quarterback will be reimbursed for the total cost of an episode of care - a hip or knee replacement; treatment for an upper respiratory infection or congestive heart failure; or perinatal care (the baby's delivery, as well as some care before and after).
With Medicaid, Long-Term Care of Elderly Looms as a Rising Cost
By NINA BERNSTEIN
Medicaid has long conjured up images of inner-city clinics jammed with poor families. Its far less-visible role is as the only safety net for millions of middle-class people whose needs for long-term care, at home or in a nursing home, outlast their resources.
With baby boomers and their parents living longer than ever, few families can count on their own money to go the distance. So while Medicare has drawn more attention in the election campaign, seniors and their families may have even more at stake in the future of Medicaid changes — those proposed, and others already under way.
Though former President Bill Clinton overstated in his convention speech on Wednesday how much Medicaid spends on the elderly in nursing homes — they account for well under a third, not nearly two-thirds, of spending — Medicaid spends more than five times as much on each senior in long-term care as it does on each poor child, and even more per person on the disabled in long-term care.
Seniors like Rena Lull, 92, who spent the last of her life savings on $250-a-day nursing home care near Cooperstown, N.Y., last year, will face uncharted territory if Republicans carry out their plan to replace Medicaid with block grants that cut spending by a third over a decade. The move would let states change minimum eligibility, standards of care, and federal rules that now protect adult children from being billed for their parents’ Medicaid care.
Now, like a vast majority of the nation’s 1.8 million nursing home residents, Mrs. Lull, a retired schoolteacher with dementia, counts on Medicaid to cover most of her bill. But her daughter Rena, 66, also a retired schoolteacher with a lifetime of savings, no longer knows what she can count on in her own old age.
“I get choked up thinking about this,” she said, recalling how her widowed mother had depleted $300,000 on five years of care in the community and one year in the Otsego Manor nursing home, before qualifying for Medicaid. “I’m so scared about what’s going to happen to me.”
Blue Hill hospital buyout plan announced to avoid layoffs
Posted Sept. 06, 2012, at 12:22 p.m.
BLUE HILL, Maine — Blue Hill Memorial Hospital has announced a buyout plan aimed at creating permanent budget reductions and avoiding layoffs, according to a news release from the hospital.
The hospital is calling its initiative a “voluntary separation incentive plan,” under which all employees can apply for the buyouts, but administrators may choose to deny some applications.
BHMH used dire language in describing the need for the buyout program, saying the hospital “must be ready to embrace the changes on our doorsteps or face the consequences of failing to keep pace — which could mean an end to health care delivery as we know it on the peninsula.”
The hospital employs 323 people, whose salaries and benefits amount to nearly $20 million per year, according to president and CEO Greg Roraff. Administrators don’t have a number yet of how many employees they’re looking to buy out or how much money they’re looking to save, Raroff said in a Thursday interview.
The hospital is poised to break even in fiscal year 2012, but that’s not enough, Raroff said.
“Like any business, a break-even really isn’t sustainable,” he said Thursday. “You have to generate a margin to build your balance sheet and make investments.”
But the buyout plan isn’t just about saving money on the operations end, Raroff said. It’s also an effort toward reorganization for when the hospital joins other Eastern Maine Healthcare System facilities in adopting an “accountable care” operation model.
Raroff said accountable care is a shift in how the hospital does business, as well as how it’s paid. It means a focus on, and financial incentives for, patient well-being, rather than on Medicare reimbursements based on the number of visits and procedures conducted at the hospital. It’s part of the plan for savings put forward by President Barack Obama’s Affordable Care Act, he said.
“We’re preparing for the future,” Raroff said. “Looking toward the future and how we’ll deliver care.”
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