Report: US health care system wastes $750B a year

WASHINGTON (AP) — 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 counter-intuitive 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 report makes ten rec­om­men­da­tions, includ­ing pay­ment reforms to reward qual­ity results instead of reim­burs­ing for each pro­ce­dure, improv­ing coor­di­na­tion among dif­fer­ent kinds of ser­vice providers, lever­ag­ing tech­nol­ogy to rein­force sound clin­i­cal deci­sions and edu­cat­ing patients to become more savvy consumers.

The report’s main mes­sage for gov­ern­ment is to accel­er­ate pay­ment reforms, said panel chair Dr. Mark Smith, pres­i­dent of the Cal­i­for­nia Health­Care Foun­da­tion, a research group. For employ­ers, it’s to move beyond cost shifts to work­ers and start demand­ing account­abil­ity from hos­pi­tals and major med­ical groups. For doc­tors, it means get­ting beyond the bub­ble of solo prac­tice and col­lab­o­rat­ing with peers and other clinicians.

“It’s a huge hill to climb, and we’re not going to get out of this overnight,” said Smith. “The good news is that the very com­mon notion that qual­ity will suf­fer if less money is spent is sim­ply not true. That should reas­sure peo­ple that the con­ver­sa­tion about con­trol­ling costs is not nec­es­sar­ily about reduc­ing quality.”

The Insti­tute of Med­i­cine, an arm of the National Acad­emy of Sci­ences, is an inde­pen­dent orga­ni­za­tion that advises the government.

Posted by Randa Wagner on Sep 10 2012. You can follow any responses to this entry through the RSS Feed. Both comments and pings are currently closed.