Arthur Garson Jr. and Carolyn L. Engelhard are the writers of GOVERNING's Health Myths column. They are co-authors of "Health Care Half-Truths: Too Many Myths, Not Enough Reality."E-mail: email@example.com
Myth: America wastes one-half of its medical care dollars.
One-half? Where did that number come from? It came from a landmark study in 2002 that reported that in some regions Medicare pays more than twice as much per person as it pays in other regions with little or nothing to show in health benefit for the increased spending.
While it is difficult to apply that to the whole health care system, we do in fact waste a lot of dollars on medical care. The number is more likely one-third. But whether the waste is one-third or one-half consider this: If we only wasted 5 percent (never mind 33 percent) of the over $2.2 trillion we currently spend in our medical care system, we could save $110 billion -- enough to pretty much provide medical care coverage for the uninsured.
The data supporting the claim of wasting one-third of our dollars come from studies that point out important differences in how we practice medicine. These studies have examined how often we do procedures (such as prostate surgery and coronary bypass surgery) or how well we care for Medicare patients with chronic illness (like diabetes and heart disease) in different parts of the United States. Physicians in one part of the country may do a procedure as much as three to 10 times more frequently as those in another part of the country with the same eventual results in terms of longer life or better quality of life. When these data are then applied to the entire Medicare population, and then ultimately the entire health care system, the logical conclusion is that if every doctor practiced in the same way as those doing fewer procedures with the same overall results, we could -- and presumably should -- reduce procedures by one-third across the country, thus lowering overall costs by thirty percent.
These studies looking at the use of procedures and chronic care services in the elderly point out a serious problem in our medical care system: Patients are treated differently based on what state they live in, where they are treated, and how many practitioners there are in the region. As a result, we now have to look harder and smarter at better ways to identify what we should not be doing in our medical care system, and then not do it.
"Waste" is "doing things that provide no possible benefit to the patient." What sort of "things" do we mean? Clearly "rework" -- repeating tests by one physician that another did yesterday -- is a waste. Less obvious is the unnecessary return visit after diagnosis and treatment of a medical problem. There is little data about what is truly needed. Would a telephone call or e-mail be just as effective? How about a follow-up with a nurse on the medical team? Understanding what is "appropriate" for each patient will require patients to become informed partners who, with the help of their physician, can better understand available treatment options and their consequences.
Sometimes better treatment is actually doing less. Unfortunately, under the current system, practitioners are rewarded for doing more and too often patients would rather just take a pill than change their behavior, which fuels wasteful spending. Better communication with patients about their preferences, using integrated physician-nurse teams, and incorporating new technologies could streamline care for the 10 percent of the population that uses 70 percent of health resources.
What else provides no value? How about administrative waste? After all, we spend more than $1,000 per person in the United States to administer our medical care system, compared with $307 per person in Canada. Reducing U.S. administrative costs to Canadian levels could save more than $300 billion annually. Doctors, hospitals and insurance companies spend approximately 8 to 12 percent on billing alone; compare that figure with the total administrative cost of our Medicare and Medicaid systems at 3 to 5 percent. It is likely that at least some of the inefficiencies in our system could be eliminated through the use of automated tools for billing, which could significantly reduce costs.
Time is money, and the face-to-face time practitioners spend in an outpatient or inpatient hospital visit is about the same amount of time practitioners spend with a patient's medical chart. This should not be. Doctors waste time in providing extra documentation with lengthy notes in the medical record.
Of course, it is important to document the visit, but why the extra work? Two reasons: to prove physicians are not committing fraud and to protect them from being sued for malpractice. Moving toward a system that encourages and documents the use of best practices with the aid of electronic medical records may help move the emphasis away from fraud and negligence and more toward demonstrating that the right things are done for the patient. This would not only be the ethically correct thing to do in our medical system, but would also restore trust among practitioners, patients, insurance companies and government and would reduce the administrative costs of excessive defensive documentation.
Assuming that wasteful medical care is defined as "no benefit" is very different from assessing the value of "a little benefit." Just how much lengthening of life, and at what cost, is considered "waste?" Is it even reasonable to ask about cost when discussing extending one's life? One of the real geniuses in the field of evaluating the costs of medical care was John Eisenberg, who said, that "to suggest that medical decision making can be divorced from consideration of cost denigrates the complexity of patient care" and that "almost all clinicians would agree that, at some point, the extra money spent on tiny improvements in clinical outcomes is not worthwhile and represents inappropriate practice." David Eddy helps us further: "In a field filled with uncertainty and doubt, the difference between 'when in doubt, do it' and 'when in doubt, stop' could easily swing $100 billion a year."
In many business situations, it is possible to do a straightforward cost-benefit analysis in which one can calculate a simple ratio comparing the benefit of an action in dollars divided by the cost of that same action in dollars. As long as the benefit is greater than the cost, the project is worthwhile for the business. Attempts to value human life in pure monetary terms have been very difficult because, as we know, the value of life certainly extends beyond the value of lost wages. Therefore, what are we to do?
One strategy is to use "added years of life" as a measure of "effectiveness" and place the added years of life in the lower part of the fraction (denominator) with the cost of achieving those added years of life in the upper part of the fraction (numerator). This calculation is called a "cost-effectiveness analysis," and is the current best method to assess the value of medical care. For example, if having coronary bypass at a cost of $50,000 increases the average length of life by 10 years, the cost part of the ratio would be $50,000, the "effectiveness" part of the ratio would be "10 life-years," and the cost-effectiveness ratio would be $5,000 per saved, or additional, life-year. This is a pretty good value when you consider that air bags in cars cost about $100,000 per saved life-year. Lower numbers represent better value. In the coronary bypass case versus the air bag example, $5,000 per extra life-year is better, from society's perspective, than $100,000, because you use fewer resources to get the same outcome.
This is not an implication that each year of life is "only" worth $5,000 versus $100,000, but, rather, it is the ratio of the cost of a procedure or technology to its effectiveness. These calculations help us put things in some order, from most to least cost-effective, so we can make choices, as a society, about how to spend our money prudently. Therefore, it does seem worthwhile to at least ask the question of how we can compare cost-effectiveness across medical treatments so we know we are spending wisely, particularly among medical treatments that treat the same medical condition.
Is it possible to "draw the line" and say that on the basis of a cost-effectiveness calculation, one should or should not do procedures and treatments with a certain cost-effectiveness ratio? Many European countries have a "cost per saved life" cut-off in their cost-effectiveness determinations for the introduction of new medical advances, but most American health insurance companies and the government do not enforce strict limits (and when they try, the limits are higher - that is, more lenient -- than the European cut-offs). Instead, U.S. insurers prefer to evaluate each case with regard to its medical necessity. However, the lack of a formal system to determine costs and benefits can lead to waste and unnecessary care.
To discourage the use of costly, ineffective treatments, the new $787 billion economic stimulus package will provide money to conduct research comparing the effectiveness of different treatments for the same illness. Note the term, because it is important: "Comparative effectiveness," the way it is currently thought of, does not include cost. We believe that while using the term "comparative effectiveness" is politically expedient (think of all the companies and their lobbyists), ignoring cost is wrong.
In the meantime, do we waste money on medical care? Absolutely. We do too many procedures, probably see some patients too frequently (either because of the physician or the patient), spend too much time and energy in defensive actions to prevent abuse and malpractice charges, and clog our system with paperwork and administrative complexity. How much money do we waste? Not one-half of medical care dollars. But we waste a lot.
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