Kudos to the Happy Hospitalist for pointing out a great piece of research by AHRQ on actual use of the health system.
For those who want an executive summary, my major point is that the median expenditure for medical care in the US in 2002 was ~$700. The vast majority of individuals in the US can afford health care. The shift to the premium-based insurance model that spends a disproportionate share on the very sick is what is making healthcare unaffordable today. Moving away from that model is the only way to ensure good healthcare for all (vs. ridiculously high health expenditures for the few). Its odd to find all the liberals (and less odd to find the health insurance execs) looking to supplement the head of the Pareto curve.
Their findings are as follows:
Dr. Rich Fogoros sent me a copy of his latest work,
Fixing American Healthcare: Wonkonians, Gekkonians, and the Grand Unification Theory of Healthcare
Its a book I highly recommend anyone interested in the system to read–and it takes more of a sociological/ historical approach reminiscent of the best parts of Demanding Medical Excellence
and The Social Transformation of American Medicine
. Where Porter’s Redefining Health Care
and Herzlinger’s Who Killed HealthCare?
highlight what a more consumer-focused system might look like and why the current system is a mess, Dr. Rich gives us a very clear understanding of why the current players have very little incentive to make that consumer-centered dream a reality.
At the heart of his argument is the Grand Unification theory of Healthcare. It is represented by a deceptively simple 2×2 matrix (seen to left) presenting decision-maker against decision quality. Dr. Rich’s assertion is that we are currently in the realm of Low quality, individually-driven decisions (Quadrant IV). Making decisions more standardized by creating better efficiency through centralized decision-making would bring us to Quadrant III– which still doesn’t take us very far, as the decisions made by the centralized power would be of extremely low quality and limited by a centralized budget– creating a situation where covert rationing is the only way to keep the budgets in check.
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There are a lot of numbers and a lot of theories floating around about why the US healthcare system is as screwed up as it is. The fact is that we today spend around $2 trillion dollars on health in the US, and anyone wanting to really do something about it needs a starting point that encompasses where all that money actually goes.
This McKinsey Global Institute report, called “Accounting for the Cost of Healthcare in the US” is a great first step in that direction. (Disclosure: I am an alumni of McKinsey & Co, but was not involved in preparing this report)
They used a robust framework to analyze the drivers of the cost of US healthcare spend:
This report by the McKinsey Global Institute outlines the present distribution of costs in the US system, and highlights where the spend deviates from a metric called ESAW–Estimated Spending According to Wealth, calculated from 13 OECD countries.
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The medical system is becoming increasingly expensive and complex– with exponential growth of additional symptoms, diseases, fellowships, technology, standards of care, research studies, journals, and quality metrics on a yearly basis.
Thinking about all that is complex– and yet we expect our physician colleagues to run ever faster and do ever more with ever shrinking reimbursement for their time. Its no wonder they’re at wits end!
The problem in healthcare is a focus on doing/ knowing/ fixing more rather than doing what is necessary– making ever more investments in the “nice to have” without the financial counterbalance at the point of service.
Charlie Baker of Harvard Pilgrim highlights an excellent article in the Boston Globe titled “The folly of the 1% policy“. The premise of the article is the position that “if there is a 1% chance of , we must prepare for it as if it were a certainty”
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Service has largely been squeezed out of care provided by 3rd party payor medical systems: Rationing and long waits are expected in nationalized systems from Europe to Canada; hour-long waits are common in US primary care and emergency rooms as well. People even wait to get coverage before dealing with chronic health conditions. Until service quality is so bad that people stop showing up (and switch payers), there was no incentive for a third party to pay for its users convenience/ experience.
Recently, that trend appears to be reversing, through innovation occurring in the US and the privatization of the NHS system. It is interesting to look at the similarities and differences of the two major starting points in the US system: boutique care and retail clinics.
Boutique care/concierge medicine
A membership model has started to emerge, led by groups like MDVIP. Equated to a country club, there is a steep price to get in–which buys you access to additional services and fewer people in line. There is significant variation in services that come with the subscription, but they generally include reduced wait times, increased communication options (cellphone, beeper, email) and more time to speak with the physician. Tests and other normal procedural pieces of medicine are generally billed to an insurance company, although there are practices that only take cash. Because of its primary care focus, this model hasn’t spread to specialists. However, recent innovators do seem to be taking the model downstream to the average individual (thanks to Kevin MD and The Medical Quack for the link), in a stripped down, no-frills approach approach that seems reminiscent of Costco. The Qliance model seems like one mechanism where better service may become available to the masses.
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