I've spent the best years of my professional life chasing healthcare costs, attempting to promote efficiency, deploying tools that are designed to steer patients and providers to the best solutions for costs and quality. So, I decided to take stock to determine what I have to show for it.
Since I started in this space, about a decade ago, here's what has happened:
- Overall healthcare expenditures has increased by over a trillion dollars a year
- Healthcare is now 3% more of GDP than it was a decade ago due to persistent growth above the rate of inflation and ahead of the general economy
- Per capita spending has increased over 50%
- The contribution to both premiums and deductibles for the average person, particularly those covered by commercial insurance, has increased by a factor of 5
So, for someone who has dedicated his professional time to cost reduction, or even moderation of cost increases, this era has not been kind.
Perhaps the quality side of the equation has fared better?
- According to the Institute of Medicine, 250,000 people a year die due to medical errors (this, by the way, is a greatly debated number)
- While readmission rates have been reduced due to penalties and changes in incentives, it doesn't seem to be correlated with a real improvement in patient health
- Chronic disease rates continue to rise although the level of obesity has stabilized
Where is the good news? Is it all a waste of time?
I've asked these questions several times over the past few months. A few factors can be tracked that are driving cost trends and are cause for long-term hope.
- Personalized medicine isn't real, but targeted therapies are. One of the key drivers behind costs is the increase of utilization of specialty pharmaceuticals. Most are novel compounds (engineered molecules, really) that directly interfere with the process of disease. In some cases, these are wonder drugs, saving lives and restoring quality of life. Just this year, novel therapy in Hepatitis C treatment has provided relief and hope to millions. However, these treatments are extremely expensive. If a balance between cost and innovation can be reached, there is much to celebrate.
- Many treatments that have historically required extended hospitalization now require either brief hospital stays or can be treated in an outpatient setting. I remember visiting my grandmother after her cataract surgery; she looked like she had gone 8 rounds with a heavyweight and needed 3 days before she was discharged. Now, that surgery is done in a doctor's office.
- Medicare is indeed launching broad bundled payment plans for surgeries that have been standardized. Both joint replacement and CABG have long been identified as ideal candidates; now patients and insurers are getting a quality and cost guarantee that they deserve.
- A new round of information technology is emerging that is sure to make the current ERP/billing oriented EMRs more user friendly. Look at companies like Envera Health as examples.
All of these are positives. There is still a path through the American healthcare experience that doesn't require broad access limitations and caps, that supports the gains that have been made in access for many Americans and brings affordability back into the conversation. This winter will be another tough one; more double digit increases for exchange plans, more increases for employers and more shifting of cost to Medicare beneficiaries will happen. But, perhaps one day, we will look back on this winter as the "winter of our discontent" and we will see innovations, regulations and controls meant to help begin to make an impact.