The Disruptive Health Care 2014 Conference, hosted by WTN Media, exposed attendees to a range of observations about today’s healthcare system, its gaps and future trends. This blog the first of four related to the conference. “Why Does the US Have So Much Waste In Its Healthcare System?” “Healthcare Incentive and Landscape Changes: Trends Underway,” and “Healthcare Data: The Currently Weak Link” will follow.
First, let’s look at the context for the conference speakers’ insistence that system disruptions are needed. I for one cringe when I look at comparative healthcare costs and outcomes across developed nations. According to data published by the Organization for Economic Cooperation and Development (OECD), which represents 34 democracies with market economies, in 2011, the US spent on average $8,508 per person on healthcare compared to an OECD average of $3,332.
But, you might say, the USA is a richer nation, #1 in Gross Domestic Product (GDP), so perhaps the comparison is meaningless. Unfortunately, the comparison is similarly discouraging when we examine how much of our overall spending is allocated to healthcare. In 2011, we spent 17.7% of our nation’s GDP on healthcare compared to 9.3% for the 34 OECD nations. The difference translates into excess spending of $1.3 trillion or 8.4% of our GDP. Even compared to the second highest healthcare GDP spender, Netherlands with 11.9% of its GDP, we spend $900b more or 5.8% of our $15.5 trillion dollar economy.
The extra spending may be a wise investment if the US ranked #1 on measures of the effectiveness of a healthcare system: it does not. In just six categories (among many) of waste, public health experts estimate that 21-47% of our spending is non-value added spending. This makes sense; if we lowered our per capita healthcare spending by 40%, we’d still spend more than what Norway and Switzerland (the two highest per capita spenders in Europe) spend.
If you doubt the waste claim, look at the facts. Indeed, the US falls far below the OECD average for many health quality measures. Out of the 34 nations, we have the 15th lowest life expectancy, below the OECD average, and the lowest percent of the population insured. In addition we rank
- 5th highest in childhood obesity (30%)
- Highest in adult obesity (36.5%).
- 6th highest in incidence of diabetes (5th in type 1 for children 0-14)
- 10th worst in infant mortality and 11th worst in low birth rates
- 5th worst in cervical 5-year cancer survival (among 19 nations)
- 12th worst in ischemic heart disease mortality (among 33 nations)
One measure of the quality of primary care is preventable admissions to a hospital. But here, we are the 2nd highest in asthma hospitalization – only the Slovak Republic is worse – 10th worst Chronic Obstructive Pulmonary Disease admission and 9th worst in diabetes admissions. This outcome is not surprising as we have the 13th lowest number of doctors per thousand citizens and unlike other nations we have the highest ratio of specialists to primary care physicians. Primary care doctors are the front line in creating health; imagine fighting WWII without foot soldiers.
We are best at 5-year breast cancer survival but 13 nations have lower breast cancer mortality rates. We do perform relatively well in some areas, but hardly the best of the best in measures like cerebral disease mortality, cancer mortality, acute myocardial infarction mortality, stroke mortality, hospitals infections, colorectal cancer rates and 5-year colorectal cancer survival rates, ranking 3rd to 9th best depending on the measure.
I am not cherry picking these statistics. Read the report and weep. Amazingly, we rate #1 in our citizens’ perception of good health (89.5% of the adult population), a reflection of our cultural can-do attitude and a potential explanation of why our nation is not gung-ho on heath care reform.
I wonder if citizens and businesses would be up in arms if they understood they pay for this waste through taxes, out of pocket payments, and higher-than-needed benefit costs deducted from paychecks and profits. Would we be angry if we realized our higher healthcare costs make our nation less competitive in a global economy?
Perhaps we’d become more upset if we appreciated the opportunity cost of excess spending that is not translating into better health. The $900 billion to $1.3 trillion in annual savings available from a better healthcare system would close our infrastructure gap, leaving money on the table to reduce government deficits. According to The Society of Civil Engineers’ “Failure to Act Studies,” $1.7 trillion is the one-time price tag for restoring the US to a first-world infrastructure; from then on, an extra $160 billion a year would keep it world-class.
Alternatively, we could more than double the money we spend on R&D, ensuring our economy retains its innovation leadership. We currently spend $435 billion across Academia ($63 billion), government ($55 billion) and business ($317 billion).
You get the idea, I hope. The waste of healthcare dollars is not without cost. And your silence on a crisis induced by poor policy choices is also not without cost.