Aug 14, 2009

Waste in Healthcare Spending Should be Issue Number One In Healthcare Insurance Reform

Almost everyone agrees there is waste in healthcare spending.
Bob DeMarco
Alzheimer's Reading Room

The real solution to the healthcare problem is similar to the problem that was faced by corporate American in the 1980s. The need to better utilize technology, and the need to increase productivity.

Imagine in 2009, when you visit a new doctor/specialist you still need to fill out forms by hand. On these forms you are required to list all medical procedures-- like operations dating back to the day you were born.

I have filled out these forms for my mother, and had to list an operation she had in 1950 over 50 times. The forms ask for all medical procedures, medications being taken, and past or current illnesses. If you mess up, under the law the health insurance provider can deny service, or worse, cancel your insurance.

Meanwhile, all of the information I am required to give, each and every time, is on the computer server of our personal care physician; and on the computer server of our health care provider. It is readily available.

To make the situation even more rediculous, my mother's medical information card has a magnetic strip on the back (like an ATM card) that contains all her insurance information.

It would only take one swipe of the card to include all of her medical procedures dating back to 1916, all the medications she is currently taking, and all of her major illnesses over the course of her lifetime.

This is one example of how antiquated the medical system in America is today. It helps explain why we are spending twice as much per person on medical care as most industrialized countries for inferior service.

For more on this go here.

Meanwhile there are forward looking doctors that have joined the digital age. We have one. No paper. No carrying around images from one doctor to another. No need to pick up paper perscriptions. The doctor presses a button and it all happens.
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To appropriately address waste in health spending, health industry leaders, policymakers and consumers must work together on system-wide goals and incentives to address the waste that imperils the health of all of us.

In this paper, PricewaterhouseCoopers’ Health Research Institute discussses wastes that could be avoided without changing the current level of healthcare.

Key findings:

Wasteful spending in the health system has been calculated at up to $1.2 trillion of the $2.2 trillion spent nationally, more than half of all health spending.

Spending can be classified into three waste “baskets”: behavioral, clinical and operational.These baskets cross all of the health sectors and include consumers, government and industry.

The top three areas of wasted spending are
  • defensive medicine ($210 billion annually),
  • inefficient claims processing (up to $210 billion annually),
  • and care spent on preventable conditions related to obesity and overweight ($200 billion annually).
Eight out of 10 consumers surveyed by PricewaterhouseCoopers’ HealthResearch Institute (HRI) said that inefficiency in the healthcare system is not only driving up healthcare costs, but impacting the quality of care.
  • Consumers see themselves, government and the industry at fault for wasteful spending
  • 86% of consumers surveyed by HRI agreed that patients going to emergency rooms for non-emergency care drives up healthcare costs (these are the 46 million uninsured, for the most part)
  • Two-thirds said that they personally have received excessive medical testing (this is how doctors make a lot of money)
When U.S. consumers were asked why they believe the U.S. healthcare system has inefficiencies that have not been resolved,
  • nearly half said “because it is not a priority for the government,”
  • More than a third said it was due to the health industry not being willing to change business practices,
  • Key barriers to eliminating waste are culture, politics, funding and incentives, and lack of a coordinated focus.
  • Solving inefficiencies means developing system-wide incentives to encourage partnerships and networks that work toward shared value.
PricewaterhouseCoopers’ Health Research Institute(22 Page PDF that contains the details and explanation).

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Bob DeMarco is an Alzheimer's caregiver and editor of the Alzheimer's Reading Room. The Alzheimer's Reading Room is the number one website on the Internet for advice and insight into Alzheimer's disease. Bob taught at the University of Georgia, was an executive at Bear Stearns, the CEO of IP Group, and is a mentor. He has written more than 700 articles with more than 18,000 links on the Internet. Bob resides in Delray Beach, FL.
Original content Bob DeMarco, Alzheimer's Reading Room