Physicians Practice - July/August 2008 - (Page 28)

HEALTHCARE REFORM THE COST OF CARE Can we agree, to begin with, that American healthcare costs too much? It’s certainly not hard to make this point: Healthcare expenditures, which have exceeded overall economic growth for decades, accounted for more than 16 percent of America’s GDP last year, according to the Centers for Medicare and Medicaid Services, a greater percentage than any other country. It is now the largest sector of the U.S. economy, by far. And the projected growth trajectory of healthcare costs continues at an alarming rate: Costs will grow another 70 percent by 2015, when nearly one in five dollars Americans spend, or about $4 trillion, will be spent on healthcare. In 1980, this sector represented 8.8 percent of GDP. What is going on here? Why is it so much more expensive to get healthcare in the United States than it is anywhere else in the West? Is it because we have “the best healthcare in the world”? Even if that’s true — and we won’t dispute it, though many have — does that quality difference account entirely for the spending disparity? Consider that in 2004, Americans spent $6,100 per capita on healthcare, compared to $3,000 in Belgium (to cite one example). Is healthcare so much better in Boston than in Brussels that it accounts entirely for the difference? healthcare inﬂation,” he says. “Either the employers or the government own health plans. It’s not patient-centered, so it hardly resembles a market.” Additional theories abound: Our pill-popping, ﬁx-it-now culture; our shouldering of a disproportionate share of the world’s drug R&D budget (thanks to other countries’ pharmaceutical price controls); our outsized malpractice fees and awards, to name a few. But many ultimately point back to medicine’s dearth of market forces. The Washington State Board of Health, in a 2006 report prepared for the Blue IN SUMMARY American healthcare is a mess: It’s splintered, disjointed, incredibly inefﬁcient and expensive, and becoming less accessible with each passing year. Most observers agree with that. What to do? That’s where it gets complicated. • Some advise tax-policy changes PricewaterhouseCoopers estimates that $1.2 trillion of the total $2.2 trillion spent on healthcare in this country is wasted. The top culprits: ineffective IT use, poor claims processing, defensive medicine, and medical errors and poorly managed diabetes. BIG PROBLEMS A recent PricewaterhouseCoopers (PWC) report estimates that $1.2 trillion of the total $2.2 trillion spent on healthcare in this country is wasted. The top culprits, according to PWC: • Ineffective IT use; • Claims processing; • Defensive medicine; and • Medical errors and poorly managed diabetes. Not everyone pins the problem entirely on these usual suspects. “The major factor contributing to rising costs is the federal tax code,” says Greg D’Angelo, a policy analyst at the Heritage Foundation. Favoring employer-based coverage “has created a payer-centered healthcare system in America, [and] driven Ribbon Commission on Health Care Costs and Access, notes that “most economic sectors in the country rely on the markets to drive decisions — we expect the ‘invisible hand’ of Adam Smith to guide us — but in health care, there is no functioning market; the invisible hand is either absent from the picture, or as is more often the case, guides us in the wrong direction because of false incentives or disincentives.” A CONSUMER-DIRECTED APPROACH designed to reduce the public’s reliance on employer-based insurance and encourage the development of a consumer-centric insurance market. But not everyone agrees that such tweaking would have that affect. eral intervention, including subsidies from taxpayers and businesses, to create a national health insurance program. But critics say that would lead to socialized medicine. individuals buy health insurance on the private market, either through their employers or via state or regional purchasing cooperatives, with sliding-scale subsidies for those with lower incomes. But some argue that the middle class would get squeezed: ineligible for subsidies but unable to afford insurance on their own. • Others suggest more vigorous fed- • Still others advise mandating that Many have had high hopes that so-called consumer-directed healthcare would solve this problem. Force people to spend more of their own money on healthcare, goes the thinking, and pretty soon consumers WWW.PHYSICIANSPRACTICE.COM 28 | PHYSICIANS PRACTICE | JULY/AUGUST 2008 http://WWW.PHYSICIANSPRACTICE.COM

Table of Contents Feed for the Digital Edition of Physicians Practice - July/August 2008

Physicians Practice - July/August 2008 Contents The Bigger Picture: Battle Royale in the EMR Market Letters Physicians Practice Pearls: Hire Right Noteworthy Cover Story: Healthcare Reform: Voting for Change Patient Relations: Dealing with Problem Patients The tech Doctor: Is Self-Service Medicine Inevitable? Technology: Do EMRs Make You a Better Doctor? The Guide Idealab: Cash-Only Care Still Works The Administrators Desk: Who’s in Charge? Ask The Experts What Went Wrong: ‘Why Our Great Idea Didn’t Work’ Coding Start It Up: How to Launch a Practice: Operations Partnership: Don't Let Partner Conflict Destroy Your Practice Appraisals: What’s Your Practice Worth? Getting Advice: How to Hire a Consultant Classifieds Advertiser Index

Physicians Practice - July/August 2008

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