JAMA recently published an interesting study that has not gotten as much attention or debate as it deserves. It is my hope that its impact will grow and that the insight that it offers will make a difference. The article “Health care spending in the United States and other high-income countries” can only be read as an abstract unless you are a JAMA subscriber, but several trade publications and Time magazine’s health postings do give us the sense of the findings. I don’t think this is “fake news.” I have had the honor of meeting one of the authors, Dr. Ashish Jha of the Harvard T.H. Chan School of Public Health, and I trust his scholarship. As Time writes:
A group of researchers compared data from the U.S. and 10 other high-income countries: the United Kingdom, Canada, Germany, Australia, Japan, Sweden, France, the Netherlands, Switzerland and Denmark. They found that spending in the U.S. far outpaces that in other nations. Health care accounts for almost 18% of the U.S.’s GDP, compared to 9.6% to 12.4% in the other developed countries, the paper says.
But, contrary to popular belief, the researchers did not find that people in the U.S. use the medical system significantly more often than those in other countries — nor did they find that the way Americans use the medical system accounts for the disconnect in spending. Underinvestment in social services didn’t appear to explain the difference, either.
Instead, high prices for labor and goods, including drugs, procedures and administrative services, seemed to be the major reasons, according to the analysis…
Despite the money poured into the U.S. health care system, however, Americans aren’t healthier than people in other countries — just the opposite, in fact. The U.S. had the shortest life expectancy and highest infant mortality rate of any country included in the analysis, as well as the highest obesity rate. The U.S. also had the lowest health-adjusted life expectancy, or the average length of time a person lives in good health: 69 years, compared to a mean of 72 years in the other areas.
These findings are not at variance with the conversation in the literature for the last several years, despite the fact that at first glance the part about there being no relative underinvestment in social services to explain the difference between the experience in America versus other developed countries. I am not interested in arguing with the findings. I think the findings are disturbing, should have been obvious to us for a long time, and suggest that the path to the Triple Aim, especially the part about delivering care at a sustainable cost, is going to be even harder than we had allowed ourselves to consider.
Let us not get confused. This study does not suggest that we should not expect a return on investment when we try to improve the social determinants of health. It does not suggest that attempting to reduce “overuse” and “misuse” with the “Choosing Wisely” campaign is a bad idea. The study subtracts nothing from the need to focus on continuous improvement or the shift from “volume to value.” The point of the paper is that an examination of the total cost of care reveals that our care costs more because each unit of care costs more and not because we practice in a radically different way. Our medical professionals earn more than people doing the same work in other countries. Our pharmaceuticals are not overused compared to other countries. Other countries may overuse meds the same way we do but they pay half of the price we pay for the drugs they use. Our administrative costs are much higher. In every component of the total cost of care we pay more and get a little less.
The problem is greater than just a problem of price. It is also a problem of value. In most markets you expect that if you pay a premium you get a better product, but if we are paying more and getting less as measured by poor outcomes we are really getting “gypped.” I hate paying more for less. Did you ever have a conversation with a person in an adjoining seat in an airplane and were surprised to discover that you were paying twice as much as they were to get to the same destination? What makes that even worse is that you are sitting in the middle set and they have the convenience of the aisle. What the authors describe is even worse. We are paying more and not arriving at the same place. The problem is further compounded by the sad fact that even though we are spending 18% of our GDP on healthcare which is twice as much compared to the other countries studied, all of their citizens get to ride, but 10% of our citizens never even got on the airplane. They have no “ticket to ride.”
The authors asked a straightforward question, “Why is health care spending in the United States so much greater than in other high-income countries? The authors suggest that the meaning of their study is no more than: Efforts targeting utilization alone are unlikely to reduce the growth in health care spending in the United States; a more concerted effort to reduce prices and administrative costs is likely needed.
For me one of the most jaw dropping moments I can remember in all the healthcare meetings I ever attended was when I listened to Don Berwick give his keynote address at the annual IHI meeting where he described “Era 3.” I was right with him step for step as he lead us “up the mountain” of progress in healthcare complete with a description of all of our wrong turns and dead end trials from which we had to backtrack. I almost fell off the mountain when he got to his ninth and final step, “Reject Greed.” I heard a collective guttural “ugh” as six thousand people suggested through their simultaneous spontaneous visceral response that he was asking too much. Why would anyone accept less or even ask for less than they can justify by pointing to “market data?”
When I was the Chairman of the Physicians’ Council at Harvard Community Health Plan I knew that I could get 400 physicians to give up an evening at home if I told them the meeting was about compensation. I am no fool. All of our meetings were advertised as “compensation” meetings even if we added other subjects of less general interest like our quality strategy to the agenda. Across the country hospitals are merging for market leverage that will protect, if not allow them to increase their price. Big Pharma keeps running their ads with smiling patients as the voice over describes all the contraindications and potential complications that they must reveal as they ask you to ask your doctor why you have not been prescribed their product that will transform your life while it empties your purse. The greed in the business of medicine knows no shame and Dr. Jha and coauthors have documented that American medicine gets the gold medal. We are “the that which there is no more than…”
I am at a loss to say what we should do in response to the findings. Perhaps we should listen again to what Don Berwick said, but I doubt that will happen. What happens in other industries that are overpriced? I had patients who were attorneys whose firms failed and their incomes plummeted. I had architects as patients whose incomes fell precipitously during economic downturns when new construction stalled. The world changes for other businesses, but I am unaware of any time that we have ever had an industry wide resetting of the pricing structure in healthcare. Pigs will fly before that will happen.
I am usually a pretty positive and hopeful individual. Nevertheless, I see no way that Big Pharma will ever reduce its price for anything short of the government nationalizing the industry, and I am not being facetious. One of the biggest failures of our government was the passage of Part D of Medicare which does precious little for many patients at a huge expense to all of us. Passage was only possible because the government gave up the possibility under pressure from Pharma’s lobbyist of using the purchasing power of over 60 million Medicare customers to negotiate lower prices with Big Pharma. From Pharma’s point of view the political contributions they made to do the job were farthings on the dollar of return for the riches they gleaned from part D. It was a great investment for them to make. Part D passed as a “welfare program” for their industry.
The JAMA article should encourage many readers to buy and read Elisabeth Rosenthal’s An American Sickness: How Healthcare Became Big Business and How You Can Take It Back which is now out in paperback. I read the book with the expectation that the last part of the title inferred that she would offer answers that would enable us to lower the cost of care. She did not. At her best she described some personal strategies for individual consumers that fall under the rubric of how to save yourself while the ship is sinking. Unfortunately Dr. Jha and colleagues also fail to offer a plausible solution to the price problem.
I rarely end a subject on a down note. The best I can do is to suggest that we strive to “red line” prices and continue our efforts to eliminate overuse and misuse of medical resources as we redouble our efforts to practice continuous improvement and improve systems engineering to eliminate waste in both practice and administration. Price times units of service determine cost in a fee for service economy. The other option is that value based reimbursement or a straight up return to capitation offers some hope, but all of the mechanisms I have seen so far translate into very little initial reduction in revenue for physicians or institutions which really means the price stays the same as the payment mechanism changes. I am disappointed to say that I see very little will on the frontlines of the majority of healthcare providers and institutions to act on the findings of this study. I hope that I will be proven to be wrong.
