Costs concentrated among top 1%

September 1, 2012

A recent study underscores the intuitive fact that a small percentage of patients consume a disproportionate share of healthcare dollars.

NATIONAL REPORTS – A recent study underscores the intuitive fact that a small percentage of patients consume a disproportionate share of healthcare dollars. For some populations, the concentration is even more dramatic than the old 80/20 rule.

"It's such an important point that sometimes it gets lost," says Nancy Chockley, president and CEO of the National Institute for Health Care Management (NIHCM) Foundation, the study's sponsor.

BIG JUMP IN COSTS

"We can't improve the value in the healthcare system without understanding the concentration of healthcare costs," Chockley says. "It has implications for how to treat patients and coordinate care."

For example, end-of-life care can be troublesome to measure because some patients thrive for long periods of time with such care models. Don Bradley, MD, chief medical officer at Blue Cross Blue Shield of North Carolina, believes a change in terminology from "end-of-life" or "palliative care" to "advanced illness management" might change perceptions of related interventions.

Insurers have been trying to control costs for decades with case review and predictive modeling. However, predictions don't necessarily translate into actionable intelligence, Bradley says. The next iteration is focusing on identifying high quality providers through its Centers of Excellence program.

"Cheap care isn't necessarily overall lower in cost," Bradley says. "We're now seeing a negative correlation between higher cost and lower quality."

The insurer offers richer benefits for members who use Centers of Excellence providers, but it is looking even more closely at those providers that have the best outcomes at the lowest costs. Specialties with widely varied costs include oncology, cardiovascular, OB/GYN, gastrointestinal and orthopedics, he says.

Preventing disease and chronic conditions before they can occur and catching treatable illnesses early can avoid larger expenditures later, says Glen Stream, MD, president of the American Academy of Family Physicians (AAFP). If anything, he's concerned about the lowest 50% of the population who spend just $36 billion on healthcare.

HIGH FUNCTIONING CARE

AAFP stresses the importance of primary care within a high-functioning healthcare system, says Stream, noting that 30% of U.S. physicians practice primary care, compared with 50% in the rest of the world.

"We have a great system when you get sick," Dr. Stream says.

The patient-centered medical home project holds the most promise for meaningful reform to increase the quality of care while lowering costs, Dr. Stream says. High-functioning primary care results in effective chronic disease management, with physicians reaching out to those who have been identified with chronic conditions but have not had the necessary follow-up visits.

Effective primary care also can ease difficult decisions toward the end of life, when expensive care is often delivered with little or no benefit. Dr. Stream, a family practitioner at the Rockwood Clinic, uses his practice as an example. He's been at the Spokane, Wash., clinic for 20 years.

"A lot of my patients tell me they don't want [exhaustive end-of-life care]," he says. "If anyone can have this discussion with a patient, it's the primary care physician."