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While it is a common understanding that too much of the $3.6 trillion we spend on healthcare is not wisely spent, there are opportunities for the industry to make some changes.
The healthcare industry is rapidly transforming to a consumer-based, technology-driven system that is built around the physician and patient relationship. Many of us involved in this endeavor are confident that our efforts will not only help stem the rising tide of chronic diseases that challenges our nation but will also enable us to create a more sustainable system.
While it is a common understanding that too much of the $3.6 trillion we spend on healthcare is not wisely spent, there are opportunities for the industry to make some changes. Recently, colleagues from Humana [Shrank was the lead author] and the University of Pittsburgh School of Medicine conducted a review, published in JAMA, assessing the amount of waste in the U.S. healthcare system.
The researchers concluded that 25% of the total amount spent on American healthcare annually, which comes out to be between $760 billion and $935 billion, can be classified as wasteful spending across six waste domains: failure of care delivery, failure of care coordination, overtreatment/low-value care, pricing failure, fraud and abuse, and administrative complexity. They also calculated that savings from identified interventions that would reduce that waste, apart from administrative complexity portion, would tally up to between $191 billion and $286 billion.
So what can we do as physicians to address this waste? Here are four actionable ways to decrease wasteful healthcare spending:
1. Interoperability is essential for empowering physicians. By allowing care teams to access the entire health record, quality of care is improved. Providers have context around the care that has been given and unnecessary duplication of services are eliminated.
2. Looking holistically at the patient. Patients don't live at the doctor's office. Barriers exist for patients that are not obvious unless we specifically ask about them. Consider transportation. Seniors who can no longer drive may not have access to food or medicine or may not be able to use smartphones to order food or transportation. Visual and hearing impairments may contribute to loneliness and depression. We need to address these barriers to help our patients stay as healthy and independent as possible.
3. Transitioning to value-based care leads to better outcomes. As physicians and health care providers, we get significant gratification when our patients do well. Experience has taught us that putting patients at the center of the care equation improves outcomes-and better outcomes, ultimately, also help reduce costs. Accelerating our adoption of value based-payment arrangements can help usher in a new patient-centered era of American healthcare that will bring with it interoperability and a holistic view of our patient. Value-based care is also a way to address some of the domains from the JAMA study: failure of care delivery, failure of care coordination, low-value care, and pricing failure.
4. Help seniors stay in their homes and out of the hospital. Working to keep seniors in their homes by delivering personalized, convenient care will improve both the patient experience and reduce costs. The light of curiosity that guided our path as physicians into healthcare can be used to help solve these issues in our broader health care landscape. As we work to improve interoperability, address social needs, and help physicians transition to value-based care, the other domains responsible for wasteful healthcare spending will become far more manageable.
William Shrank, MD, is chief medical and corporate affairs officer at Humana and serves as an editorial advisor for Managed Healthcare Executive. Meera Atkins, MD, a board-certified obstetrician and gynecologist, is currently participating in Humana’s Executive Immersion Physician Program.