Health Care Challenges

By Tom Donohue

I gave remarks yesterday to the Emergency Department Practice Management Association's Solutions Summit which this year focused "Strategies to Manage Health Care Change".  I took one look at the title and I thought that’s ambitious...managing change in something as complex and multi-faceted as our health care system, a sector that accounts for 16% of our $13 trillion economy.  It brings to mind the question "How do you eat an elephant?", the answer of course being "one bite at a time".  Let's look at our biggest health care challenges for our first seven bites.

First, our system costs too much.

Costs are escalating with no end in sight—for businesses, families, and the government. Unless solutions are found—and soon—these spiraling costs will harm companies and force businesses and individuals to drop coverage. Government will be forced to enact crippling tax increases, cut promised benefits, or drain other vital programs just to pay the health care bill. And just wait until the nation’s 77 million baby boomers retire! The Medicare trustees recently issued their annual report, and the news is bleak. To make good on the health care benefits promised to Americans, future generations face a tax bill of $85 trillion as measured in today’s dollars.  The picture is even more troubling when you add in Medicaid. And we haven’t even begun to factor in Social Security.

The bottom line: Americans spend more on health care than any other modern society—$2 trillion, or $6,700 per person—yet, we don’t always get the best results. It’s time to ask why and hold people accountable. I can assure you that the business community, which pays a major portion of health care bills, wants to know why!

Second, our system fails to cover significant portions of our population.

Some 47 million people are without health insurance coverage at least part of the year. Many of them end up in emergency rooms with non-emergency medical needs, and most can’t pay for services. But we must look closely behind those numbers before we start proposing policy solutions.

More than 9 million of the uninsured earn more than $75,000 a year, and almost 17 million make more than $50,000. Why are they choosing to opt out and risk not having some level of coverage? Another 10 million are not citizens and would not even qualify for a federal program under current law. Yet emergency rooms are required to treat them. How many could, in fact, afford to pay at least part of the cost, but do not? About 6 million are eligible for health care through their employer or a family member’s employer, but do not enroll. Another 9.7 million are eligible for Medicaid and government health insurance but don’t take advantage of it.

The uninsured do represent a significant problem, but the number of truly uninsured who need assistance is not nearly as large as is often claimed. Finding solutions to 10 to 15 million - the real number - are much different than 47 million.

Third, our system is grossly inefficient.

A new analysis from PriceWaterhouseCoopers finds there’s about $1.2 trillion in wasteful or unnecessary health care spending, or about half of all spending. What are the causes? Underutilized information technology, duplicative testing, inefficient administrative costs, and defensive medicine, among others. When it comes to health IT, we see that data cannot be shared, and much of the important information needed for patient care remains locked away in paper folders in filing cabinets. The result? Care can be uncoordinated, inefficient, and on too many occasions, inadequate.

Overhead and administrative costs are another problem. They account for 20% to 25% of health care spending. There is also far too much defensive medicine. The Department of Health and Human Services estimates that as much as 30% of health care costs are due to tests and procedures that are performed for no other reason than to avoid a costly lawsuit. That money could be put to far better use improving patient care.

Fourth, quality of care is unsatisfactory, sometimes appallingly and tragically so, considering what we’re paying.

Medical accidents are high. An estimated 98,000 Americans die annually from preventable medical mistakes. According to the Institute of Medicine, medication errors harm at least 1.5 million people each year.  In addition to the pain and heartbreak, these errors add incalculable costs to our health care system.

Fifth, the system does not adequately address wellness and prevention or encourage personal responsibility.

You’ve heard the saying an ounce of prevention is worth a pound of cure, but much of our current health system doesn’t pay for prevention. It pays for treatment. Americans are co-conspirators in this failure. We have developed a real sense of entitlement … we can absolve ourselves of personal health responsibility because someone else will pay. If Americans are unhappy with escalating costs, then they should do something about it; stop eating too much, drinking too much, and smoking too much.

You’ve also heard of the 80-20 problem … that is, 80% of the health care bills go to 20% of the population, most with chronic conditions, many of which are preventable. This is a huge factor in escalating costs, and it will only get worse if we don’t take steps to get chronic conditions and obesity under control.

Sixth, when Americans do get sick, they are confronted by a system that lacks transparency.

They lack information on the quality of doctors and hospitals and appropriate treatments. We need to find ways to provide them with this information—it can help reduce costs and lead to better health care outcomes.

Lastly, where are we going to get the good workers we need to fill health care positions at all levels, from the nursing home attendant to the general practitioner to the surgeon?

A new report from the Institute of Medicine warned that health care institutions must rapidly increase training in geriatric care to prevent an "impending crisis" as baby boomers head toward old age. It called the current work force "too small and woefully unprepared."

We won't need just health care workers, but IT professionals as well. By some estimates, we’ll require at least 40,000 additional health IT professionals to move toward a paperless system.