costs of care

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We’re No. 1, Not In A Good Way: Highest Hospital Administrative Costs

(Connor Tarter/Flickr via Compfight)

(Connor Tarter/Flickr via Compfight)

By Alvin Tran
Guest Contributor

When it comes to hospital administrative costs, a new Health Affairs study finds, our country is No. 1 and we’re way ahead of the curve — unfortunately.

In the study, researchers analyzed hospital accounting data to compare administrative costs across eight countries: Canada, England, France, Germany, the Netherlands, Scotland, the United States and Wales. They found that administrative costs accounted for more than 25 percent of total U.S. hospital expenditures — far ahead of the pack.

“We were surprised by just how big the differences have grown. The U.S. is in another league than every other country,” said Dr. David Himmelstein, the study’s lead author and a professor at the City University of New York’s School of Public Health.

Himmelstein and his colleagues also found that countries operating under a single-payer health system, such as Canada and Scotland, had the lowest administrative spending, and calculated that the U.S. could save $150 billion a year if it had a system like theirs.

“You’re pulverizing all this money on something that does not make people better.”
– Economist Uwe Reinhardt

Based on Medicare Costs Report data from 2011, hospital administrative spending in the U.S. amounted to $667 per capita — more than double what the Netherlands and England spend.

In the Netherlands, administrative costs consumed just 19.8 percent of hospital budgets — compared to 25.3 percent in the U.S. —  and in England, just 15.5 percent.

In a phone interview, Himmelstein said American hospital administrative costs have doubled over the last decade. “We anticipate that they’ll continue to go up because we’re continuing to pursue health policies that stimulate administration,” he added.

Uwe Reinhardt, a health economist and professor at Princeton University, sees high hospital administrative costs as a moral question. “You’re pulverizing all this money on something that does not make people better — doesn’t improve their health,” he said.

Reinhardt, who said he had once believed the new federal health law would lower administrative costs, now thinks Obamacare has become too challenging and complex, especially with the addition of navigators and health exchange administrators.

“I think the administration of the American health system has outpaced our ability to cope with it. Even the best IT people cannot cope with it anymore,” he said, adding that “Obamacare, if anything, adds to the administrative overhead.” Continue reading

Mass. Health Wonks, Start Your Engines! Contest To Guess Rise In Costs

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This Tuesday, Sept. 2, we will know … Did Massachusetts succeed or fail in its first year of trying to keep health care costs in line with all the other things we spend money on?

In 2013, health care costs were not supposed to grow more than 3.6 percent.

So what do you think, did Massachusetts make it?

Weigh in below in the comments section, and enter our contest.

The winner will be the person who is closest (you can go over) on both of the following questions:

First, how much did health-care spending increase in 2013? Please submit to the first decimal place (for example, 0.7 percent, 1.7 percent, 4.3 percent, 6.6 percent, etc.).

Second, what was the total amount of money spent on health care in Massachusetts last year? Think double-digit billions.

Remember, the state’s calculations for both of the above will not include out-of-pocket expenses (except those related to insurance), health-care research dollars or public health spending.

The answers will come on Tuesday from the state’s Center for Health Information and Analysis.

Your prize…lunch with CHIA director Aron Boros at the hospital or health insurance cafeteria of your choice. And I might tag along too.

When Medical Care Is Futile, Other Patients Pay The Hidden Price

(U.S. Navy via Wikimedia Commons)

(U.S. Navy via Wikimedia Commons)

By Richard Knox

Every day in intensive care units across the country, patients get aggressive, expensive treatment their caregivers know is not going to save their lives or make them better.

California researchers now report this so-called “futile” care has a hidden price: It’s crowding out other patients who could otherwise survive, recover and get back to living their lives.

Their study, in Critical Care Medicine, shows that patients who could benefit from intensive care in UCLA’s teaching hospital are having to wait hours and even days in the emergency room and in nearby community hospitals because ICU beds are occupied by patients receiving futile care. Some patients die waiting.

On one day out of every six, the researchers found, UCLA’s intensive care units contain at least one patient receiving useless care while other patients are unable to get into the ICU.

More than half the time, over a three-month period the researchers examined, the hospital’s intensive care units had a least one patient receiving futile care. The study shows the ripple effects of that futile care within the UCLA hospital and in surrounding hospitals where patients were waiting to be transferred.

“It is unjust when a patient is unable to access intensive care because ICU beds are occupied by patients who cannot benefit,” the authors write.

“The ethic of ‘first come, first served,’” they say, “is not only inefficient and wasteful, but it is contrary to medicine’s responsibility to apply health care resources to best serve society.”

But the concept of “futile” care raises touchy questions. Who decides when care is futile? What if the patient’s family disagrees? What can doctors and hospitals do to avoid futility? Might efforts to avoid futile care slide toward the big R – rationing?

I talked about the study’s implications with its senior author, Dr. Neil Wenger, a UCLA professor of primary care medicine and head of the university’s ethics center. Here’s a lightly edited transcript of our conversation.

Why did you decide to study futile care? Continue reading

Report: ‘Crisis’ In Cancer Care Requires New, Patient-Centered Approach

The U.S. is facing a “crisis in cancer care” due to growing demand from an aging population, a shrinking network of specialists and the increased complexity surrounding the disease and how to treat it, says a new report from the Institute of Medicine.

Here’s the problem, according to the IOM:

In the United States, approximately 14 million people have had cancer and more than 1.6 million new cases are diagnosed each year. However, more than a decade after the Institute of Medicine (IOM) first studied the quality of cancer care, the barriers to achieving excellent care for all cancer patients remain daunting. Care often is not patient-centered, many patients do not receive palliative care to manage their symptoms and side effects from treatment, and decisions about care often are not based on the latest scientific evidence.

Institute of Medicine

Institute of Medicine

The cost of cancer care also is rising faster than many sectors of medicine–having increased to $125 billion in 2010 from $72 billion in 2004–and is projected to reach $173 billion by 2020. Rising costs are making cancer care less affordable for patients and their families and are creating disparities in patients’ access to high-quality cancer care. Continue reading

Mass. Survey: Happy With Health Care, Concerned About Costs, ER Use Up

(Source: Massachusetts Medical Society)

(Source: Massachusetts Medical Society)

Last month, the Massachusetts Medical Society released its findings on how hard it is to get in to see a primary care doctor in the state. Reminder: Often pretty hard.

Today, the society dropped the second shoe of its state-wide data on the health care system: So how are we feeling about it?

Today’s bottom lines: We’re still generally very satisfied with the care we get, but man, those medical bills are high and ever higher. And emergency room use is up 6 percent — not something that is supposed to happen under health care reform. From the press release:

Seven years into health care reform, and despite longer wait times for appointments with physicians, Massachusetts residents remain as satisfied with the health care they receive as they were before reform began and are finding access to the care they need without difficulty, according to a public opinion poll released today by the Massachusetts Medical Society, the statewide association of physicians.

The poll, seeking the opinions and perceptions of Massachusetts adults on a range of health care issues, also revealed that residents think the cost of care is the most important health care issue facing the Commonwealth, that residents have limited knowledge and unfavorable opinions of the new types of health plans and care models, and that more adults are using the emergency room for care.

The nuts and bolts:

The Society’s Public Opinion Survey of Health Care in the Commonwealth has been conducted periodically since 2003 as part of the Society’s continuing effort to gauge patient opinions of health care in the state. The 2013 survey was conducted by telephone May 14-16 and included 417 randomly selected interviews with adults 21 and over. Major findings:

Top Concerns: Cost and Affordability
When asked to choose among cost of care, access to care, and quality of care, 78% of respondents say that the cost of care is the most important health care issue facing Massachusetts today. When asked a separate, similar, open-ended question, 45% indicated that affordability is the most important issue.
65% of residents believe their health care costs are more expensive than last year, including 28% who think they are “much more expensive” and 37% who believe costs have increased “somewhat.” Continue reading

Study: More Empowered Patients Can Mean Higher Medical Costs

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Does this mean we can’t have it both ways? As patients, we’d like more say in our medical care. We’d also like the astronomical costs of care to come down. But here’s the Los Angeles Times headline: Patients who helped with medical choices had higher bills: study.

The story describes a study just out in the journal JAMA Internal Medicine that found that involving patients more in medical decisions can lead to longer hospital stays and higher costs — quite a bit higher.  (See the journal’s video interview with the author here.) The numbers:

Analyzing the data, the researchers found that nearly all — 96.3% — wanted to receive information about their illnesses and treatment options, but that only 28.9% said they had a strong preference for making their own decisions about their care.

Those patients had longer hospital stays, by about a quarter of a day on average, than patients who preferred let their doctors take the lead. They also had greater hospital costs ($865 more, on average.) By and large, people who were more likely to participate in medical decisions were better educated, and more likely to have private insurance coverage, than the rest of the patients who were surveyed.

To put the finding in perspective, the team calculated that multiplying the 28.9% of patients by the 35 million hospitalizations in the U.S. each year yielded 10 million hospitalizations. If each represented an additional quarter of a day and $865, the impact would total 2.6 million hospital days and about $8.7 billion in costs.

Ouch. Readers? Is it still the right thing to do? Is there some way to have it both ways?

New Fed Data Show Hospital Prices Vary Wildly: The Mass. Version

View map in a larger map

(Data visualization above: Alex Kingsbury, WBUR)

Today is a glorious day for health care wonks who see great founts of Medicare numbers as enticing Big Data playgrounds just begging for the analytical equivalent of gymnastics on the monkey bars.

The federal government has just released hospital prices on 100 common procedures, and though many studies have already documented the dramatic cost variation among hospitals — here’s a recent one — the numbers have never before been this accessible. The Washington Post does a wonderful job of providing context and translating some of the data into visual form here, including a useful feature titled  “How much do providers charge in your state?”

Of course I provincially plugged in Massachusetts, and was surprised to see that though we’re reputed to have among the highest costs in the country, we’re below the national average on the 10 categories shown, ranging from pneumonia to heart failure.

WBUR’s Alex Kingsbury puts his data-visualization talents to excellent use on the Medicare data in the map above, showing the variation in costs for treating one condition, Chronic Obstructive Pulmonary Disease, at each of the state’s hospitals. They range from $8,918 to $52,729. [More on these striking gaps from WBUR's Martha Bebinger here: Crazy, irrational hospital billing (with no connection to quality.)]

Above, click on each blue pin to see what each facility charges. Or if you’re not a geographical type, you can check out the raw Medicare numbers here, and here’s a list of the data points Alex used: Continue reading

Mass. Poll: Health Costs Feel Heavier Than Ever, Yes To Price Tags

Source: Mass Insight / Opinion Dynamics

Source: Mass Insight / Opinion Dynamics

You may already know all too well that the cost of health care, whether in premiums or co-pays or deductibles, seems to weigh down your budget more heavily with each passing year. But the chart above tells you that if that budgetary load is feeling more burdensome than ever before, you’re not alone.

Every spring, the Boston consulting and research firm Mass Insight runs a health care “affordability” poll, and this year’s is just out today. From the press release:

Since 2004, the Mass Insight / Opinion Dynamics Healthcare Affordability Index has tracked how much of a cost burden residents feel from premiums, co-pays, prescription drugs, and deductibles. Results are calculated into a single Index score, which measures the level of affordability people feel toward their healthcare. Results from the spring 2013 poll show the lowest score ever recorded on the Index, 109, meaning Massachusetts residents feel their healthcare is becoming less affordable and more of a financial burden.

The poll of 450 Massachusetts residents, conducted in late April, found that its “affordability index” dropped 10 points in just the last year.

Might the 2012 Massachusetts health cost-containment law help at all? At the very least, the poll found eagerness among respondents for one aspect of the new law: its promise of greater health care “transparency” to make it easier for consumers to obtain price information. Continue reading

The Big Lesson From Brill’s ‘Bitter Pill’ Story, ‘So Big It’s Hard To See’

Time's "Bitter Pill' cover

Time’s “Bitter Pill’ cover

I stopped in to get my car fixed yesterday and found the recent Time issue featuring Steve Brill’s mega-story — Bitter Pill: Why Medical Bills Are Killing Us — still lingering on the waiting-room table, well-thumbed and dog-eared. For a story about a problem that just about everyone already knew existed, the piece has clearly been having a major impact and sparked widespread discussion.

Today, the Cambridge-based Institute for Healthcare Improvement posts a lively and provocative piece that concludes that the current payment system is broken and must be blown up to create one that “incents value improvement.” Written by Jeff Selberg, the institute’s chief operating officer, and Clifford M. Marks, a health care researcher st Harvard Business School, it begins:

Steve Brill’s recent piece on the irrationality of health care costs has inspired so many disparate reactions, it feels almost like a health policy Rorschach: Some see a clear case for a single-payer system. Others point to all-payer rate setting. And many health care executives, as reflected in a response from the Healthcare Financial Management Association (HFMA), saw an “unfortunate and misleading” narrative about rampant greed in health care.

The British writer G. K. Chesterton once observed that “[m]an can always be blind to a thing so long as it is big enough.” We wonder if that isn’t happening here, because there is a far more fundamental truth to be had in Brill’s descriptions of nonsensical charges, of patients forced to the brink of bankruptcy by prices that, frankly, seem extortionary. It’s a lesson so big we seem to have trouble even seeing it.

Payment in health care is not tied to what should be its goal of delivering better value, or better outcomes at lower costs. What’s more, everybody knows it. And it is this sobering reality that Brill’s article lays bare: Nobody has any faith in the current reimbursement system – and they shouldn’t. As Brill hammers home in vignette after vignette, health care charges are almost entirely unhinged from patient welfare. You can move to single payer. You can ratchet up taxes on hospital profits. You can enact tort reform. But none of it will work if we fail to blow up the current payment system, and replace it with one that incents value improvement.

When Jeff was CEO of Exempla Healthcare, he told his board – let’s have no rate increase for our chargemaster (the hospital listing of charges so appropriately maligned in Brill’s piece). We all know the chargemaster is crazy, it’s distorted, it’s meaningless. And his CFO responded, great, but if you want to freeze the rates, we’re going to take a $10 million hit. Continue reading

When Health Care Costs Help Threaten Teachers We Need

Brookline's Edward Devotion school (John Phelan/Wikimedia Commons)

Brookline’s Edward Devotion school (John Phelan/Wikimedia Commons)

For many of us, there comes a moment when the high cost of health care suddenly turns from an abstract public issue into a deeply personal one. Often, it’s an astronomical out-of-pocket medical bill. Or a family calculation that the price of health insurance means no new car, or no summer trip.

For me, that moment came last week at a PTO meeting held at my children’s Brookline public school. At issue: plans to eliminate the “Enrichment and Challenge Support” program.

The program, formerly called “Gifted and Talented,” benefits all the school’s children, and works in every Brookline school. It promotes creativity and learning by inquiry. It collaborates with classroom teachers to help support advanced students, as well as all learners. It works with small groups of kids on topics from reading and writing to math, science and social studies.

Also on our school’s chopping block, separately: The part-time math tutor who works with small groups of children. (The one who prompted a friend’s son to exclaim recently, “Probabilities are fun!”)

In short, our vaunted school district may soon jettison some academic work that perhaps best embodies all the cutting-edge advice on how to train our children to thrive in the 21st-century world.

First, a disclaimer. School district budgets are exceedingly complex and depend on many imponderables, including state and federal budgets. I can by no means draw a direct line between Brookline’s health insurance costs and the decision to cut two of the best and most beloved teachers my children have had.

But here’s what struck me: The endangered program costs the district about $264,000 a year. And in response to a parent’s question, Brookline superintendent Bill Lupini said that for each percentage point that health insurance costs rise, the town must pay about $230,000.

Growth in premiums slowed during the recession, and the town had been hoping the rate news would be good. But it’s not. As of today, Alan Morse, chairman of the Brookline School Committee, says the district’s health insurance costs in the coming budget “are up about 3-1/2 percent, as opposed to the 2 percent which we were hoping for — which reduces the district’s resources available to fund next year’s budget.” Continue reading