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Eliminating Unnecessary and Inappropriate Care – Could Health Premiums Drop to 2010 Levels?

Here’s a quiz regarding the estimated annual cost of inappropriate and unnecessary healthcare in the U.S.  Please select the answer you believe reflects the best cost estimate:

a. $210 billionInstitute of Medicine (2013)
b. $265 billionOliver Wyman (2017)
c. $393 – $958 billionGoodman, et al. (2011)
d. $1 trillion + – Various sources
e. No one really knows

The correct answer is, “e,” as measurements vary widely based on different methodologies – such as the year it was performed, and just how broad the term, ‘inappropriate,’ was used in each analysis. However, as new reports become published, unnecessary care is typically considered between 20 and 30 percent of overall needed care. In fact, based on a 2017 study of surveyed physicians regarding unnecessary care, physicians reported that more than 20 percent of overall care was not needed. Yes, even physicians acknowledge that at least one-fifth of care is not appropriate!

Despite the ABIM Foundation’sChoosing Wisely” campaign, which began in 2010 and has been widely adopted by at least 80 specialty societies, 75 percent of physicians believe unnecessary care is still a serious problem. Additionally, 69 percent said the average practitioner ordered useless tests and procedures at least once a week. Noted physician, Marty Makary of Johns Hopkins University, theorized that “Ninety percent of C-sections are unnecessary; 80 percent of stents are inappropriate; and 30 percent of people with cancer get the wrong treatment.”

But our broken healthcare ‘system’ allows for defective and unsuitable care to be paid out anyway. In a $3.5 trillion healthcare industry, inappropriate costs can account for as much as 30 percent of the total healthcare economy, or over $1 trillion annually. To put this number into perspective, the Congressional Budget Office reported that U.S. defense spending during fiscal year 2017 was $590 billion.

The above estimates do not specifically include another form of ‘waste’ as it relates to the fragmentation of care – the complexity of administering healthcare. This complexity leads to additional indirect costs and duplication of effort because there are so many different health plan payers with a myriad of administration functions. Functions which cause providers to hire additional staff to meet health plan requirements, like pre-authorization, administering various billing methods, etc. This is yet another problem with add-on costs that provide little-to-no value in a system already wrought with excessive waste of unnecessary care. I will not be addressing waste due to indirect costs in this blog.

Unnecessary and Inappropriate Care

Unnecessary and inappropriate care commonly consists of wasted spending due to ‘defensive medicine,’ whereby physicians order more (than necessary) tests and procedures to avoid potential malpractice lawsuits. Some studies suggest this amount of waste is not as great than commonly thought, perhaps less than three percent of overall costs. Another reason for inappropriate care is due to patients wanting unnecessary care. Misdiagnosis (overdiagnosis or no-diagnosis) also impacts the overall cost of healthcare. Of course, medical mistakes, both preventable and otherwise, also greatly impact healthcare costs, in addition to societal costs for patients and our communities.

Put another way, if inappropriate care could somehow be scrubbed from the healthcare system, it would make sense that our costs (premiums and, consequently, out-of-pocket expenditures for care) would correspondingly drop by a commensurate amount. According to the Kaiser Family Foundation, employer-sponsored health coverage continues to cover more American workers than earlier this century. Employer-sponsored plans in 2017 covered 156 million people, dwarfing the next largest form of health coverage, Medicaid (74 million).

Employer plan costs would be greatly impacted by eliminating inappropriate and unnecessary care. Another big takeaway: Employee takehome pay would increase, providing an economic boost.

Paying 2010 Premiums

In 2018, the 19th Iowa Employer Benefits Study© reported that the average monthly single and family health premiums were approximately $573 and $1,454, respectively. If about one-third of inappropriate care was eliminated, these rates would also be reduced, presumably by the same ratio (if we assume waste is across the board in all medical settings and procedures – and it appears to be). The newly-adjusted (unscientific) rates would now become $401 (single) and $1,017 (family) – rates that we have not seen in Iowa since our 2010 Iowa Employer Benefits Study©.

If we could eliminate ineffective, harmful and wasted care, we could revert to paying insurance premiums we paid eight years ago – even without eliminating bloated administrative costs. In the past, medical cost trends have historically exceeded the consumer price index, but by eliminating this excessive waste, and assuming the waste is continuously ‘engineered out’ of the delivery system, the medical-cost trend should be more favorable in the future. The problem, however, is not a small one. This problem comes from the idiom, “One man’s loss is another man’s gain.”

No organization or practitioner desires to lose revenue, because their income would be adversely impacted. Yet, obfuscating the cost by using chargemasters, backroom discount pricing methods and other unorthodox means to keep costs opaque serve no one other than those who allow our system to be ‘gamed’ for profitable purposes. Smarter regulation, appropriate technology and quality improvements can all reduce waste. Additionally, we must find the antithesis of greed.

As a country, think about how such ‘savings’ could be diverted to fund other programs that would proactively impact population health. We live in a world of trade offs, and trading wasted care (and its’ associated cost) with preventive health-related programs seems to make a lot of sense.

Market-Based Healthcare?

Let’s be honest. Our healthcare ‘system’ is not a true market-based model. It is different from any other part of our economy. True market-based models are characterized by three things not currently found in U.S. healthcare:

  1. Transparency in cost and quality.
  2. Accountability for care across the continuum (payment would be connected to outcomes that really matter).
  3. Information that allows for consumer choice and competition – patients need to be treated as consumers when appropriate.

All three allow us to get to the value of care, and ultimately, a market-based model that would theoretically provide checks and balances to keep the system ‘honest.’

Overall, a market-based model has more clarity around the producer, the seller and the buyer.  Historically in healthcare, the buyer (consumer) has not been part of the equation.  It is not yet clear the role in which the buyer will play as the healthcare system evolves. Currently, healthcare services are paid by somebody else – such as employers (offsetting employee pay), insurance companies or the government. This disconnect between the seller and producer from the ultimate consumer allows for perverse behaviors which are not commonly found in other market-based systems.

Payments Must Incent Appropriate Outcomes

Until we have payment systems that reward appropriately-determined outcomes, a market-driven system in healthcare will be merely a dream, not reality. In fact, if our hodge-podge system continues without much needed disruption, a true market-based system may not have a chance to see daylight. Market systems may wring out the unnecessary additive costs over time, but this cannot be done without having the three components in place as mentioned earlier.

The simple question is this: How can we turn back the clock to eight years ago and pay what we really should be paying today? Eric Coldwell, an analyst with Baird Equity Research put it quite succinctly when describing the push for transparency and value-based care: “The U.S. healthcare system is a sandcastle and the tide is coming in.”

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Medical-Error Fatalities in Iowa?
Here’s a Calculated Guess –
Up to 4,300 Iowans Annually

Guessing Medical Errors…Yes, an’ how many deaths will it take until he knows
That too many people have died?
The answer, my friend, is blowin’ in the wind
The answer is blowin’ in the wind.
Bob Dylan, Blowin’ in the Wind

In healthcare, we have oceans of data but only puddles of useful information. The data comes in various forms, typically from healthcare providers who care for us and from the insurance vendors who enroll and cover us. Without question, the data generated within our healthcare system is abundantly voluminous.

During the last year, I have spent time writing and presenting about preventable medical errors. I recently was asked by two individuals (one representing the insurance industry and the other employed within the healthcare provider community) to render a guess about specific medical error data within Iowa borders – relating to the number of patients who were lethally harmed. I assured them that I could not find anything local – only national estimates were available. With this said, national patient safety experts, such as Dr. Ashish K. Jha, Dr. Peter Pronovost, Dr. Don Berwick and Rosemary Gibson, among many others, confirm that patients harmed in our country is nothing short of a national epidemic.

In a strange way, this request was similar to the Wizard of Oz being asked to provide a heart, brain and invoke courage. But in this particular case, I was asked to unearth local data about the medical errors found in Iowa. I suspect not even the Wizard could provide this treasure trove of critical public information!

But, out of curiosity, what IF we backed into these numbers using national estimates? After all, national data on medical errors are estimations that emanate from available (but imperfect) empirical knowledge.

Yes, many types of national and local organizations are working diligently to make our healthcare delivery system safer. But until we have a true measurement on the actual prevalence of medical errors to serve as a starting point on a local and national basis, how can we possibly improve or assume progress is being made? For example, are we measuring ‘process’ rather than ‘outcomes’? Are study methods rigorously evaluating improved care in a transparent way? To legitimately improve quality outcomes, we must measure what matters most, not just what is most convenient. Easier said than done, but many times we confuse activity with progress, which only prolongs egregious results.

From information found in past studies, reports and evidence, we do know that about 25 percent of all patients are harmed in our country by medical mistakes. The Institute For Healthcare Improvement estimated 15 million medical mistakes occur in our hospitals each year. In 1999, the Institute of Medicine (IOM) released ‘To Err is Human,’ suggesting that perhaps as many as 98,000 Americans die in our hospitals each year as a result of preventable medical errors. In 2013, another report was published in the Journal of Patient Safety conveying that up to 440,000 Americans die in our hospitals due to these mistakes.

So which number is most accurate – 98,000 or 440,000? We simply don’t know. Dr. Lucian Leape, a physician and professor at Harvard School of Public Health and a pioneer on patient safety, was a key contributor to the IOM estimates. Dr. Leape has since acknowledged the 440,000 estimate is more likely to be accurate.

Using federal and state data from the Kaiser Family Foundation website, total hospital admissions in the U.S. during 2012 was 34.8 million. Of this, Iowa had about 340,000 total facility admissions, a number substantiated by Iowa Hospital Facts.

By calculating the death per admissions nationally, using 98,000, 440,000 and an arbitrarily-selected mid-point of 250,000 lives, we can then use each ‘conversion’ factor to determine what the estimated fatalities are for individual states based on each national estimate.*

The slide below illustrates the estimated number of medical error fatalities for Iowa and five neighboring states, using the three national estimates. When factoring the 98,000 fatalities as reported by the IOM, Iowa would have an estimated 959 lives lost annually within our hospitals due to preventable medical errors. This number is similar to the population of the city of Lansing, Iowa. If national fatalities are about 250,000 lives annually, a calculation of 2,444 patients die annually within Iowa, or about the size of the city of Kalona. Finally, the 440,000 estimate equates to about 4,300 Iowans dying annually due to hospital medical errors – roughly the size of the city of Jefferson.

Estimated Medical-Error Fatalities

Within the slide, due to the larger populations of Minnesota, Missouri and Illinois, Iowa compares favorably with lower-estimated fatalities. However, the estimated fatality numbers found in Iowa are greater than those found in the less-populated states of Nebraska and South Dakota.

If any of the guesstimates are correct in the next 10 years, Lansing becomes the size of Norwalk, Kalona the size of Marshalltown and Jefferson the size of Ankeny. Isn’t it time to start reporting, measuring and documenting ‘actual’ data and stop guessing and theorizing? Unfortunately, we live with faceless statistics when it comes to medical errors.

Bob Dylan had it right. How many more lives have to be lost before we do the right thing?

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*CAUTIONARY NOTE: Using the same national factor for every state assumes that outcomes from each state are equal to one another, which is a BIG assumption. Thanks largely to the Dartmouth Atlas of Health Care, we do know that care-quality varies wildly in different parts of our country, state and even across town. Healthcare, like politics, is all local, but we don’t know whether using a national norm is better or worse than the Iowa ‘norm’ because fatality metrics due to medical errors within each state are elusive. Therefore, quality-adjusted care was not baked into these estimates.

Confronting THE ‘Silent Killer’

Silent Killer

Keeping silent. What IS the third leading cause of death in the U.S.?

The safety of the people shall be the highest law.
Marcus Tullius Cicero

A democratic society values freedom of speech, protection from harm and unjust imprisonment. Unfortunately, one of these values has been glaringly absent for some time.

While preparing this particular blog, I am reminded that countless towns, cities and states have silly, if not outrageous ordinances and laws. Take Iowa – some laws have been on the books for many years and are grossly outdated – most likely due to oversight or just plain laziness. For example:

  • A man with a moustache may never kiss a woman in public.
  • One-armed piano players must perform for free.
  • Kisses may last for no more than five minutes.
  • In Dubuque, any hotel in the city limits must have a water bucket and a hitching post in front of the building.
  • Marshalltown forbids horses to eat fire hydrants.

If these comical, yet ridiculous laws are still in existence (some are now repealed), can you imagine just how many ‘violations’ have occurred since they were implemented? Having such laws or ordinances legislated to control harmless acts within our towns and state borders are quite meaningless, don’t you think?

So then, why are we not concerned about having legitimate legislation that attempts to protect every patient from harm, even when the harm is mostly ‘silent’ and assumed to be unintended? Allow me to explain…

If the Centers for Disease Control (CDC) were to include preventable medical errors in hospitals as a category, it would be the third leading cause of death in the United States, behind heart disease and cancer. When it comes to reporting these mistakes around the country, however, doctors and nurses have been fired when they speak up. This code of silence is, to say the least, deafening. Medical errors, no doubt, have become THE ‘silent killer.’

In its 1999 “To Err Is Human” report, the Institute of Medicine (IOM) called for a nationwide, mandatory reporting system for state governments to collect standardized information about “adverse medical events” resulting in death and serious harm. Interestingly, this call for a national reporting system was not implemented.

However, as of November 2014, 27 states and the District of Columbia now have variations of authorized adverse event reporting systems. Oregon’s reporting system is voluntary. As of this January, Texas now reports such events. Many of Iowa’s neighboring states, such as Illinois, Minnesota and South Dakota have reporting requirements.

What about Iowa? Not much.

To improve the care we receive, we first must understand how prevalent this problem is in Iowa and elsewhere. In 2010, Harvard published a report in the New England Journal of Medicine indicating that about 25 percent of all patients are harmed by medical mistakes. In 2014, Massachusetts completed a survey of its residents and determined that 23 percent received medical errors.

So are preventable medical errors in Iowa similar to these alarming reports, or is care provided within our borders somehow insulated from the dismal results found elsewhere? That becomes the big question – we simply don’t know. In Iowa, we have no independent trusted source to publicly provide ongoing transparency about this ‘silent killer.’

A quote from noted cancer surgeon, Dr. Marty Makary, refers to the importance of openness and transparency – which easily applies to this particular subject matter:

“Health care costs are not going to be reigned by different ways of financing our system, but by making it more transparent so that patients can fix the system. I’m convinced that the government is not going to fix health care. And doctors are not going to fix health care. It’s going to be the patients.”

There are different ways to scale over this ‘Wall of Silence.’ Perhaps a good, first step may be to establish reporting requirements, much like the other 27 states are now doing. By taking this approach, health workers who desire to do the right thing by reporting errors can be protected from workplace retaliations. Another, more immediate strategy is to ask Iowans about their experiences – a simple process that establishes a baseline for later, more deliberate, actionable solutions to make safety-of-care a statewide priority. To ultimately improve patient safety and quality, public reporting and provider feedback is critical.

We must not tolerate secrecy and demand ‘sunlight’ within the medical care we receive. A preventable medical error becomes egregiously INTENTIONAL when nothing is done to prevent it from occurring again in the future. By staying quiet, opportunities to learn and improve the quality of care will be lost.

Now, well into the 21st Century, it is time to assess which laws best serve our citizens. Limiting a kiss to five minutes does not have the life-changing consequence when compared to addressing and eliminating THE ‘silent killer’ of our time.

Isn’t it time to take action? I welcome your thoughts on this very important issue.

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