A reduction in health care spending? It's already happening
"Lean thinking" can reduce waste, such as waiting. Manufacturing theory
suggests that whenever goods are not moving or beingprocessed, the waste
of waiting occurs.
A recent review of the reduction health care costs from 2009 through 2011 demonstrates the rise in health care spending dropped to 3 percent each year from a historic rate of 5.9 percent over the past decade.
Because the recession contributed, there has been disagreement about whether there have been substantive changes in health care costs due to more systemic change. The question is critical to the future of health care financing, and our entire economy. Federal and state legislation intended to curb the rise in health care costs focus on the shift from volume to value. Here in Massachusetts, in fact, the “bend in the cost curve” is legislatively fixed below the rise of the gross state product.
Last week I was fortunate to hear Stuart Altman, the chairman of the Massachusetts Health Policy Commission, describe some of the philosophy behind their approach to reviewing health system performance and business relationships. He pointed out that the rise in percent contribution by workers to their health insurance has risen 147 percent in 10 years while wages went up 36 percent, which translates to essentially no growth in take-home pay because this number matches inflation.
For those of us representing providers, this is the core moral obligation to society. We may bemoan the seemingly endless creation of regulation to prevent cost increases in health care, but it is the stagnation of purchasing power, especially for the middle class, that is, and should, be driving us.
The authors of the review studied 10 million employees between 2007 and 2011. They noted there was a cost shift from employers to employees, which accounted for about one-fifth of the reduction in rise in health care costs. So this means some four-fifths of the slowdown was not related to shifting economic drivers from the recession. In addition, there is some evidence that the slowdown in health care costs began before the recession.
As the graphic shows, the slowdown in health care costs is still significant after removing the effect of out-of-pocket expense.
The authors conclude that the slowdown in health care spending may be due to a slower adoption of newer technologies, and other changes in provider behavior that “support cautious optimism that the spending slowdown may persist—a change that, if borne out, could have a major impact on U.S. health spending projections and fiscal challenges facing the country, among other factors.”
I remain optimistic. There is so much waste in health care; we have plenty of opportunity to further help the middle class see personal income improve if we blunt the cost curve.
In the language of process improvement, we can reduce waste using ‘lean thinking’ with opportunities in the following dimensions:
• inappropriate processing
• unnecessary inventory
• unnecessary motion
How might these dimensions translate into improvements in health care costs?
Many advanced primary care medical homes have learned not to schedule follow-up visits, initially a heresy. The idea is that to dramatically improve flow in an office requires available time of existing practitioners. Existing patients’ follow-up visits are often able to be accomplished with a telephone call, which could be done by non-physician clinicians or medical office personnel. Many of the follow-up management decisions are around measurements available without a visit, such as blood pressure, cholesterol, blood sugars, hemoglobin A1Cs, and the like.
These are just a couple examples of opportunities to reduce waste, improve care, and, ultimately, reduce the rise in the cost of health care.
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