Cost Effective Care: How Do We Get The Waste Out of the System?

July 8, 2011

In the May 18 issue of the New England Journal of Medicine, Rashi Fein and Arnold Milstein tackled the question of why evidence-based care diffuses so slowly. The article is compelling because of its fundamental conclusion: institutionalized interest group pressure against change in health care and consumer misunderstanding of health care financing make it hard to envision how health care spending could be reduced in significant ways.

Fein and Milstein note, as many have, that other countries have addressed this issue much better than we have in the United States. They conclude that if we could do as well as some of these other countries, we could save $640 billion – no small sum, especially with the focus on deficits in today’s environment. But they go on to enumerate the obstacles to getting evidence-based guidelines embraced and used on a routine basis.

Those who are steeped in health policy often focus on macro level trends and impacts. But in the U.S., unlike most developed countries, health policy decisions are not made on the macro level. Health policy in the U.S. is fragmented, with many different actors creating the environment and cost trends. State and federal governments have significant health policy roles but they are not alone in their influence. They are joined by thousands of health plans, hospitals, physicians and other provider entities, device manufacturers, pharmaceutical manufacturers, billing agencies, research entities, and other administrators, all with a stake in the current health care system. This diffuse decision making makes it harder to effect change in the U.S. than in countries where decision making structures are more centralized.

So, what can we do about the environment we are in? Well, the Affordable Care Act has a number of strategies for changing the cost trajectory of health care in the country. But most importantly, it will be essential for groups throughout the country to focus on things that can truly be changed and not get lost in those macro trends.

A great example is the concept of waste in health care. Some people argue that as much as 30 percent of spending on health care is “waste” because so much care doesn’t have good evidence behind it—and that may be true. Others think of waste as process re-engineering: simplifying and streamlining functions for efficiency. These points of view may not be in conflict, but viewing this as a macro issue, encompassing both, can make it hard to tackle any part of the problem.

Looking at waste in health care on a global basis can get us mired into looking at every possible approach to reducing spending. This was the approach taken in the Affordable Care Act. Make no mistake: there are great ideas in the Affordable Care Act and they should all be tested. But, for those not in the federal government, focusing on the laundry list of ideas can actually be paralyzing. Community and even statewide groups can come to the conclusion that “solving” the cost problem is out of their hands.

Perhaps a better way to look at the question of waste in health care is to say: in a highly decentralized system, how do we influence enough individual actors to make a noticeable difference in overall health care spending? Put that way, community and state groups can focus on efforts that can be undertaken to make a difference and build from there. Think of hospitals coming together to work on Lean Engineering to make a difference in the efficiency of health care at the hospital level. Think of health plans and physician organizations sharing data about best practices in certain clinical areas to learn from each other about evidence-based guidelines and ways to do things differently. And, think of communities focused on physical fitness and nutrition in the schools and working with parents to prevent obesity before it happens.

Starting from the community and going up rather than the macro and going down can give us more hope that the promise of reducing waste—and in that process freeing up billions of dollars for other purposes—could be achievable after all.