Healthcare: Cheaper, Better & Faster is the “new” game

Revisiting an old management truism, a business must execute cheaper, better and faster to do well. But alas, the magic formula has its own limitations. If you want high quality at a low cost, then it will take a long time. If it’s high quality at a fast pace, then cost will take a hit and if it’s low cost at a high speed, quality will go down.

Now, this does not hold true for healthcare. Speed in terms of healthcare translates into the urgency to respond as well as the reach of that response. In other words, it translates into how many more people have access to service and how quickly in case of need. Healthcare is a high accuracy science and hence, efficiency and effectiveness go hand in hand. The solution is not viable just with reach; it has to produce the promised results. That’s where quality comes in. As for costs, the lower they are kept, the simpler healthcare is to manage and the further its reach. Healthcare can be efficient while effective, accessible and still reasonably priced.

In today’s environment of healthcare reform and changing health dynamics, the success of future healthcare is hinged on doing better for less. And enterprises are awakening to this. Infact, some are already headed in that direction.

According to a study conducted by Thompson Reuters, out of the $2 trillion spent on healthcare, $700 billion is spent correcting preventable mistakes and errors [1]. There is an estimated $250 billion spent on unnecessary procedures. In other words, about a trillion dollars in savings are waiting to be discovered. With that much money, we could more easily afford universal healthcare. And when I say universal, I am talking about healthcare that is accessible to all.

The Centers for Medicare & Medicaid Services data shows that the agency spent $4.4 billion in 2009 on care for patients harmed in hospitals and another $26 billion on patients who were readmitted within 30 days [2].

According to the Kaiser Family Foundation, U.S. spends twice or more while leaving millions uninsured than other comparable countries such as France, Australia, Germany, Japan etc. which spend less while covering everyone in their countries. Not only that, WHO studies have shown that we get less bang for our buck when compared to these countries.

Countries that are ahead of the U.S. in such studies have reflected valuable lessons we need to take note of.

Countries offering universal healthcare have shown that the care offered is the same to all citizens irrespective of their economic status. Canada, France and Israel have shown that investments in primary care are important [3]. Availability and accessibility of primary care to all ensures, that in the long run, there is a lower incidence of the need for urgent care which is both expensive and puts pressure on the available resources. Primary care advocates the wellness philosophy of prevention, thus helping control and minimize cases where a cure is needed.

Britain and France have advocated the optimization of non health personnel that are not doctors [4]. Nurses, midwives, physician assistants etc. have their roles to play but can be optimized to service patients where a doctor’s expertise is not necessarily required. These personnel can play an effective role is spreading the reach of healthcare to remote areas and to non urgent clinical situations.

These countries have championed the cause of guaranteed treatment taking out the debate around what is insurable and what is not, who can get treatment and who cannot. As a result, doctors can do what they are trained for, which is, manage people’s health instead of managing the business of health.

Prescription drugs are also relatively cheaper in the East than in the West. Reason; governments ensure that there is fair trade practice associated with drugs. In France and Japan, any injuries as a result of medical errors are promptly covered removing the need for medical malpractice law suits [5].

This does not mean that healthcare is totally on the right track in these countries. They are wrestling with their own issues. They face the same healthcare inflation that we do in the U.S. This results in higher taxes to sustain the system they have in place. These countries are also seeking avenues to fight the rising costs of healthcare. But, they have a better percentage of satisfied citizens than we do.

Governmental intervention in healthcare is a double edges sword. On the one end, it is a major cause of today's high and rising healthcare costs. Medicare, Medicaid, and tax deductibility of employer provided health insurance created a system in which patients at the point of service pay only a fraction of their medical bills out of pocket. This subsidized system puts pressure on the available resources and those guaranteeing services. On the other hand, the expectation is that the Government intervenes further in guaranteeing healthcare access to all while also bringing costs down. Healthcare is a service business and should be treated as such. Today, healthcare is big business generating multimillion dollars in profits for the service providers, hospitals, insurance companies and drug companies among others. It would be a culture change to move from this model to one where it’s treated as primarily a service business administered at reasonable costs and profits.

U.S. investors say they are focused even more intently than before on companies with products that aim to lower the cost of healthcare. Entrepreneurs are now thinking in terms of making healthcare more efficient. Just based on what we already know, let us review some immediate steps that can be taken to see results in the right direction.

1.    Focus on Primary Care - As we have discussed before, countries that are doing better than the U.S in healthcare have shown that they have focused on primary care. Primary care ensures that preventive steps are taken proactively to reduce the risk of chronic conditions later. We should focus more on extending quality primary care to all and ensure that citizens are educated about primary and preventive care. Another point to note is that in countries like France, medical education is either free or highly subsidized. As a result, doctors are not burdened with loans once they finish their education. They have similar opportunities whether they specialize or go into primary care. In the U.S., doctors end up with huge loans by the time they complete their education. They look for more lucrative careers and hence, pursue specialties since a specialist earns far more than a primary care physician. Steps need to be taken to bring primary care on par with other specialties so that primary care attracts quality health practitioners as well. Medical education can be subsidized to alleviate the loan burden on those who pursue it. Also, instead of relying solely on doctors, nurse practitioners can be leveraged to provide primary care across the country. Any or all of these measures will reduce costs, increase the reach and quality of healthcare.

2.    Streamline and Digitize Medicine - Universal application of information technology to digitize patient records, physician practices and the interactions between healthcare providers, insurance carriers, third party administrators and Federal/State bodies will ensure lower costs and increased efficiency. Electronic Healthcare Records (EHR) and Computer Physician Order Entry (CPOE) are a step in the right direction. eHealth, Teleradiology and other advancements in eMedicine help improve accuracy while simplifying procedures. These investments today are poised for great savings in the future.

3.    Standardize Prevention & Maintenance - Chronic illnesses are on the rise in the U.S. and the world. Chronic diseases are the number one cause of death and disability in the United States. According to Centers for Disease Control and Prevention, more than 133 million Americans, 45% of the total population, have at least one chronic disease. Chronic diseases kill more than a million Americans each year, and are responsible for 7 of 10 deaths in the United States. Chronic diseases account for 75% of the nation’s health care spending. Advocacy of health based prevention and regular health checkups are a precursor to tackling them. As a standard, if people have regular preventative health maintenance similar to the vaccine schedules and well baby checkups for children, most of the chronic illnesses can be prevented or caught at onset. When caught early, they are easier and cheaper to manage.

4.    Manage Healthcare Accessibility - Healthcare costs vary within our own borders in the U.S. Based on the doctor-patient ratios in various locations, the number of patients seen by a practice also varies. As a result, there are rural locations where costs are less relative to urban locations and further, due to the lower doctor-patient ratio in such areas, the quality of care is also better. Such models should be propagated across the country. When the doctor-patient ratio is balanced in any area, it ensures better quality outcomes and can ensure balanced costs. To take healthcare to the most remote corners in the country, India is adopting telemedicine among its rural populace in a huge way. A foundation had been laid for a health superhighway to make the promise of universal healthcare a reality. The health superhighway will connect a chain of hospitals; both government and private through applications like telemedicine, mobile software and wireless networks so that doctors can connect with villages in India. Embracing technology and relying on resources other than just doctors to raise awareness levels helps lay the path to better health.

5.    Tighten Control on Costs – In India, there is a growth in investments in a niche market for smaller companies that want to make healthcare affordable, accessible, and ubiquitous. They offer high quality services similar to their larger counterparts, but costs are kept under a tight leash. The aim is to have hospitals that are accessible and efficient, run with a tight control on cost, and a firm grip on pricing. These companies are geared towards catering to the middle class and lower economic status clientele but without compromising on quality and service. Some of the innovative steps taken by them to cut costs include shared resources, mobile clinical units and scheduled procedures in various locations where healthcare is not accessible. Innovation is key to control costs. There is a lesson to be taken from this example that shows that a uniform quality of service at reasonable costs can be provided to the farthest reaches of our society by leveraging innovative practices.

6.    Advocate Checklists - Critical procedures can be monitored using simple checklists.  These simple steps hugely contribute in minimizing medical errors as well as trauma and costs associated with such errors. ICUs in Michigan use a simple checklist famously chronicled in “The Checklist Manifesto” written by a cancer surgeon at Johns Hopkins, Atul Gawande. As we have seen before, a major chunk of healthcare costs are attributed to medical errors that are preventable. Adopting a checklist includes ensuring that simple things like hand washing and donning sterile gloves are done and it proved very effective.In the first year, the Michigan hospitals reduced infections by two-thirds, saving 1,500 lives.Seton Family of Hospitals has shown successes in patient safety. They have adopted a nurse-led initiative that virtually eliminated bed sores, ranking Seton first internationally. Major reductions in infections were achieved. Seton has also dropped its birth injury rate to zero by putting best practices for obstericians around birthing processes. In 2003, when the safety initiative began, Seton billed Medicaid $500,000. In 2009, Medicaid was not billed at all [6].

This is just the beginning of a list. Further thought and discussion on this matter can provide several avenues for continuing the task of improving our healthcare infrastructure and services. Even without reinvention, restructuring our current healthcare system to make it cheaper, better and faster is a definite reality.

References:

1.       Joe Flower, 15 Ways to Make  Healthcare Cheaper by Making it Better
3,4,5.  Arthur Caplan, Ph.D, Spinning the globe offers lessons in health care.  What does the rest of the world know that we don't? - By Arthur Caplan, Ph.D – msnbc.com, Sept., 18th, 2009

2,6.    Tony Inglis, Efficiency can make health care better and cheaper, May 10th, 2011

About the Author:

Rajeev Mudumba works with a leading HRO/Healthcare organization. Rajeev has over 16 years of leadership experience in the HRO, Healthcare and Technology consulting industries. His distinguished record of accomplishment and innovation includes high level strategy and ideation, precise execution and enhanced focus on efficiencies through the use of technology in business across various verticals. He can be contacted at rajeevsagar@gmail.com.