Structural inefficiencies in american health care
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Structural Inefficiencies in American Health Care. Eric Bernstein, MD, MPH New Mexico Cancer Care Associates Santa Fe, NM. Safe topics. Money Politics Cancer Health care reform. National Health Expenditures and Their Share of Gross Domestic Product, 1960-2009 . Dollars in Billions:.

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Structural inefficiencies in american health care

Structural Inefficiencies in American Health Care

Eric Bernstein, MD, MPH

New Mexico Cancer Care Associates

Santa Fe, NM


Safe topics

Safe topics

  • Money

  • Politics

  • Cancer

  • Health care reform


National health expenditures and their share of gross domestic product 1960 2009

National Health Expenditures and Their Share of Gross Domestic Product, 1960-2009

Dollars in Billions:

5.2% 7.2% 9.2% 12.5% 13.8% 14.5% 15.4% 15.9% 16.0% 16.0% 16.1% 16.2% 16.6% 17.6%

Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2009; file nhegdp09.zip).


Insurance premiums are rising and fewer people can afford them

Insurance premiums are rising and fewer people can afford them

• 1,516,971 Personal bankruptcies 2011

• 62% of these are classified as “medical”

(Himmelstein D, et al, Am J Med 2009)

• ~940,000 “medical bankruptcies” in 2011

• 8% of NSCLC patients bankrupt within 5 years of diagnosis (Ramsey SD, et al. 2011)

Claxton G, et al. Health Aff (Millwood). 2010 Oct;29(10):1942-50.


Health care spending worldwide

Health care spending worldwide


Best health care in the world

Best Health Care in the World?

For many specialized things, the USA is terrific

BUT

Average life expectancy at birth =33rd

DALE (disability-adjusted life expectancy) =24th

WHO World Health Report 2000 =37th

United Kingdom

WHO World Health Report 18th

6% of GDP spent on healthcare


Why a re our outcomes not better

Why Are Our Outcomes Not Better?

Uninsured:

  • More ill when seek treatment=

    Breast cancer: 30-50% higher mortality

    Colon cancer: 50-60% higher mortality

  • Mortality of uninsured hospitalized children=

    1.6 times that of the insured child

    Chronic conditions poorly managed; Not systematic

JPUBHealth10/29/09 advance publication on line

CalHealthReform.org accessed 11/14/2009


Budgets cut

Budgets Cut

  • N.C. Division of Mental Health, Developmental Disabilities, and Substance Abuse Services

  • Community Care of North Carolina

  • N.C. Office of Rural Health and Community Care


Administrative costs

Administrative Costs

  • USA: easily the world leader at 30%

    (6XOECD*)

  • France 4%

  • Canada 6%

  • Taiwan 1.5%

    In USA, 1 insurance employee for every two doctors

    68K/year in billing costs per doctor in an office-based practice

    *Organization for Economic Co-operation and Development


Where does your health care dollar go

Where Does Your Health Care Dollar Go?

Hospitals 31 cents

Administrative Costs 30 cents:

- Insurance Company -20 cents

-Doctors, Hospitals -5 cents each

Doctors 21 cents

Drugs 10 cents

Other

Going UP Going DOWN (as a percent)


Structural inefficiencies in american health care

  • 2010 Revenues of Top Insurers

  • 1. UnitedHealth Group - $87 billion (25)2. WellPoint - $65 billion 3. Aetna - $34.7 billion (85) 4. Humana - $30.9 billion (98)5. Cigna - $18.4 billion (141) 6. Health Net - $15.7 billion (179)7. Coventry Health Care - $13.9 billion

  • “Sometimes it’s good to be a health-care CEO. Health-care company chief executives had the highest median pay of any industry captured by the recent The Wall Street Journal CEO Compensation Study.” 2011


Health care industry spending 1 4 million day on lobbying the washington post 7 06 09 others

“…hired more than 350 former government staff members”

“…At least ten others have been members of Congress”…

Billy Tauzin

Karen Ignagni

Health Care Industry Spending 1.4 million/day on lobbying--The Washington Post 7/06/09, others


Magnetic resonance imaging mri machines per million population 2008

Magnetic Resonance Imaging (MRI) Machines per Million Population, 2008

* 2007.

Source: OECD Health Data 2010 (Oct. 2010).


Mri scan and imaging fees 2009

MRI Scan and Imaging Fees, 2009

Dollars

US high-end

1,500

US average

Source: International Federation of Health Plans, 2009 Comparative Price Report.


Why does the market fail

Why does the market fail?

  • Inelastic demand

  • Almost no one pays directly for care

  • Pricing is a mystery


Everything costs more

Everything costs more


Los alamos medical center

Los Alamos Medical Center

  • Population 12,000

  • 20 bed hospital

  • 140 doctors


Depot lupron

Depot Lupron

  • Lowers testosterone to control prostate cancer

  • Hospital bills $12,000

  • Medicare pays $651.00

  • Everybody else?


Los alamos medical center1

Los Alamos Medical Center

  • Population 12,000

  • 20 bed hospital

  • 140 doctors


Cost per life year

Cost per life year

  • Dialysis $87,561 per year

  • Bevacizumab ~ $600,000 per year


Structural inefficiencies in american health care

J Natl Cancer Inst. 2011 Jan 19;103(2):117-28.


Us healthcare

US Healthcare

  • Most expensive

  • Outcomes mediocre

  • Many uninsured


Why s o expensive

Why So Expensive?

  • Expensive care is more profitable

  • Administrative costs very high

  • Lacks benefits of a single payer system or a free market system to control costs


Thought leader

Thought Leader

  • Lee Newcomber, MD, MHA

  • Head of Oncology for UnitedHealthcare


Providers effecting change

Providers Effecting Change

  • Memorial Sloan Kettering

  • Zaltrap (aflibercept)

  • Twice as expensive as Avastin (bevacizumab)

  • MSK doctors refused to use the drug and wrote an Op-Ed in the New York Times

  • Price subsequently cut by 50%


Affordable care act

Affordable Care Act

  • Will increase the number of Americans that have health coverage

  • Economic impacts are yet to be determined

  • Most significant reform in health care since Medicare in 1965


Obvious downsides

Obvious downsides

  • Does not fix some of the fundamental barriers to controlling costs

  • Some gaps in coverage will remain

  • Had to listen to my talk


Opportunities

Opportunities

  • Public is aware and fed up with failure to do a better job

  • Fundamental reform is still needed, but perhaps more likely after the weeks events

  • Conversation is continuing


What is needed

What is Needed

  • Campaign finance reform

  • Address the role of special interests in government and healthcare

  • Service minded individuals need to take back the reigns on a state and federal level


Structural inefficiencies in american health care

  • Life is short

  • Do good work

  • Be kind


Structural inefficiencies in american health care

  • Life is short

  • Do goodwork

  • Be kind

  • Have fun


Structural inefficiencies in american health care1

Structural Inefficiencies in American Health Care

Cancer as an example of why the worst cancer may be the system.


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