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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.

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)

slide15

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
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
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
slide36

Life is short

  • Do good work
  • Be kind
slide39

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.