Challenges of Health Cost Management

Transcription

1 Challenges of Health Cost Management Karen Bray, PhD, RN March 12, 2010

2 Health Care Costs Health Care Costs are exploding In 2008 healthcare represented 17% of GDP Expected to reach 20% in 2017 Employers are looking for fast and effective cost-reduction alternatives relative to health care premiums. Chronic care costs The numbers of people with diabetes is up by 50 percent since New technologies are expanding the scope and reach of care. Heroic medicine is commonplace and very expensive. Miracles happen routinely. 2

3 International perspective Health Care Spending per Capita, % GDP United States Switzerland Germany France Canada Australia Japan United Kingdom Percent of GDP Source: OECD Health Data 2007

4 Health status and outcomes Life Expectancy at Birth, Years United States Switzerland Germany France Canada Australia Japan United Kingdom Life Expectency at Birth Source: OECD Health Data 2007

5 Health status and outcomes Infant Mortality, Deaths per 1,000 live births United States Switzerland Germany France Canada Australia Japan United Kingdom Series Source: OECD Health Data 2007

6 American health care "gets it right 54.9% of the time. McGlynn EA, Asch SM, Adams J, et al. The quality of health care delivered to adults in the United States. N Engl J Med 2003; 348(26): (June 26). 6

7 Variations in Medicare Spending Dartmouth Atlas Report Dramatic variations in spending between 1992 and 2006 Miami 5% annually San Francisco 2.4% annually Medicare savings of $1.42 Trillion if all regions grew at SF rate Technology as the culprit? Evidence from regions based on fee-for-service Differences in organizational and local physician decision-making are key 7

8 8 End of Life Spending Miami, last six months of life You will see doctors (mostly specialists) 46 times You will spend > 6 days in ICU, and have a 27% chance of dying in the ICU Your tab will run about $23,000 Portland, last six months of life You will see doctors (mostly primary care) 18 times You will spend 1 day in ICU, and have a 13% chance of dying in the ICU You will likely die at home with hospice support Your tab will run about $14,000 27% of Medicare annual $327 M budget is for last year of life Dartmouth Atlas Project, 2009

9 Total Health: How Long, How Well We Live ~ 40% Behavior: tobacco use, nutrition, Weight, MDD (movement deficit disorder) ~ 30% ~20% ~10% Genetics Environment/public health Health Care Delivery 9 US Dpt of Health and Human Services, Public Health Service. Healthy People 2010: National Health Promotion And Disease Prevention Objectives.

10 Four Types of Spending Spend on you Spent on Whom? Spend on someone else Your money Whose Money? Someone else s money Spend less and get more Get more Spend less Neither. Depends on other motives 10 Milton Friedman. Free to Choose, 1980

11 So What Are We to Do???

12 Trillions $4.5 $4.0 $3.5 $3.0 $2.5 $2.0 $1.5 $1.0 $0.5 $0.0 National Health Care Costs Bend the Trend $4.04 T $3.52 T $520 B Current Trend Trend Reduced 30%

13 Challenges to Bend the Trend? 1. Paper Medical Record 2. Rapid Changes in Medical Science 3. Patient Adherence to Treatment Plan 4. Follow Up on Chronic Illness 5. Difficulty in Outcomes Tracking 13

14 The Cost of Doing Nothing Assumptions Annual Employee Health Care Costs of $1,325, Employees 8% Annual Cost Increase 33% of employees are obese 20% of employees smoke 14

15 The Cost of Doing Nothing $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $ Projected Costs 15 Wellsteps.com ROI calculator

16 Reduce Obesity from 33% to 25% $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $ Savings Due to Obesity Reduction In an employee group of 480, obesity decreases from 158 employees to Wellsteps.com ROI calculator

17 Reduce Tobacco Use from 20% to 15% $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $ Savings Due to Fewer Smokers In an employee group of 480, tobacco use decreases from 96 to Wellsteps.com ROI calculator

18 Smoking and Absenteeism $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $ Savings in Absenteeism Due to Reduced Tobacco Use 18 Wellsteps.com ROI calculator

19 Obesity and Absenteeism $50,000 $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $ Savings in Absenteeism Due to Reduced Obesity 19 Wellsteps.com ROI calculator

20 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 The Cost of Doing Nothing $ Projected Costs Projected Savings 20 Wellsteps.com ROI calculator

21 Conclusions Healthcare Costs require immediate action by thoughtful, committed people While overwhelming, there are things we can do Work for affordable coverage for all Align incentives and effective cost control Redesign the care delivery model to support commitment to good health rather than commitment to more intervention Invest in infrastructure and rational public health policy Develop collaborative models and coordinated efforts to improve the system 21

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