Posts - Heartland Health Research Institute

Voices on Hospitals: Electronic Health Records and Consistent Quality of Care

Posted on: 07.02.14 By: David P. Lind

We have often heard the phrase, “Perception is reality.” Although this phrase may not be entirely true, perception is important because it happens when we use our senses, such as sight, taste, sound, touch and smell. In short, our perception is both pure and objective.

However, our interpretation of our perceptions — also known as ‘perspective’ — invites both experience and emotions, which can be more subjective and unique, and, therefore, more about opinion. I suppose perception is reality IF we exclude interpretation of our experiences and emotions.

My point is this: Opinions are important and certainly do matter!

This week, we continue to address how Iowa employers perceive hospitals within their communities on two new performance indicators:

Electronic Health Records (EHRs)
Consistent Quality of Care

Indicator #3: Electronic Health Records
As indicated in our ‘Voices for Value’ white paper, electronic health records (EHRs) are designed to accurately capture data on the patient at all times. This allows providers to view the patient’s entire medical history without the need to track down the patient’s previous medical record, and to ensure the data is accurate, appropriate and legible. Using one modifiable file, it is widely believed that patient EHRs will help make the healthcare delivery process more efficient with fewer medical errors.

Using a 10-point scale, (1 is ‘failing’ and 10 is ‘excellent’), Iowa employers rated statewide hospitals a 6.9 regarding the use of EHRs. Converting this score to a grade, the overall statewide grade for this indicator is a ‘C+.’

However, when rating employers on a regional basis using size-weights (size-weighting is discussed in my June 25th blog), only the northwest region received an acceptable grade of a ‘mid-level C.’ All other regions, grade in around the ‘mid-D’ range.

Indicator #4: Consistent Quality of Care
Quality of care that is consistently applied, regardless of provider and location, is really the end-game for all of us, right? Let’s be brutally honest, we pay world-class prices for the care we seek, so quality of care should be our minimum expectation.

Yet, Iowa employers are clearly dubious about receiving consistent quality of care. As with all three previous performance indicators, the northwest region received the highest score/grade compared to the other regions within the state, while the northeast region barely secured the yellow ‘C’ grade.

Thus far, after reviewing four of the 12 performance indicators, the northwest region has been consistently outperforming the other four regions. Are hospitals in the northwest region of Iowa embracing slightly different approaches that appear to be resonating more positively with employers in their communities?

I have many questions, but it is too premature to speculate. For now, we will rely on the perceptions, perspectives and opinions of the Iowa employer.

Next week: “Trust”

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Voices on Hospitals: Access and Patient Satisfaction

Posted on: 06.25.14 By: David P. Lind

Before I continue my discussion on employer perceptions of Iowa hospitals, I would like to react to a Commonwealth Fund report “Mirror, Mirror on the Wall, 2014 Update: How the U.S. Health Care System Compares Internationally” published on June 16th.

It is a fact that we pay for world-class healthcare in the U.S. No one can honestly dispute this. Yet, there’s a major gap in what we pay for healthcare versus the outcomes we receive — commonly known as ‘value.’

When we compare our expensive healthcare system to 10 other major industrialized countries, as the Commonwealth Fund recently did, the U.S. ranks dead last in the quality of its healthcare system. As we already know, we spend far more than any other country on healthcare (per capita), and yet the Commonwealth Fund reports “…further findings indicate that from the patients’ perspective, and based on outcome indicators, the performance of American health care is severely lacking.” In fairness to U.S. healthcare providers, this report factors in other criteria that does not directly relate to provider performance here in the U.S., such as our troublesome access to insurance coverage and equity issues.

This report is like fingernails on a chalkboard — for one key reason. In Iowa, we continue to compare our health outcomes ‘progress’ to other states, rather than with our international counterparts. I understand it is more convenient to compare Iowa metrics with comparable metrics from other states, after all, each state operates under the same federal healthcare ‘system’. But let’s be honest, it is very easy to be selective on which metrics to use when comparing the progress of our outcomes with other states. Aren’t we merely comparing Iowa to other under-achieving benchmarks?

It’s really about our expectations, right?

Since we are paying world-class prices for our healthcare, then we need to proactively compare our outcomes to…well, the world. Incrementally making progress comparisons to other states only serves to prolong our inevitable desire to produce world-class outcomes. With the risk of sounding naïve about this subject, I am convinced Iowa can and should take the lead by being the petri-dish for world-class care. But to do so, we must ‘think’ world-class and, consequently, use the appropriate benchmarks to get us there.

There, I said it. Now, shoot me.

As previously mentioned, future blogs will address how Iowa employers view hospitals on 12 different ‘indicators’ across five Iowa regions. Today’s topic addresses employer perceptions on hospitals regarding “Access to Services” and hospitals’ “Concern for Patient Satisfaction.”

Employer perceptions about our hospitals can be interpreted as unique perspectives coming from key stakeholders who have much to gain (or lose) from the local care that is provided to their workforce.

The five arbitrarily-carved regions in Iowa consist of the following number of counties (99 total counties):

Central – 9 counties
Northwest – 27 counties
Northeast – 25 counties
Southwest – 17 counties
Southeast – 21 counties

Indicator #1: Access to Hospital Services
Using a 10-point scale, (1 is ‘failing’ and 10 is ‘excellent’), Iowa employers rated statewide hospitals a 7.3 regarding having access to their services. When converting this score to a grade, the overall statewide grade for this indicator is a ‘B.’ (See NOTE below.)

The following map shows little measurable difference between the five regions for this indicator. The northwest region has the highest average of 6.9, while central Iowa follows at 6.6. When applying weights to the regions, many regions actually grade at a mid-to-high ‘C.’ If you have not reviewed our ‘Voices for Value’ white paper, it is available for download. ‘Voices’ briefly addresses this particular subject on pages 14 & 15.

Indicator #2: Concern for Patient Satisfaction
Overall, employers give statewide hospitals a score of 6.9, or ‘C+.’ However, when we look at the five regions under this indicator, it becomes more interesting. Employers in the northwest region clearly feel their hospitals have more empathy for patient satisfaction, grading hospitals at a low ‘B.’ The northeast and central regions grade their hospitals at a low ‘C,’ while both the southeast and southwest lag behind equally at high ‘Ds.’ Our ‘Voices’ white paper discusses this topic on pages 15 & 16.

Former Massachusetts Congressman Tip O’Neill frequently stated “All politics is local.” As you will see in upcoming blogs, employer perceptions on Iowa hospitals vary greatly based on location. So we might say that “All healthcare is local.”

Local problems can be addressed with local solutions, to a great extent, but only if we have appropriate expectations of the desired outcomes we wish to seek.

Next week: “Electronic Health Records” and “Consistent Quality of Care.”

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NOTE: When grading the entire state, it is important to distinguish that employer respondents were not weighted, which means all employers (regardless of size) have an equal voice. However, when we break out the five Iowa regions, the results are size-weighted so that organizations with more employees have a louder “voice.” Because each region is size-weighted, the average regional scores will appear lower than the statewide average score, in this case, 7.3. Sorry to get technical, but I wanted to address why the statewide averages do not exactly jive with regional averages. If we dig deeper by county, the map becomes very colorful because not all counties are alike, since not all hospitals are alike.

It’s Time to Disinfect – Feedback on ‘Voices for Value’ White Paper

Posted on: 06.18.14 By: David P. Lind

The feedback I continue to receive on provider grades and our ‘Voices for Value’ white paper have been absolutely astonishing. It’s clearly exceeding any pre-conceived expectations that I had prior to embarking on this research in 2013. Employers have spoken loud and clear about their PERCEPTIONS and, most importantly, the EXPECTATIONS they have for the hospitals and physicians serving their communities.

A few typical comments shared with me by employers on ‘Voices’ include:

Why haven’t employers been surveyed on this before?

My Response: Great question! I honestly don’t know.

I’m not surprised by the results. In fact, I thought the scores/grades would have been less generous than they appear.

My Response: I don’t think anyone is surprised by these results, including the providers themselves. Our expectations on impending improvements within our healthcare delivery system are tepid at best (due primarily to glacial progress) – if not flat out skeptical, at worst. It is important to note that survey respondents included both hospitals and physician groups, who are after all, employers as well. Interestingly, hospitals and physician groups equally appeared to be brutally honest about their perceptions/expectations of – themselves!

How did providers within our location perform on these performance measures?

My Response: It depends. Scores certainly vary by location. In most cases, employers located in urban areas appear to be more critical of their providers than their rural counterparts. It is quite clear, however, that employers located in the northwest region of Iowa appear to be more complimentary of their hospitals and physicians than employers located elsewhere in the state. At this time, the reasons for this difference are only speculations. In fact, in 10 of the 12 performance indicators, northwest region employers graded their hospitals higher than the other four regions in Iowa. The other two indicators, “Access to Services” and “Consistent Quality of Care” were tied as the best in the northwest region with at least one of the other regions. There is still so much more that we need to know about this topic.

Now that we have this baseline information on employer expectations, what can we, as employers, do to have a more meaningful impact on the value of healthcare received by our employees and their families?

My Response: Stay tuned! New approaches and initiatives are just beginning to emerge from this work.

In my next several blogs, I will be providing region-by-region comparisons for each of the 12 performance indicators on hospitals. Next week’s blog (to be published on June 25) will address how employers view hospitals on “Access to Services” and “Concern for Patient Satisfaction.” Future blogs will address the other Iowa hospital performance indicators.

Making his famous statement on transparency in a 1913 Harper’s Weekly article, former U.S. Supreme Court Justice Louis D. Brandeis wrote the following:
“Sunlight is said to be the best of disinfectants.”

In the weeks to come, I will do my best to provide a bit more sunlight on this massive topic.

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Is YOUR Doctor Happy?

Posted on: 06.11.14 By: David P. Lind

There are some professionals we would want (or hope) to be very happy with their chosen careers. For obvious reasons, we would hope that the physicians who care for us love their profession. However, according to Medscape’s 2014 Physician Lifestyle Report, some physician specialties report being happier at their job compared to other specialties. The percentages are not that encouraging for us patients…or perhaps it’s just me.

Interestingly, dermatologists are the happiest physicians at their jobs: 53 percent reported being “very” or “extremely” happy at work. From a separate Medscape report, dermatologists are also least likely to be overweight. Hmm, might this be a correlation or causation?

Medscape’s data is based on survey responses from 31,399 physicians. The following list ranks the remaining 23 specialties based on the percent of physicians who responded they were “very” or “extremely” happy at work.

Ophthalmologists: 46 percent
Pathologists: 45 percent
Gastroenterologists: 44 percent
Psychiatrists: 44 percent
Nephrologists: 43 percent
HIV/Infectious disease specialists: 42 percent
Orthopedists: 42 percent
Pediatricians: 42 percent
Rheumatologists: 42 percent
Critical Care: 41 percent
Oncologists: 41 percent
Urologists: 41 percent
Anesthesiologists: 40 percent
Cardiologists: 40 percent
General surgeons: 40 percent
Obstetricians and gynecologists: 40 percent
Pulmonologists: 40 percent
Neurologists: 39 percent
Endocrinologists: 38 percent
Internists: 37 percent
Radiologists: 37 percent
Family medicine physicians: 36 percent
Emergency medicine physicians: 36 percent

Growing evidence suggests there is a relationship between happiness and workplace success. I find this study to be particularly interesting, as it may reflect on the tenuous quality of healthcare outcomes received within our healthcare ‘system.’

Choosing the right profession can be difficult. Choosing to become a medical professional has the potential of reaping great rewards along with some unintended side effects.

I would prefer my doctor to be happy at work. Wouldn’t you?

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A Health Care ‘Rock Star’

Posted on: 05.21.14 By: David P. Lind

In April, I had the pleasure to meet and host a health care ‘rock star’ in my office, Rosemary Gibson. Rosemary is a Senior Advisor at The Hastings Center, an “independent, non-partisan, non-profit bioethics research institute” based in New York.

In addition to having a very impressive and powerful resume, Rosemary has written four books that provide critical insight into our health care system that is both disturbing and, quite frankly, outrageous. These extremely well-written books are co-authored by, Janardan Prasad Singh, an economist at the World Bank. After meeting with Rosemary, I quickly purchased all four books and challenged myself to find time to devour them in short order.

Rosemary Gibson’s books include:

Using her extensive knowledge, Rosemary passionately speaks the unmitigated truth about a very complex and perverse health care ‘system’ in which we all participate. As an example, Rosemary shared with me this-alarming (if not mortifying) fact about health care spending in the U.S. that was generated by the Congressional Budget Office (CBO):

“If historical health care spending trends continue, the U.S. will be spending 99 percent of its Gross Domestic Product on health care by 2082.” That’s right – 99 percent in about 68 years! (Source: CBO. The Long-Term Outlook for Health Care Spending. Appendix D. November 2007).

Our country currently spends about 18 percent of our GDP on health care, which makes it nearly one-sixth of our existing economy. If accurate, the CBO estimate would essentially mean our entire economy would consist of health care – which is absolutely astounding!

Granted, the CBO report was published in November 2007, about three years prior to the passage of the Affordable Care Act (ACA). Yet, many experts argue that the ACA was more about covering additional people under different types of health care plans (both public and private), than attempting to control the cost of health care.

Rosemary was greatly interested in our recently published white paper, ‘Voices for Value,’ on how Iowa employers view the health care provider community.

I’m looking forward to finding new ways to collaborate with Rosemary in the future and welcome her expertise here in Iowa. Rosemary’s background and critical insight into our fractured health care system is greatly appreciated as we strive to find new opportunities to make a difference.

You will hear more about this health care ‘rock star’ in future blogs – stay tuned!

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Searching for the Medical ‘Black Box’

Posted on: 05.14.14 By: David P. Lind

Would hospital employees choose to receive medical care from their own hospital? Wouldn’t you want to know how hospital employees truthfully rated their own hospital’s safety culture?

Yep, me too!

The Agency for Healthcare Research and Quality (AHRQ) released their Hospital Survey on Patient Safety Culture results. This survey is very important for many reasons. One key reason is that these results correlate to infection rates and patient outcomes.

When you think about it, who better to ask about quality of service within a hospital than the frontline worker themselves – staff, nurses, technicians, etc.? In fact, when noted physician, Marty Makary and his staff performed a joint study with risk management firm Pascal Metrics, they found “hospitals that scored well on the staff survey had lower rates of surgical complications and other important patient outcomes.” (Marty Makary, MD, “Unaccountable: What Hospitals Won’t Tell You and How Transparency Can Revolutionize Health Care.”, Page 28)

Unfortunately, the results from the AHRQ survey are not meant for public consumption. They are meant only to be viewed by participating hospital administrators and the government. You see, this type of survey is not mandatory. In fact, U.S. hospitals participate in these surveys with the condition the results remain out of the public eye. Because hospital competition can be fierce within certain markets, reputations can be marred by having a low safety score – which adversely affects hospital revenue. Unlike the missing black box from Malaysian Flight 370, it appears this ‘black box’ of critical survey results is meant to remain hidden.

After learning of the 2014 AHRQ survey release, I quickly found that only 653 hospitals around the country participated in this non-mandatory survey (representing about 13 percent of approximately 5,000 hospitals in the U.S.). A miniscule 55 hospitals responded from 11 states within the region where Iowa was placed. The report from AHRQ does not list the participating hospitals, for reasons mentioned earlier. After a few email inquiries, I was able to learn that only 28 Iowa hospitals participated in this survey in 2012 and a paltry 9 hospitals in 2014 (Iowa has 118 community hospitals).

In all fairness, other research firms such as Pascal Metrics, also perform these studies. But once again, we have little knowledge on which Iowa hospitals participate and how often – let alone the results that come from these reports.

Dr. Makary’s view on lack of transparency for safety culture surveys is spot on:
“While I sympathize with hospitals who feel threatened by transparency of safety-culture results, I sympathize more with misled patients….In short, data transparency, properly weighted, would empower patients to make informed decisions about where they should spend their health care dollar.”

Compared to other developed countries, U.S. citizens pay world-class prices to our hospitals, but, in return, we receive little or no transparency on what matters most to us – our safety – and, in some cases, our lives.

This topic should be of great interest to employers when initiating (and leading) discussions with the healthcare provider community. Payers are entitled to know what they are paying for and, what the contents of the black box reveal.

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16 Candles

Posted on: 04.30.14 By: David P. Lind

We have just launched our annual Iowa Employer Benefits Study©. As with all previous studies, I’m looking forward to this year’s survey for the following important reasons:

• This will be the 16th Study conducted since we started this particular survey in 1999. Though I would never compare this ‘baby’ to my two beautiful daughters, it sure has evolved considerably since inception!

• Two new modules of questions will be added in this year’s survey.

1. Affordable Care Act (ACA) – This module will address whether Iowa employers are using healthcare exchanges (marketplaces) — either public or private. If not, we’ll determine whether they plan to offer health coverage through some type of marketplace in the future. We will also find out whether employers are using a Defined Contribution approach for health coverage or offering it as part of a cafeteria plan.

Along with many other ACA-related questions, we will learn whether employers plan to:

Add a spousal surcharge
Require an employee’s spouse to get coverage through their own employer
Adopt a value-based insurance design for health coverage
Offer tiered-provider networks to promote high-value providers
Eliminate health coverage for all employees
Eliminate health coverage for part-time employees
Institute a wellness program
Add wellness rewards or penalties

2. In our 2013 Study, we asked Iowa employers to rate hospitals and physicians on 11 performance indicators using a 10-point scale. In addition, employers were asked to rate how much they ‘trust’ hospitals and physicians. In this year’s survey, we are going one step further. We are inviting employers to rate which of the 12 performance indicators are most important to them. From this, we will prioritize which of the 12 indicators are most important from the employer perspective.

As with the past 15 Studies, we will continue to ask our core questions about the benefit components being offered by Iowa employers. New information gained from this survey will be reflected in our Lindex Online Iowa Benefits Benchmarking tool. The 2014 results should be available in late August/early September. As always, our intent is to keep our annual Study both fresh and relevant within the changing world of employee benefits.

If your organization is randomly selected to participate in this year’s Study, we highly encourage you to share in our celebration by participating in this important survey.

I always take great delight in adding yet another candle to our cake!

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A New Revolution Begins: ‘Voices for Value’

Posted on: 04.23.14 By: David P. Lind

This is your world. Shape it or someone else will. Gary Lew

This quote is so true! If we simply sit back and complain about the status of healthcare and health insurance rates in Iowa, nothing will change. We need to reshape our healthcare world. And, to begin to shape it, we need an open and honest dialog about the conditions that currently exist, determine what is working and where improvement is needed.

To encourage this dialog, I have written a ‘Voices for Value’ white paper, based on employers’ responses to survey questions regarding their satisfaction with their regional hospitals and doctors. You may download your FREE copy of ‘Voices for Value‘ here. Since issuing our press release last week on Iowa employer perceptions of the Iowa healthcare provider community, the interest in this white paper has been overwhelming!

I wish to thank the Iowa Association of Business and Industry (ABI) for sponsoring ‘Voices for Value.’ After learning about this paper, ABI has been extremely supportive in promoting the contents of our survey. It is a great honor for me to have ABI involved as the sole sponsor.

The findings from this ground-breaking survey are quite clear: Iowa employers expect more from their healthcare providers than what they are currently receiving in most all of the survey’s 11 performance indicators.

Access to services
Concern for patient satisfaction
Electronic health records
Consistent quality of care
Ability to engage patients
Focus on wellness and health promotion
Efficiency
Coordination of care among providers
Transparency in medical outcomes
Cost transparency
Keeping cost reasonable

In addition to the above indicators, employers were asked to rate the extent of ‘Trust’ they have for the providers serving their workforce. Having trust in those who provide care is paramount to having a highly-functional healthcare system. I firmly believe that greater trust will result when improvements are made within each of the performance areas.

Until this survey was conducted in mid-2013, the voice of Iowa employers has been diffused, diluted and, mostly silent. For care to be appropriate, efficient and cost effective, a meaningful revolution must occur in Iowa (and elsewhere) to drive innovation with carefully-placed incentives (and disincentives) that will reward behaviors we desire – from both the care delivery and consumption sides. But it won’t be easy.

It has been said that “Revolutions never happen in comfortable shoes.”

As found in most social change, this new revolution will be uncomfortable, but very necessary – if not critical. Healthcare providers must heed the voices that have emerged from ‘Voices for Value,’ and take action to deliver high-value care to their customers, the very people they serve within their communities. This revolution may also be uncomfortable for employers, who have historically relinquished the oversight of healthcare delivery to third parties. Now, employers must take action by providing constructive, ongoing feedback to the providers serving their communities. Somehow healthcare has lost this critical ‘voice’ to serve as a crucial guide on how care should be delivered.

The new healthcare revolution in Iowa is buoyed by ‘Voices for Value.’ However, Voices merely serves as the first step in a long journey to high-value care that we all deserve. The ‘value’ of care has been defined as health outcomes achieved per dollar spent* – and we currently spend an enormous amount of money with seemingly few controls to reduce this growing expenditure. Yet, as witnessed in our survey results, Iowa employers have spoken loud and clear that care is mediocre, at best. A revolution is necessary to reshape our healthcare world.

Based on how Iowa employers perceive the care provided within their communities, ‘Voices for Value’ establishes the basic framework of issues that require new transformations in our local healthcare system. ‘Voices for Value’ is not an exhaustive accounting of the myriad of issues inherent in healthcare, but rather, it serves as a baseline from which new initiatives can be thoughtfully developed and pursued by all interested stakeholders within Iowa to make the changes that we all desire to have.

Continue to follow our future blogs on how this revolution is gaining traction and, most importantly, how YOUR voice can be heard!

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*Michael E. Porter, Harvard Professor

Grading Iowa Hospitals and Physicians – A ‘Silent Voice’ No More

Posted on: 04.18.14 By: David P. Lind

Today, we issued our press release on the Iowa Employer Perceptions of the Iowa Healthcare Provider Community. The results come from our 15th annual Iowa Employer Benefits Study©. This section of the study reveals compelling information that is both fascinating and relevant to Iowa employers – and to the entire state of Iowa. This type of study is a first of its kind in Iowa – perhaps in the country!

We’ve also just released our “Voices for Value” white paper which provides a comprehensive look at Iowa employer perceptions of the Iowa healthcare marketplace. I am very proud that the Iowa Association of Business and Industry (ABI) is the sole sponsor of this paper, as they have represented the “Voice of Iowa Business Since 1903.”

For the last 30 years, I have been keenly involved with employer-sponsored health insurance in Iowa. During most of that time, I assisted employers with evaluating and obtaining health coverage on behalf of their employees. As employers know, the complexities of health insurance requires a great deal of their time and effort each year to assure the ‘appropriate’ health coverage offering to their employees. This is an often-overlooked cost that is not factored into the health premiums paid by employers. Nonetheless, it is a necessary process that requires frequent employer attention.

Year-after-year, our annual studies indicate that Iowa employers continue to receive premium increases that exceed the inflation rate. In fact, since 1999, the annual Iowa single premium increased by 171 percent while the family premium increased by 158%. Despite these meteoric increases, Iowa employers continue to pay more than their ‘fair share’ of the premium costs – about 80 percent of the total single premium and about two-thirds of the family premium.

So why ask Iowa employers to assess hospitals and physicians within their communities? It’s quite simple. Employers play an enormous and critical role in funding the private insurance system. Unfortunately, when assessing the value received from the healthcare providers, they have been a relatively silent and diluted voice on how this investment is being used.

A silent voice? Yes, but no longer.

Iowa employers were asked on a 10-point scale, where 1 is “failing” and 10 is “excellent,” to assess 11 key performance measures. Employers reported that both hospitals and physicians within their communities are either ‘average’ or ‘below average’ on most measurements. However, two measurements that are most worrisome to employers, resulting in dismally low grades, are “Keeping Cost Reasonable” and “Cost Transparency.” Iowa employers feel that hospitals are a grade away from failing on both measurements, as they received grades of D-minus and D-plus respectively. Physicians were graded slightly better at D and C-minus, respectively. Based on the escalating premiums employers continue to pay each year, it is not surprising that employers are in a foul mood on cost issues.

Trusting Hospitals and Physicians

One last assessment measurement is the “Level of Trust” employers have with hospitals and physicians within their communities. Specifically in healthcare, trust is perhaps the most important measurement used to gauge the effectiveness of the services provided to the population. In this measurement, hospitals received a tepid B-minus from employers, while physicians received a mid-B.

The other grades given to hospitals and physicians are considered to be underperforming, particularly relating to measurements on patient care and the perceived outcomes received from patient care. More about these grades in later blogs.

One final comment regarding how employers graded their health providers. When asked to evaluate health providers, employer assessments come from ‘perceived’ attitudes about the various measurements being asked within the survey. Clearly, we need to know a great deal more on how our healthcare providers can meet the expectations of a key healthcare payer – the employer.

This particular survey provides a solid baseline on employer perceptions. Based on these results, future healthcare provider community assessments will be required.

I invite your comments regarding the grades employers assigned to both hospitals and physicians.

To learn more about this and other survey results, we invite you to subscribe to our blog.

Healthcare Waste & Inefficiency – an Inconvenient Truth?

Posted on: 03.19.14 By: David P. Lind

The Iowa House and Senate leaders recently announced a joint budget agreement on spending levels for the state of Iowa’s 2015 fiscal year, which begins July 1, 2014. The budget target agreed upon? $6.97 billion – a great deal of money, for sure.

This amount, however, pales in comparison to the net worth of some of the billionaires around the world. For example, when compared to Forbes‘ latest list of the world’s billionaires, the announced 2015 Iowa budget would fall somewhere between #191 and #196 of the most wealthy people on the list. Bill Gates sits atop at $76 billion while Warren Buffett weighs in at the #4 position, with a ‘pithy’ net worth of $58.2 billion.

In short, Bill Gates’ net worth is 11 times greater than Iowa’s annual state budget. A fun fact to recite at tonight’s dinner table, right?

Try this not-so-fun fact: According to a 2010 report from Institute of Medicine (IOM), the U.S. healthcare system wastes about one-third of the $2.6 trillion we all spend on healthcare. This equates to about $765 billion wasted annually — and growing!

According to IOM, the six areas of waste and inefficiency are:

Missed Prevention Opportunities – $55 Billion
Unnecessary Services – $210 Billion
Inefficiently Delivered Services – $130 Billion
Prices that are Too High – $105 Billion
Excess Administrative Cost – $190 Billion
Fraud – $75 Billion

Based on these stats, one might reason that our health insurance premiums are about a third higher than they should be. No wonder our health premiums continue to increase more than the consumer price index, year-after-year! Let’s be honest, merely tweaking our insurance plans (by increasing deductibles, copayments, offering limited-provider networks, implementing value-based benefit plans, etc.) will NOT remotely make up the difference that we lose in annual waste.

It is about time that we confront this ‘inconvenient truth’ (thank you, Al Gore) and think differently about truly reforming our healthcare system.

To put the $765 billion of healthcare waste and inefficiency into context with other budgeted costs, consider the following:

The proposed 2015 budget for the Department of Defense is $549 billion.
The president’s 2015 budget proposal would run a deficit of $561 billion.
The proposed 2015 budget for Education is $1.014 trillion.
As mentioned earlier, the 2015 State of Iowa fiscal year budget is $6.97 billion. That puts national healthcare waste about 110 times greater than Iowa’s state budget EACH YEAR!

So, the next time you wonder why your health insurance premiums and out-of-pocket healthcare costs are so high, you might remind yourself that we currently live with a VERY wasteful healthcare system that is in desperate need of an efficient and high-value care transformation.

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