Medical Waste: Why American Health Care Is So Expensive
The last time your doctor said you needed an MRI, a diabetes medication, a breast biopsy, or some other test or treatment, did he or she think about — or even know — how much it would cost? Or discuss whether your insurance would cover it?
Most likely not, says Mitesh Patel. And this creates a problem.
Patel is a professor of medicine and health care management at the University of Pennsylvania’s Perelman School of Medicine and Wharton, and a senior fellow at the Leonard Davis Institute of Health Economics. He points out that medicine is the only business in which the person ordering a service or item — and the person receiving it — doesn’t know the price. “If I go to buy a pair of jeans, we know the jeans are $50. The person selling them knows it cost them $30 to make or obtain.”
Is it really a doctor’s job to think about cost? After all, getting proper medical treatment is a little more complicated — and consequential — than shopping for the latest fashions. But Patel points out that price unawareness on the part of doctors leads to “a lot of inefficiency” in the system. And he is far from the only expert to highlight the amount of waste in American health care.
By most estimates, the United States spends between $3 and $4 trillion on health care annually, a sizeable 17% of our GDP. According to a 2015 Bloomberg report, the U.S. is the third most expensive country for medical care, surpassed only by Norway and Switzerland. Yet when the report ranked 55 developed nations in terms of health care efficiency — based on life expectancy, healthcare costs per capita and costs as a percentage of GDP — the U.S. fell near the bottom at number 50. (It only beat out Azerbaijan, Algeria, Serbia, Russia and Brazil.)
Basically we’re paying more and getting less than citizens of other countries. Americans’ average life expectancy (78.8 years) is lower than that of Australia, Canada, Denmark, France, Germany, Japan, the UK, and several others, according to the Commonwealth Fund. And when it comes to infant mortality, the World Health Organization reports America’s rate of birth-to-five mortality as notably higher than most other OECD countries.
Many point to wasteful practices as a major part of the problem. In a 2012 Journal of the American Medical Association (JAMA) paper, Donald Berwick and Andrew Hackbarth estimated that health care waste, which includes unnecessary treatments, overpriced drugs and procedures and the under-use of preventive care that can fend off more serious illness, makes up a whopping 34% of the U.S.’s total health care spending.
“Multiple stakeholders from health system leaders to policy makers … are looking for ways to reduce unnecessary spending in health care while maintaining the same level of quality of care,” notes Patel. In his view, part of the solution lies in getting doctors to be more aware of the costs and effectiveness of what they order for patients. But he realizes that some people will recoil from this idea, concerned that it may mean limiting or rationing lifesaving medical care to save a buck.
When the report ranked 55 developed nations in terms of health care efficiency — based on life expectancy, health care costs per capita and costs as a percentage of GDP — the U.S. fell near the bottom.
“That’s not what we’re trying to do here,” he states. “What we’re trying to do is reduce unnecessary spending. It’s estimated that a third of health care spending is unnecessary.”
Patel says that some tests and treatments are known to be of low value and should be used only in cases where a patient has specific red flags or symptoms. In this category he puts the prostate-specific antigen (PSA) test for prostate cancer. “The test is not very good and leads to a lot of unnecessary treatment.”
Other examples of low-value care are cited by Kira Ryskina, who like Patel is a professor at the University of Pennsylvania’s Perelman School of Medicine and a senior fellow at the Leonard Davis Institute. She mentions, for example, cancer screenings such as mammograms when performed on patients at the end of life, when life expectancy is very short. A recent study shows, she says, that even physicians who consider themselves very cost-conscious said they would recommend this service for 16% of their patients.
She also notes that many doctors will order imaging like MRIs and X-rays when a patient first complains of acute low back pain. “It’s not diagnostic typically,” she says, adding that in most cases, physical therapy and ibuprofen is a more appropriate course.
High-value care, on the other hand, involves procedures that are known from a cost and resource point of view to be worthwhile, according to Patel. This category typically includes screening tests such as colonoscopies, mammograms (excepting situations such as the end-of-life scenario) and vaccines like flu shots. “These are things that are backed by evidence,” he says. “We have good research to demonstrate that when used in the appropriate population, these tests and treatments actually work.” He adds that professional medical societies have classified such tests as “grade A”, and that the Affordable Care Act promotes their use by eliminating any out-of-pocket cost to patients. Another high-value practice involves ordering generic medicines instead of brand names wherever possible.
In both experts’ view, a valuable step toward reducing wasteful practices is the Choosing Wisely campaign. Launched in 2012 in partnership with the American Board of Internal Medicine (ABIM) Foundation, Choosing Wisely is a national effort to reduce over-treatment by highlighting procedures which specialty medical societies find “problematic,” to use Ryskina’s term. These are practices that “patients and physicians should talk about a little more before undergoing. That are thought to be maybe over-used,” she says.
There are now more than 70 participating medical societies, covering from cardiology to neurology to orthopedics. In June, the American Dental Association joined the effort, issuing “Five Things Dentists and Patients Should Question.” “We now have a list within every specialty of what things we need to focus on … to reduce low-value care or improve high-value care…,” Patel says. “The [Choosing Wisely] movement has really helped to push this forward.”
In addition to providing recommendations for physicians, the campaign has partnered with Consumer Reports to provide over 100 free brochures for patients. The aim is to reduce the incidence of patients demanding medical services that may not be appropriate for them. Examples are people asking for allergy testing when they don’t have allergy symptoms, requesting a brain scan for Alzheimer’s as soon as they think they’re having memory problems, or asking for an antibiotic for an upper respiratory infection (antibiotics don’t cure viruses). The information also helps patients reconsider certain cancer treatments that have been shown to do little good and may actually cause harm.
Getting Doctors to Think About Cost
Why would doctors order tests and procedures that have now been identified as low-value? For one thing, patterns developed during residency contribute significantly to a doctor’s lifelong practice