In health care, cheaper can mean better
An Irish adage says: “When you come to a wall that is too high to climb, throw your hat over the wall, and then go get your hat.” That’s what Massachusetts started with its 2006 law requiring just about everyone to get coverage and arranging to make that coverage affordable. Now, it’s time to get the hat.
Legislation to contain costs is the necessary sequel. Reducing costs won't just rescue health care; it will also help rescue our schools, our roads, our museums, our wages, and the competitiveness of our corporations; that's because every additional nickel we spend on health care comes from somewhere else — somewhere also important.
Can Massachusetts' health care be universal, excellent, and far less expensive?
Absolutely. The route is simple: improve care. In a study in the Journal of the American Medical Association, my colleague Andy Hackbarth and I estimated the amount of pure waste in American health care — overtreatment that helps no patient at all (like treating viral infections with antibiotics), errors and injuries from unsafe care, failures in coordination (such as sending people home from hospitals without supports), needless administrative complexity, failures of price competition, and fraud. The lowest estimate of total waste in these six categories was 21 percent of health care costs; the highest was 47 percent; and the midpoint was 34 percent.
When we are wasting $1 in of every $3, it makes no sense to say we cannot afford to make health care a human right without rationing. Don't cut care. Cut waste.
Easy to say, but hard to do. Every form of waste in health care has deep roots in the current system. Fee-for-service payments have trained hospitals to keep their beds full; they therefore underinvest in the coordination of care that can help keep patients home, where they would rather be. Prices are not transparent to doctors or consumers, so price competition is weak. Neither hospitals nor doctors are taught how to standardize care in accordance with the best science; the result is illogical and harmful variation in care.
Better care at lower cost already exists. For example, last month, the "Nuka" system of team-based, health-oriented care that serves Alaska Natives in Anchorage won the Malcolm Baldrige National Quality Award, the nation's highest recognition for quality in any industry. Nuka started with both a needier population and far lower costs than in Massachusetts, but it has further reduced emergency room visits by 50 percent, hospital bed-days by 53 percent, specialty consultations by 60 percent, and primary care visits by 20 percent, while achieving first-rate scores for quality, outcomes, patient satisfaction, and staff morale. Nuka makes care affordable by making it excellent.
Eliminating waste in Massachusetts health care will require large-scale changes in delivery that will be temporarily uncomfortable for most providers. And even though patients, families, communities, employers, wage-earners, and doctors themselves would be much better off, the pace of change is much too slow. Our elected leaders must press the issue, because our health care delivery systems are unlikely to summon the will on their own. The changes are just too hard for most to face.
Bills now before the Massachusetts House and Senate can provide that will in the form of a cost target, and by creating consequences for missing it. The House would limit the growth of health care costs to the growth rate of the Massachusetts economy starting now, and then to 0.5 percentage points lower than the overall economic growth rate starting in 2016. The Senate is less ambitious; it would set a limit of 0.5 percent above economic growth until 2016, and then equal to it thereafter. Neither matches the bolder goal proposed last month by both the Associated Industries of Massachusetts and the Greater Boston Interfaith Organization: 2 percentage points lower than the overall growth rate.
Alarms are sounding. Massachusetts hospitals and other providers are warning that too stringent a target will harm care — and harm the state's economy when unemployment is already high.
Undoubtedly, this transition will be wrenching. But no healthy industry can maintain jobs that depend on continuing services that add no value. Health care costs are hurting the economy now, because they keep employers and consumers from spending on other priorities. Massachusetts has among the nation's highest costs per capita. Waste levels here likely exceed the average, and surely exceed 20 percent of what we are all paying. The more ambitious AIM, GBIO, and House proposals are on the right track; health care can and should begin to return money to other uses, starting now.
The one outcome we must avoid is the stalemate that plagues Washington. Massachusetts led the nation in making health care universal, and it should lead now in cost control through waste reduction. Bold goals will help. If any state can, Massachusetts can ignite the intellectual firepower to reduce costs without harming a hair on any patient's head.
Dr. Donald M. Berwick is the former president of the Institute for Healthcare Improvement and the former administrator of the federal Centers for Medicare and Medicaid Services.