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A groundbreaking research study released Monday by Humana reveals
$1 out of every $4 spent on health care in the U.S. annually is being wasted,
totaling $265 billion.
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A new value-based model needs to be adopted in the industry.
·
It must be an integrated approach that includes behavioral health,
pharmacy, social determinants of health, home health and primary care.
Bruce
D. Broussard, president and CEO of Humana Published 3 Hours
Ago Updated 9 Mins AgoCNBC.com
A groundbreaking research
study released Monday by Humana reveals that $1 out of every $4 spent on health
care in the U.S. annually is being wasted. It's a situation that needs to be
addressed by the industry at a time when consumers are grappling with spiraling
medical costs.
The cost of health care
should never be top of mind for patients — not when they are facing emergencies,
nor when they are living with multiple chronic conditions. For this ambition to
become a reality, we must evolve the health-care system to more efficiently
deliver personalized care for our patients.
Yet rising health-care
costs are a reality and cause stress for many people. If we are to successfully
confront the issues of cost and efficiency in care, we first need to fully
understand the systemic problem of wasteful spending.
Our researchers at Humana recently
completed this multiyear study, published this month in the Journal of the
American Medical Association. The study puts a spotlight on the nearly 25% of
our country's annual total health-care spending that can be deemed as waste, or
between $760 billion and $935 billion each year.
"Rising health-care costs are a reality and cause
stress for many people. If we are to successfully confront the issues of cost
and efficiency in care, we first need to fully understand the systemic problem
of wasteful spending."
Dr. William Shrank,
Humana's chief medical and corporate affairs officer, led the study identifying
the extend of waste in the system. But he also found a silver lining in the
results. Dr. Shrank said this study shows that "in the national debate
about health reform, we don't need to start over. We can build on the strengths
of today's system … while also producing the necessary savings to expand
coverage to all Americans."
So why is this all
happening?
Our researchers examined
and ranked the contributing factors. Failures in care delivery, care
coordination, overtreatment/low-value care and pricing failure topped the list.
We identified administrative complexity as the greatest source of waste.
Administrative complexity
causes $265 billion to be misspent annually. We all want our doctors carefully
credentialed and our information systems to work seamlessly. Processing medical
claims and payments are also a necessary cost of operating and require some
administrative effort and expense.
But the cost of
complexity can become waste when clinicians and health plans work separately,
despite our common goals — not the least of which is the desire to allow
patients to focus on care before cost — or, in broader terms, value. We are
aligned on the importance of care that provides a patient with real value, but
the traditional model has not incentivized us to help each other.
The new value-care model
That is why the
value-based care model is making headway when it comes to reducing health-care
costs and improving value. Value-based care recognizes physicians' dedication
to their patients' health by reimbursing the provider when their high-quality
service leads to better health outcomes. It is not about the amount of services
they provide or the number of patients they see; it is about using an
integrated approach to improve health outcomes. This integrated approach —
which includes behavioral health, pharmacy, social determinants of health, home
health and primary care — becomes the common framework in which caregivers and
health plans can meet.
As a health plan, we
realize that we have a role to play. A physician's administrative complexity
may be the result of a health plan's efforts to coordinate care and assist in
reducing redundant or unnecessary clinical costs — for example, when a health plan
requires prior authorization. However, no one wants to produce this waste, and
we all want clinicians to have the time to focus on what matters, caring for
patients.
According to
a survey by the American Medical Association, for every hour a physician spends
with patients, they spend nearly two additional hours on administrative tasks
throughout the day. We know we have a role to play in alleviating this burden,
and we are already partnering with providers to do just that.
At Humana we are helping
providers in our value-based networks access services that increase
interoperability. Or, to put it in simpler terms, we are making it easier to
align and collaborate.
Currently, multiple
providers can only share electronic medical records with each other by paying
exorbitant fees. To disrupt this model, we are empowering patients to access
and share their own health information. Instead of redundant forms and
procedures, patients can keep caregivers updated in a seamless, cost-effective
way.
So far, the results of
this movement toward value-based care are promising. Our annual report on
value-based care found that preventive care is on the rise, while re-admissions
and hospitalizations are falling. This trend clearly reduces costs for
patients, as we've seen costs for our Medicare Advantage value-based agreements
almost 16% lower than original Medicare fee-for-service.
Humana receives more than
1 million provider calls each month. Unlike member calls, these are
transactional, such as checking on benefits or claims for patients. Earlier
this year, Humana and IBM launched a pilot program with more than 120 providers
and a Watson-powered virtual agent.
Statistics and efforts
like these make it easy to be an optimist. But what I'm really inspired by is
the potential to address systemic waste across the health-care system, through
providers, payers and governmental agencies partnering on improving the
efficiency of the system — ultimately improving the affordability of health
care for Americans, without having to start over.
We know where the leaky faucets are. Now it is
time for repair.
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