The Deteriorating Administrative Efficiency Of The U.S. Health Care System – PNHP

As we start 2019, I thought I would bring in some fundamental issues that we have been facing and continue to face, both in Jefferson County and nationwide. In reading through a variety of articles recently, I came across a couple of articles that pretty clearly identify the state of healthcare in the US.

The first is an old study, but one that has been updated and used frequently in presentations. Lest start with the original study first.

The Physician’s for a National Health Program published a 1991 study from the Harvard School of Medicine that validates what many of us, the critics of modern hospital management, have been instinctively feeling all along. The situation, updated in a more recent slide deck, here, gives the current situation.

The problems of hospital administration are endemic. You can hear it every time there is a hospital commissioner meeting each month. Only good news is presented. Bad news is couched in doublespeak if it’s ever raised at all.  No mention of the medical bankruptcy rates in Jefferson County (they are on the rise). Never raise issues that are problems or concerns or face being ostracized by your peers. From executive suites of hospital management making vastly more money than the surrounding towns they serve, to the rubber stamps of hospital commissioners that simply are uninformed and  like staying that way, or aren’t willing to challenge anything of a controversial nature, to medical professionals who cosy up to the administration to make themselves feel better about their positions of authority and stop any change agents ending up as hospital commissioners. It all feeds the continuation of a system that is fundamentally out of control on costs. It’s not just JHC it’s the whole broken system.

Here’s the underlying data sets of one aspect of our current, deeply broken system.

The 1991 study found that “the spending on hospital administration is 117% higher than Canada and accounts for about half the total difference in healthcare spending between the two nations…If healthcare in the United States had been as efficient as Canada’s between $69 to $83 Billion dollars would have been saved. ” It has only gotten much worse since then.

Enough to pay for healthcare for all Americans without cutting the beloved military budget that so many Americans feel is beyond questioning, even as it consumes more than half of all governmental expenditures.

It goes on to state: “Recent health policies with the avowed goal of improving the efficiency of care have imposed substantial new bureaucratic costs and burdens.”

There are other issues at work beyond this, such as pharmaceutical costs, etc, but this goes to the core of this leg of the stool. Perhaps the stool should have three legs, For Profit Insurance Companies, Pharmaceutical companies, and hospital administration. But read it yourself and draw your own conclusions.

“CONCLUSIONS: The administration structure of the United States healthcare system is increasingly inefficient as compared to that of Canada’s national healthcare program. Recent health policies with the avowed goal of improving efficiency of care have imposed significant new bureaucratic costs and burdens.”

http://www.pnhp.org/publications/NEJM5_2_91.htm

The data has been updated through 2014 with data from the Department of Labor Statistics. It only got vastly worse since 1991. What happened between then and now? Well, computer use exploded. Is that the problem? During this time we also had both Democratic and Republican Presidents and Congress. And we had an explosion of medical insurance growth.

growth of physicians and admin

This recent study covers updated information related to hospital administration costs.

Medical Spending Differences in the United States and Canada: The Role of Prices,

Procedures, and Administrative Expenses

Abstract

The United States far outspends Canada on health care, but the sources of additional spending are unclear. We evaluated the importance of incomes, administration, and medical interventions in this difference. Pooling various sources, we calculated medical personnel incomes, administrative expenses, and procedure volume and intensity for the United States and Canada. We found that Canada spent $1,589 per capita less on physicians and hospitals in 2002. Administration accounted for the largest share of this difference (39%), followed by incomes (31%), and more intensive provision of medical services (14%). Whether this additional spending is wasteful or warranted is unknown.

The United States spends nearly twice as much per capita on health care as Canada: $7,290 per person in the United States in 2007 compared with $3,895 per person in Canada (aOrganisation for Economic Co-operation and Development [OECD] 2009a).

Despite this higher spending, however, U.S. health indicators continue to lag behind those of Canada. In 2006, infant mortality was 6.7 per 1,000 live births in the United States, compared to 5.0 per 1,000 in Canada. In the same year, life expectancy at birth was 78.1 years in the United States and 80.7 years in Canada (OECD 2009a)

…Some studies stress administrative expenses; estimates suggest that U.S. administrative costs are 46% to 71% higher than Canada’s (Aaron 2003; Woolhandler, Campbell, and Himmelstein 2003). Other studies propose that higher prices paid for services are the primary driver of greater spending (Anderson et al. 2003). Pharmaceutical costs are higher for branded drugs (Danzon 1992; Graham and Robson 2000), and physicians earn more in the United States as well (Newhouse 1992). Still other studies have examined the volume and intensity of health care services received.

another study, from Princeton

http://www.princeton.edu/~ota/disk1/1994/9417/941705.PDF

Hopefully, if you have interest in this issue, you can look through these studies and come to your own conclusions. Some critics state that we won’t get better healthcare by having single payer or some other blanket coverage. I’m unclear, given the current system and it’s documented bad outcomes compared to other countries, how this is possible.

But it seems increasingly like only those who can afford healthcare get it and an increasingly large share of Americans can’t afford coverage, or get coverage and become impoverished by being taken to court to pay for services that they never could afford in the first place. By the way, both here in Jefferson County and nationwide, medical bankruptcies are on the rise. They are unheard of in all other industrialized countries.

If you are worried about this state of affairs and want to do something about it, there will be an election for Matt Ready’s seat this year.

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