Health Care Industry Must Drive Cost Containment
Like it or not, the health care industry in Massachusetts will face heavy scrutiny now that the Legislature and Gov. Deval Patrick have forged ahead with a bill designed to contain the growth of medical costs.
That's a logical second step after the commonwealth took the initial jump six years ago with the insurance mandate. That, in turn, contributed significantly to Congressional passage of the Affordable Care Act, and put both health insurance coverage and costs of care on the national front burner. So, what happens in this next phase for Massachusetts could well presage cost-containment efforts on a national scale.
This process will, no doubt, be a painful one for the health care industry. The clamor for cost controls, as well as transparency in health care costs, has grown increasingly louder, and not just from the consumer side. Employers have also seen their share of the costs of providing a key employee benefit soar, causing some to go so far as to reconsider whether it makes sense to continue offering the benefit going forward.
In a report earlier this month, the Washington-based Institute of Medicine issued 10 recommendations to improve health care while lowering costs. Here are three that we see as most important:
• Improve the capacity to capture clinical data, care-delivery process information, and financial data for better care, system improvement, and to generate new knowledge.
• Streamline and revise research regulations to improve care, promote the capture of clinical data, and generate knowledge.
• Streamline and revise research regulations to improve care, promote the capture of clinical data, and generate knowledge.
The emphases on "data" and "generate knowledge" are ours. Why? Because the path to a health care system that's better, faster and cheaper begins with streamlining the access to information. Other large industries, notably financial services and manufacturing, have increasingly embraced this heavy investment in technology over the last 20 years. While many health care providers have also embraced some of the innovations of the Information Age, much work remains to accelerate the use of electronic medical records, for instance, to be fully aware of a patient's health care history. For example, in its study, the institute noted that one in every four patients said their health care providers had to re-order tests in order to have accurate diagnoses. That duplication of effort wastes a lot of money, but it also wastes valuable time that can compromise patient health and well-being.
The industry must also educate consumers on what different providers charge for specific procedures, especially with the offering of "tiered" health insurance products in which patients can pay lower premiums in exchange for higher out-of-pocket costs. The Boston Globe recently told the story of a man who had elbow surgery and discovered that his insurer paid $83 for a simple cloth sling for his arm. The man found a similar sling priced at $7 online. "Somewhere in our health care system,'' he told the Globe, "common sense has left the building.''
With the passage of the state's new cost-containment law, legislators put their collective fingers in the wind and claimed a potential savings of up to $200 billion over the next 15 years. That figure is largely unsupported and likely to be wildly optimistic. But even a quarter of that projection would be a pretty impactful outcome. There is broad agreement that costs must — and will — be taken out of the system as the aging of the baby-boom generation places more demands on the health care industry. This legislation is a good nudge in the right direction — yet over time, it will be better informed health care consumers and cost-sensitive businesses that need to drive the change.
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