I have been working in the hospital setting for the past 17 years and like to think that I had some level of understanding of health care economics and the current state of our health care system. I knew that there was a shortage of primary care physicians and that we generally do a lousy job in preventive care relative to other developed countries. I knew that we have the most expensive health care in the world and that our outcomes are not proportionate to our dollars spent. I knew that reimbursement dollars were being slashed by government payors, that the 340b drug discount program was being threatened, and that the runaway freight train of specialty pharmacy expense (with prices pulled out of a hat) was likely unsustainable.
I recently had the privilege of attending a series of talks on health policy that made me realize that I’ve had my head in the sand and that I wasn’t as nearly knowledgeable as I hoped I was. Here are a few of the factoids and discussion points that made me take note:
According to a PricewaterhouseCoopers study, 54.5% of health care cost in the U.S. provides no value; the dollar value associated with this waste represents approximately 9% of our gross domestic product and prevents optimal reinvestment in our infrastructure, national defense, education system, etc.
In the decade preceding 2009, a study found that 79% of all household income growth was siphoned off by increased health care expenditures
70% of physicians in the U.S. are specialists who are often paid 3-4 times the rate of primary care physicians; in practically every other nation, specialists make up only 30% of the physician population
Getting less revenue per encounter results in many primary care physicians seeing as many patients as possible (to make revenue through volume) and directing complex patients who might need longer work-ups to the higher-cost specialists who are largely reimbursed on a fee-for-service basis
Specialty physician services are further overvalued as a result of the actions of the Relative Value Scale Update Committee (RUC); this group, comprised of 26 specialists and 5 primary care physicians, acts as the sole advisors to CMS for valuation of medical services; the composition of this group is not representative of the physician market and further exacerbates the primary care physician shortage by driving physicians into the more lucrative specialty practices
The typical American is more likely to be able to get better data on the speed of pizza delivery services than you are to get quality, safety, and cost data about your physician
The health care sector spent $3.4 billion in the decade preceding 2008 on lobbying efforts targeting federal government health policy matters; the 2012 election cycle saw $260.4 million from health care interests directed to federal campaign efforts
Perhaps the most sobering thought was this…if you were to arrange individuals with the power to reform health care around the table, you would find that most of them are benefitting quite nicely from the current system and are, in some way, incentivized to want health care to cost more. Your congressional representatives, specialist physicians, many hospital systems, the drug and device industries, and non-government payors are all included in this group. Those who aren’t doing so well include primary care physicians (who are suffering from an exodus to the specialty ranks), employers, and patients/taxpayers. There is concern that employers could soon be washing their hands of this topic by directing their employees to the health insurance exchanges for coverage. This would remove or minimize the clout of one party with the strength to demand significant reform leaving patients/taxpayers to fend for themselves.
The news isn’t all bad. There are some emerging business models that have shown exceptional results through transparency efforts and risk-based reimbursement approaches. Increased transparency around outcomes and costs should go a long way to increase competition, drive results, and decrease costs. The question is where pharmacy fits into all of this. Based on our skill set, we are well-positioned to be a part of the solution with a demonstrated ability to reduce readmissions, adverse events, and to improve compliance in the ambulatory setting. A health care system that is in dire need of primary care providers could benefit greatly from our skills, particularly when combined with our well-documented ability to encourage evidence-based resource utilization and to contain costs. Provider status will certainly help us along this road and open doors where we can fill voids affecting patient access to care and patient education. Ask yourself if you are prepared to lead your institution into this new world.
Educating ourselves on current health care issues (outside of pharmacy) is critical if we are going to understand where we will fit into the evolving health care picture. That might seem daunting when we have so many areas within pharmacy to stay current, but I would recommend the following sites as a first step towards increasing your health policy IQ:
healthaffairs.org – health policy news and blogs
paulkeckley.com - weekly report on health policy from Paul Keckley, PhD, managing director of the Navigant Center for Healthcare Research and Policy Analysis
brian klepper.info – blog from Brian Klepper, PhD, health care analyst and chief development officer for WeCare TLC
Knowledge is power.
References available upon request