Newtown, CT – May 31, 2013
Health care costs vary significantly; we spend twice as much as any other country; and have the same, or lower outcomes in quality. That's the plain old truth because it's based on clear and unambiguous facts….dollar for dollar, index for index. And while Rome is burning, the ivory tower dwellers are fiddling away. The latest dust-up on regional variation is a good example. A few researchers publish a paper that purports to say that some of the regional variations in costs they have studied are due to patient factors, not practice patterns. They picked the weak link in the Dartmouth work, the variations in end-of-life costs, that many of us feel have some methodological challenges – not least of which is that it's difficult to predict ex ante whether a patient will die in six months. But that doesn't mean regional variations aren't prevalent and significant. In fact, they are. Some are caused by massive price differences as we showed in an Issue Brief last year on the very high price of care in Pittsburgh compared to three other cities. Some are caused by very large differences in the rate and cost of potentially avoidable complications, as we've shown in a study published in Health Services Research, and other studies. Many of the ivory tower dwellers have kept their focus on Medicare, but that's barely half of the spending in the country. The balance is paid out by employers and individuals who experience and suffer from undeniably large variations in costs. For example, our Issue Brief on the costs of total knee replacements showed that much of the variation in total knee replacement costs had to do with the price of inpatient stays, after adjusting for patient severity. That's a fact as well. So let's get real folks.
What this means to you – The variation in costs of care has been harming families in this country, financially and physically, for decades. The apologists would have us believe these variations are mostly due to patient severity. What a bunch of bullshit. It's due to patients not being cared for appropriately. It's due to the mountains of well-documented patient safety failures. It's due to the unnecessary overuse of services that has caused the medical societies to publicly list them on a "wall of shame". It's due to egregious market pricing summarized in a Catalyst for Payment Reform report. And the root cause of all this variation is the incredibly bad incentive created by fee-for-service payments. So don't get distracted by the dust-ups and stay the course. We know the facts, even though some would prefer to ignore them in order to tell a story that generates headlines and short-lived fame for the authors, and money for the paper peddler.
Francois de Brantes
Health Care Incentives Improvement Institute, Inc.