The ACP Advocate Blog

by Bob Doherty

Wednesday, January 7, 2009

Who is to blame for health care spending?

One way to look at health care costs is to do an evidence-based analysis of the factors contributing to expenditure growth, and based on the evidence, come up with remedies.

But that isn't very much fun, is it? The first recourse for most of us is to point the finger at someone else, usually based more on our own personal experiences.

So doctors will blame "greedy" lawyers and lawyers will blame "greedy" doctors. Conservatives will blame the government. Liberals will blame for-profit companies. John Q. Public gets his share of the blame, too - for not doing enough to stay healthy and then demanding too much when sick. Even McDonalds gets the blame for making us obese.

And just about everyone blames the drug companies. I've seen internists stand up at ACP chapter meetings to fume about how drug companies rip off patients. If only we could bring down drug prices, they say, we could bring overall health costs under control.

Maybe, but the data suggests otherwise. Prescription drug spending is a smaller factor in rising health costs than say, physician and hospital services.

Yesterday, Health Affairs published the Medicare's actuaries' annual report on health care spending. The title pretty much says it all: National Health Spending In 2007: Slower Drug Spending Contributes To Lowest Rate Of Overall Growth Since 1998.

In 2007, total national expenditures were $2,241.2 billion. Out of this, $227.5 billion was spent on prescription drugs, $696.5 billion on hospital care, and $478.8 billion on physicians and other professional services.

One reason that prescription drug spending decelerated is because of increased dispensing of generic drugs. The authors explain that "loss of patent exclusivity for several major blockbuster medications in 2006, including Flonase, Pravachol, Zocor, and Zoloft, had a large impact on the 2007 prescription drug trend, as six month generic exclusivities expired for some of these drugs and additional generic medications became available". They also attribute the drop-off it to an increase in the number of "black box" warnings issued by the FDA.

I know ... I know ... The big drug companies don't deserve credit for a slow down that was driven by increased competition from generics and people being scared off of their products. And we are still spending a lot of money on prescription drugs. Still, as Jacob Goldstein observed yesterday in the Wall Street Journal health blog, it's a tough time to be in the drug business.

Following the rule of "going where the money is" (which, Wikipedia says, is wrongly attributed to bank robber Willie Sutton), it would seem like prescription drugs would not be the first place to look for big savings.

Today's questions: Do you agree or disagree that the big savings aren't in prescription drugs? Where are they, then?

6 Comments :

Blogger Steve Lucas said...

The problem with the question is there is no single answer. It will take a coordinated change in the practice of medicine to achieve savings, changes that will be fought by each shareholder.

Expanding on the O Canada question we need to offer doctors not more money, but more time. This will require a change in the coding to allow doctors the time needed to deal with complex patients. The object of this will be to cut back on the technology, (scans) hospital stays, and ER visits so common to today's medical practice. The problem is the system drives patients into the most expensive medical care, while leaving the most patient centered caregiver, PCP's, running ever faster to be financial viable.

This is, I am going to hate myself, a multifaceted problem, where a coordinated change in the medical field will be needed to achieve savings. Fewer hospital stays, fewer test, and fewer referrals, can all be achieved, but only if we build a better foundation and that starts with primary care.

In my perfect world I see primary care doctors income remaining the same or slightly increasing while the number of patients per day declines. Today in many doctor's office a visit is measured in a handful of minutes and the patient is interrupted in mere seconds, not a good way to solve a problem. A side benefit would, hopefully, be increased job satisfaction and reduced stress.

Medicine does remind me of work I have done with a church. In the church setting people believe the staff should work for free, the building should be the biggest possible, and we can never spend enough on the organ. In the medical world PCP's should work for free, hospitals can never be big enough, and we can never buy enough technology.

In my world the staff needs to be fairly compensated, the building only needs to be big enough to do the job, and technology needs to questioned as to its usefulness. While drug cost continue to decline, still a good business, we need to look at hospital cost and the use of ever increasingly expensive technology.

Steve Lucas

January 8, 2009 at 7:19 AM  
Blogger Jay Larson MD said...

“We have found the enemy and they is us” Pogo.

Everything in health care is expensive. Will reduced prescription drug costs help reduce health care spending, sure. Will it make a big difference in health care spending, no. There is not one place in health care to reduce spending significantly. If one part of the health care system reduces its slice of the pie, another part of the health care system will increase its slice of the pie. To have big savings in health care spending, it has to be across the spectrum. The pie has to be baked in a smaller pie plate.

January 8, 2009 at 9:07 AM  
Blogger Joon K. said...

In order to save on health care costs, we need to increase spending. We need to increase the number of primary care physicians who will spot preventable outcomes in a timely fashion so that the public isn't burdened with the costs of late treatment.


In order to save on health care costs, the parties with a vested interest in keeping their incomes high (or at least not shrink), need to be given non-monetary incentives to be content. Increased job satisfaction can come in myriad ways: more teamwork and bonding, more accountability and less finger-pointing, due recognition for outstanding or memorable performance, etc.


In order to save on health care costs, we also have to increase efficiency within the system. This can mean using more technology, but it implies using it in non-wasteful ways.


Finally, in order to save on health care costs, we need praxis: the combination of study and action, research and work. One of the main problems with health reform is that the people with the greatest ideas often lack the power to implement them. There ought to be a way to have the best ideas heard...but best for who? As a starting point, I'd say best for the patient.

January 8, 2009 at 2:15 PM  
Blogger Jay Larson MD said...

Steve Lucas is so correct. Primary care doctors, especially general internists need more time. Time to do an adequate history, time to do an exam, and most importantly time to think. Unfortunatley, there is a problem with patients having more time with their PCP. With the current PCPenia, giving more time to some patients will take away time from other patients.

January 8, 2009 at 3:54 PM  
Blogger Jim Webster MD, MACP said...

It's all about the money isn't it? Whether talking about savings, pay for PCP's, comparative effectiveness, or ins and outs. Clearly what is needed is a complete restructuring of how care is organized and reimbursed. Coordinated multispecialty, physician led, groups with closed end budgeting, EHR's etc. would do it, but would end fee for service, solo practice etc., changes which would clearly be resisted even 'tho the savings would be enormous.
The ACP membership clearly has two choices: We can point fingers and protect our individual turf and kick the problem down the road until the system collapses, or we can lead the solution. I hope we have the courage to start the latter approach.
Jim Webster MACP

January 9, 2009 at 12:07 PM  
Blogger CarsonDoc said...

How much of the expenditure to physicians actually ends up as physician receivables? Who else is receiving money that has been attributed to physicians? It’s this type of misleading data presentation that hurts our cause deeply.

January 9, 2009 at 11:25 PM  

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About the Author

Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog

Email Bob Doherty: TheACPAdvocateblog@acponline.org.

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