Cost Saving Suggestions

By June 9, 2009Commentary

Several prominent health industry segments have issued a follow-up statement identifying more specifically where they believe health care cost savings can be achieved. (Industry Statement) The statement takes the form of a group cover letter to the President, with individual letters from each segment detailing their cost saving ideas.  The groups include the American Hospital Association, the American Medical Association, America’s Health Insurance Plans, AdvaMed, which represents medical device makers, PhRMA, which represents drug manufacturers and the Service Employees International Union.  The four primary objectives that the cover letter lists are ensuring appropriate utilization of care; reducing the input costs of providing care, streamlining the claims submission and processing cycle and better managing chronic disease.  The group estimates that between one and 1.73 trillion dollars could be saved over ten years.  Interestingly, none of these savings are attributed to reducing input costs.

The AMA suggested that it could help save money by avoiding hospital re-admissions, working on care guidelines that would reduce utilization in areas such as back pain, treatment of coronary artery disease, induction of labor, treatment of sinusitis, diagnostic imaging and medication reconciliation programs.  The AHA said it would facilitate best practice approaches and quality improvement programs, including reducing surgical infections and central line blood stream infections, the spread of methicillin-resistant staph, clostridium difficile infections, ventilator-associated pneumonia, catheter-associated infections, adverse drug events and pressure ulcers.  Longer term, the association identified opportunities in improving discharge processes and care transitions; better use of health information technology, more palliative and hospice care, preventing patient falls, improving perinatal care and reducing supply costs.

The insurance industry proposed standardizing and automating key administrative processes, creation of uniform new market rules utilizing insurance exchanges, aggregation of  physician performance data to evaluate care, educating Americans on health issues and empowering them with personal health records.  The drug association first noted, correctly, that the growth rate in drug spending has recently been well below the overall rate of spending growth.  It goes on to suggest that better care guidelines to ensure appropriate use of drugs can create savings in other cost areas, such as hospitalizations, and that pay-for-performance programs should incentivize treatment consistent with such guidelines.  It also wants better systems to ensure compliance with treatment recommendations, use of medication therapy management techniques and more comparative effectiveness research.  Finally, it would like to see more initiatives to make drug development go faster and be less expensive, acceleration of use of personalized medicine and better drug coverage for all.  AdvaMed suggested that its products also would provide a lot of savings if used more and therefore encouraged more quality metrics around appropriate use.  It also encouraged efforts to reduce in-hospital medical errors.

Finally, the SEIU, which represents many health care workers, supported the expansion of home and community based services, instead of institutionalization; implementation of Medicare and Medicaid Chronic Care and Prevention initiatives using community health teams; and post-acute care payment reform.

It is hard to know where to start to comment on such detailed and specific, as well as credible, suggestions for how to save on health care costs, much less address the staggering level of innovation in the ideas presented.  Suffice it to say that none of the industry segments appears to be recommending that their own revenue be reduced and that each of their sets of suggestions would be beneficial to their members.  And in fairness, there is no reason to expect anything else because the job of these associations is to look out for the best interests of their member companies.  They will engage in and facilitate health reform efforts up to the point where any significant negative financial impact may accrue to their members.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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