Efficiency in the US Health Care System

By September 13, 2018Commentary

We have written before about the misleading nature of many international health systems comparisons, which almost always are used to deride the health care system in the US, but fail to adequately adjust for unique cultural and other factors in this country.  Health economist Victor Fuchs looks at the relative “efficiency” of US health care in an article in the Journal of the American Medical Association.   (JAMA Article)   Efficiency in this context looks at the relationship between the inputs and outputs in regard to an activity or industry or system.  As you can imagine, to define this relationship in a complex system is not easy.  For health care, the question becomes considering what we put into the health system, largely cash, do we get an efficient return.  One way to try to understand this is to compare our system with other ones, which Fuchs does.  This comparison always starts by noting that we spend more, and we do, largely by choice, and by some measures seem to get less, with common examples being shorter life expectancies and more child mortality.  These particular measures are the worst to use in an unadjusted fashion because they are highly dependent on factors that have nothing to do with the quality or cost of health care and everything to do with both cultural and social issues and with personal responsibility or lack thereof.

Fuchs points out that while we use more of and pay more for certain services, by some output measures we may be getting value, or being efficient.  An example he uses is joint replacement surgery.  For most patients this surgery results in significant improved quality of life–less pain, more ability to engage in activities, better mental health.  So we may do more joint replacements in the US and we certainly pay more for them, but our citizens May be deriving value from that choice.  Exogenous morbidity, or those health issues that result from factors other than the actual delivery of health care, such as those social and cultural issues I mentioned, is another way to understand efficiency.  The US has lots of exogenous morbidity–gun violence, drug use, car accidents, poor diets, and on and on.  These ultimately represent failures in personal behavior, buttressed by a political and social culture that doesn’t encourage or incent good behavior.  If you do get shot in the US and survive the incident, you are going to get health care and have outcomes as good or better than any where in the world.  A good example of these personal behavior issues is appropriate weight management.  74% of our adult population is overweight or obese, compared to an average of 54% in ten other high-income countries.  That means more disease and health care spending, but isn’t the fault of the health care system.  We have all kinds of programs to help people with weight issues, but there is no heft behind; there is no penalty to people who don’t take advantage of these programs and actually do something.

In terms of actual care delivery, the US does very well, actually rarely makes mistakes and often delivers appropriate care.  By that measure of “micro-efficiency” it is doing well.  On the macro, or system level, there could be a mis-allocation of resources in the US, and people often use things like we do much imaging or we have too many Cesarean births, but they ignore the larger picture that we use fewer resources such as inpatient hospital days or some kinds of physician visits.  Overall, it isn’t apparent that we have massive resource mis-allocation.  Our system isn’t perfect, but it is refreshing to read a more balanced and fact-based analysis like that done by Fuchs, to understand that we aren’t awful compared to other nations.  How would you like to wait for months or years for some services like people do in Canada, the UK or other “developed” countries.

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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