Steering Clear by Peter G. Peterson

Author:Peter G. Peterson
Language: eng
Format: epub
Publisher: Penguin Group US
Published: 2014-12-17T16:00:00+00:00

THE NEED FOR FUNDAMENTAL CHANGE

The debate over the cost of healthcare often obscures an essential truth: we can only make healthcare more affordable for governments, businesses, families, and individuals by fundamentally changing the way it is delivered, received, and paid for. These underlying changes will necessitate far more than just nibbling around the edges of one or two parts of the healthcare system; it will require finding ways to increase value throughout the entire chain of prevention, diagnosis, treatment, and recovery.

Some people may find the concept of “value” off-putting when it comes to healthcare—they may associate the word with cheapness, or lower quality. But increasing healthcare value should be about getting equal or better care for fewer dollars. Such a goal is, in fact, achievable given the massive inefficiencies in the current system.

As evidence of those massive inefficiencies, consider the extraordinary and inexplicable variations in healthcare procedures and costs around the country, even when costs are adjusted for different demographics and local living costs. According to scholars at the Dartmouth Institute for Health Policy and Clinical Practice, Medicare recipients in some parts of the United States have seven times more back operations and fifteen times more prostate screenings than in others. Women over sixty-five in Grand Forks, North Dakota, are seven times more likely to have a mastectomy for early-stage breast cancer than women in San Francisco. Similarly, the rate of shoulder replacement is ten times higher in Provo, Utah, than in Syracuse, New York.

Regional variations in prices are just as shocking. A 2013 study found that when 122 hospitals were asked how much they would charge for hip-replacement surgery, the list price varied from $11,100 to $125,798.* The National Commission on Physician Payment Reform found that Medicare pays more for procedures done in hospitals than when those same procedures are performed in doctors’ offices. An echocardiogram done in a hospital costs Medicare $450, while the same procedure costs $180 in a physician’s office, according to former Senate majority leader Bill Frist and Dr. Steven Schroeder, cochairs of the commission.

To me, these symptoms suggest fundamental flaws in the way our healthcare sector operates. In my wide array of experience in industry, government, and the nonprofit sector, I have never seen such huge and inexplicable variations in costs. Such waste and inefficiency would not be tolerated in other major American sectors, where there is more of a laserlike focus on value, outcomes, and implementing best practices.

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