The way to get Americans healthcare coverage doesn’t need to be about allocating more and more resources to the healthcare system. The way to get all Americans access to affordable healthcare is by cutting out the fat that inflates the cost of healthcare goods and services.
The reason healthcare is such a difficult topic is because we’ve painted it as an issue of needing more resources. The problem with framing it this way is that it starts a tug-of-war between interested groups as to who should foot the bill for said resources. Instead of the arguing about who should give more, we should be focusing on making sure the resources we’ve already committed to healthcare are used efficiently.
The three areas that have the largest potential for increasing efficiency are “avoidable drug-impacted medical costs,” emerging medical procedures, and transparency in purchasing healthcare procedures.
“Avoidable drug-impacted medical costs” are relate to the cost associated with inefficient deployment of prescription drugs. For example, Ravi Ika, CEO of RxAdvance, estimates that Americans waste $350 billion on “avoidable drug-impacted medical costs.” These avoidable costs are often caused by patients forgetting to take their drugs or not understanding their prescription regimen. Patients then end up in the emergency room, hospitalized, and in some cases disabled. All of which could have been avoided, including the medical expenses, if the patient had been reminded to take their drugs or better understood their drug schedule.
Finding ways to efficiently administer prescription drugs so that these “avoidable drug-impacted medical costs” can be reduced should be a significant aspect of the ongoing discussion about healthcare in America.
Emerging medical procedures are new techniques, technology, or surgeries that are developed to replace older, outdated procedures. Implementing emerging medical procedures that are cheaper and safer sounds like a no-brainer when it comes to lowering healthcare costs. But as I wrote in my article last week, the problem is implementing the new procedures in the market. Doctors that have become experts in older, more profitable procedures are unlikely to want to adopt the new ones. Some of the new procedures, being cost effective and safer, end up being reimbursed at very low rates even though they replace expensive procedures. Due to the new procedures being rated at the cost of implementation, they are under-utilized by the market. These new procedures need to be rated so that they are profitable for doctors and create savings compared to older procedures.
Lastly, the purchasing of healthcare services needs to be more transparent.
The way that most healthcare procedures are purchased is through references with no general metric, either monetary or otherwise, to determine the value of said procedure. Plainly, most patients have no idea how much they are going to pay until they get the bill and have no way of shopping around for the same procedure done at other hospitals. This is fundamentally anti-free market and helps raise costs due to the lack of competitive pricing and even fraudulent inflation of the cost of procedures. Yes, people are unlikely to price shop for cancer treatment, but other procedures such as knee replacements would be ideal for price shopping.
Increasing the efficiency of our system is one of the areas that can make the most impact on healthcare with the least amount of political maneuvering. Yes, there may be some resistance to change, but no reasonable argument can be made against increased efficiency in our system. Market forces and practical regulations can create the momentum needed to get our healthcare system into the shape the American people deserve.
Richard S. Bernstein, CEO of Richard S. Bernstein & Associates, Inc., West Palm Beach, is an insurance advisor for high net worth business leaders, families, businesses, municipalities, and charitable organizations. An insurance advisor to many of America’s wealthiest families, he is a writer, trusted local and national media resource and expert speaker on estate planning and health insurance. Visit his website at www.rbernstein.com. To read more of his reports — Click Here Now.
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