Obama wants to reduce healthcare costs! But How?
After the Health Care Executive consortium meeting with Obama, the number 1 action is to reduce healthcare costs! But How?
Sources of increase in cost:
1. Medical Errors
2. Friction with insurance
3. Shortage of skilled workers
4. Rising costs of new therapies
5. Adoption of IT systems and new technology
Medical errors lead to morbidity/mortality and maybe litigation. Adding to costs. So formula is to reduce errors.
Insurance works on the fundamental that say 100 healthy people pay for illness of say < 10 ill people. If the balance begins to tip towards the other side, then the costs begin to spiral. Then the payer wants to pay less and provider naturally wants to safeguard its income. So the formula is to keep the balance right.
Skilled workforce shortage leads to higher wages, over utilization, and increased chances of failed outcomes. So the formula is to train more workers and in the interim fill the shortfall by aliens/immigrants.
New therapies are unavoidable, because there is a constant battle going on between disease and therapies. One trying to outdo the other! So the formula is to be conservative while using new therapies.
Adoption of IT systems helps in optimizing the processes, removes silos, reduces errors and provides information at the point of care. This is exactly what the incentive package intends to do.
Cutting costs is easier said than done because cost for one stakeholder is revenue for another in the healthcare system.