30 percent of medical bills are waste, Utah company trying to find where it goes
(KUTV) The US has a $ 1 trillion dollar problem in the form of healthcare. Every year, Americans spend $3 trillion on health care, but 30 percent, or $1 trillion, is wasted. Where the waste is, and how to cut the fat is anyone's guess.
The cost of health care is enough to cause a heart attack in and of itself, and now with the Affordable Care Act is forcing a conversation on pricing. That may also mean hospitals can no longer keep billing for those heart attacks in the same way they always have.
In Utah there are multiple efforts in motion to help push down the cost of health care across the country. Efforts at University of Utah Hospital to find actual hospital costs in 2015 yielded quick results. Last year, as prices at hospitals nationwide rose by 2.9 percent, costs went down at University Hospital by .5 percent.
Utah is ahead of the national curve in wanting answers that many assume we already have. In a September, a New York Times article, the shocking admission came.
"Most businesses know the cost of everything that goes into producing what they sell essential information for setting prices. Medicine is different. Hospitals know what they are paid by insurers, but it bears little relationship to their costs," it said.
With costs of health care rising faster than inflation, there is no doubt changes need to be made. Intermountain Medical Center is also working on tracking spending inside its hospitals and doctors' offices. Only those with the leanest bottom lines and best outcomes may survive.\
Health Catalyst, a Utah company, is also in the mix trying to lower health care costs through software that would track healthcare expenditures, improve quality, add efficiency and lower costs for millions of Americans.
Health Catalyst CEO Dan Burton says Utah is ahead of the game, adding that competition in this field is "good for the industry" because we have no options today.
"The problem we are trying to solve is waste" said Burton.
How much it costs for an x-ray, surgery or simple treatment of strep throat is anyone's guess.
"It is surprising until you step back to understand how the economic well has worked for a number of decades."
No other business in the world operates like U.S. Health care, where no one, not the doctor, the hospital or the patient really knows how much a procedure like a knee replacement costs. Burton, who is working with his company to find out, says you could get an answer ranging from $5,000 to 100,000 and without a differentiation in outcome with the price.
Healthcare consumers currently can't compare prices, or if the price they're paying will yield a better outcome. Patients most often go where their insurance sends them.
That Burton says "is why you see your premiums going up 15 and 20 percent."
Salt Lake's Health Catalyst just signed a deal with UPMC, a Pennsylvania hospital system, with hopes of finding a way to help other hospitals start tracking and cutting costs next year. The two are working together to create mobile devices and software to track costs in medical care. Burton said they need to know "when the nurse comes into the hospital room with the patient," and when the nurse leaves. Time spent with patients has never been tracked before.
If you ask Burton, hospitals and care centers that want to survive will have to make changes over the next 20 years. They will have to figure out where the waste of 30 percent per year is, and figure out how to get rid of it.
Change on the home front, he says, will come slowly, "instead of your premium going up 20 percent, it will go at 10 percent and then five percent" and there may be situations "10 to 15 years from now where your premiums actually go down.
The New York Times, tracking health care costs shows, change is possible.
"Americans pay, on average, about four times as much for a hip replacement as patients in Switzerland or France and more than three times as much for a caesarean section as those in New Zealand or Britain. The average price for Nasonex, a common nasal spray for allergies, is $108 in the United States compared with $21 in Spain. The costs of hospital stays here are about triple those in other developed countries, even though they last no longer, according to a recent report by the Commonwealth Fund, a foundation that studies health policy," the article said.
Expect to hear more about such research in the years to come.