"Many Experts Say Health-Care System Inefficient, Wasteful"

A Washington Post article today notes that many experts complain that our current system is riddled with waste and inefficiency.   The CEO of Virginia Mason in Seattle notes that improving the production system in hospitals and ambulatory facilities can save substantial resources, and argues that fee for service reimbursement is a large part of the problem.  Reed Tuckson, an executive at United Health Care, and Don Berwick, CEO of Institute for HealthCare Improvement, both note that investments in prevention make sense.   

The article quotes that authors of the Dartmouth Atlas that 30% of all health care expenditures represent waste.   Peter Orszag, now head of the Congressional Budget Office and soon to be Obama's director of the Office of Management and Budget, imagines how great it would be to redirect just a third of that to more useful care.  

Unfortunately, many of the "wasted" dollars actually represent billings rather than real incremental cost.  For instance, today's Boston Globe includes a survey showing that 14% of Massachusetts residents use emergency departments because their primary doctors are not available.  That doesn't mean, however, that every one of those dollars spent on emergency departments can actually be saved.  Every time we prevent a single emergency department visit, we don't really save $500, since the resource cost of running the emergency department probably doesn't decrease by more than a few dollars for each prevented visit, until enough are prevented to decrease staffing.   We also can't forget the substitute cost of the primary care visit. It's less expensive than an emergency department visit, but it is not without cost altogether. 

Of course, every dollar of waste is also revenue for some element of the health care complex.   It's mighty hard to pry revenue away from hospitals, doctors, ancillary providers, pharmaceutical companies, device manufacturers, or pretty much anyone else!