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6 ways to save money in health care: Berwick

Dr. Donald Berwick, a health-care quality improvement guru, says there are six ways that waste in the U.S. system can be cut -- offering better care, to boot.

Berwick, founder of theInstitute for Healthcare Improvementand former chief of Medicare and Medicaid Services, says that tackling those six problems could cut 20 to 30 percent of U.S. health-care spending in the public and private sector.

Since current spending is estimated at $2.5 trillion a year, such a feat would save hundreds of billions, if he is correct. A New York Timesinterview with Berwick led to a calculation that Medicare and Medicaid savings alone would be $150 billion to $250 billion.

Here are the six wasteful problems that Berwick identified:

1) Lack of coordination.

When a patient moves from one health-care setting to another -- such as hospital to home or nursing home -- communication often suffers.

For example, the patient may not clearly understand instructions and think the prescribed blood-thinner is to be taken in addition to the one at home.

“People need seamless journeys in health care,” Berwick said.

2) Process failures.

Patients suffer and costs go up when someone on a health-care team forgets to do something, such as check the patient's wristband, or makes a mistake, such as giving an overdose of medication.

No one means to do it, but no one is perfect, either. That's why IHI suggests cultivating a culture of patient safety, in which caregivers feel free to point out mistakes -- including their own -- and find ways to prevent them.

Some IHI participating hospitals report that such steps have cut their infection rates by more than half – even down to zero in some categories.

3) Overtreatment. Most over-testing and over-treatment isn’t the result of greed, Berwick said. Rather, the excess stems from over-cautiousness, habit, or the desire to do something -- anything  -- to help.

But over-testing and over-treating aren't just unnecessary expenses; often, they result in real harm, Berwick said. So can admitting a patient to the hospital instead of finding a way to treat at home, with proper support.

Examples of treatments that many clinicians say are overdone include C-sections, back surgery for a pain that would get better on its own with time, and prescribing an antibiotic for a virus.

Not everyone agrees on the rules for testing, though. For example, a panel that recommended cutting back on mammograms for women in their 40s drew a loud outcry from breast-cancer patients.

Similarly, not all agree with the current argument that PSA screening for prostate cancer needs to be scaled back, saying it leads to unnecessary invasive treatment for tumors that would not have been fatal.

4) Administrative complexity.

Both public agencies and private health institutions require unnecessary duplication of effort.

Berwick said that when Pres. Obama told his agency chiefs to attack that problem, the Centers for Medicare and Medicaid Services identified scores of regulations that weren’t needed and stopped them.

He said auditors calculated the savings at CMS alone at around $11 billion, he said. “I think there’s plenty more of that,” he said.

5) Pricing failures.

For decades, Medicare paid inflated prices for products and services. In the past few years, with new authority from Congress, CMS has conducted competitive bidding for some types of medical equipment, such as wheelchairs, in areas prone to severe overspending. Two of those metro areas were in Florida – metro Miami and Orlando.

While there were complaints from some vendors who lost contracts, there were very few from patients, Berwick said. Taking the program national – a move that is now under way – is predicted to save $28 billion, he said, about $11 billion of that going to beneficiaries.

6) Fraud and abuse.

Berwick said that like most honest doctors, he underestimated the extent of the outright fraud and abuses such as upcoding -- billing a simple treatment as one that is complex and pays more -- before he entered government.

He discovered that for every dollar spent on investigation and prosecution, government agencies got back $6 -- a return on investment of 6 to 1. 

The Affordable Care Act gave Medicare authority to prescreen physicians, home-health agencies, equipment suppliers and others who apply to participate. And the Center for Program Integrity can use "predictive analytics" to flag a questionable payment before it gets sent. 
-- Health News Florida is an independent online publication dedicated to public-interest journalism. Contact Editor Carol Gentry at 727-410-3266 orby e-mail.


Carol Gentry, founder and special correspondent of Health News Florida, has four decades of experience covering health finance and policy, with an emphasis on consumer education and protection.