10 drivers of healthcare cost
DESCRIPTION
In this presentation, we highlight 10 drivers of healthcare costs in the US. The US spends over $2.6 trillion on healthcare or about 18% of GDP. Other nations are able to provide healthcare services for considerably less: U.K. – 9.6% GDP, Germany – 11.6% GDP and Japan – 9.5% GDP. Despite our high level of spending on healthcare, the US lags in healthcare quality. This level healthcare spending is an unsustainable burden on the United States economy, more specifically businesses, employees and consumers. Businesses who provide health insurance are less competitive internationally, employees experience stagnation of wages and consumers spend more on healthcare and less on other necessities.TRANSCRIPT
10 Drivers of Healthcare Costs
1The Fee-for-Service (FFS) model of paying for medical servicescreates an incentive to perform a high volume of tests and services, regardless of their necessity.
Fee-for-Service Reimbursement
2 Fragmentation of Care Delivery
Providers lack an incentive andthe means to coordinate with other providers when treating patients. This fragmentation of care leads to inefficiencies, over-treatment and greater potential for medical errors.
3 Administrative Burden
The complexity of the US healthcare system produces a heavy administrative workload and demand for resources thatleads to higher overall costs.
The aging of the baby boomer population combined with longer life spans means that there will be more elderly to care for. The elderly require costly resources and careincluding inpatient hospital stays, hospice care, outpatient care, home health and nursing facility care.
4 Population Aging
5 Chronic Disease & Lifestyle Choices
Chronic diseases (many of which are preventable) utilize high volumes of a complex mix of services, resulting in about 84% of US healthcare expenditures.
6Utilizing new technology when there are alternatives that are less costly and equally effectivedrives up healthcare spending. Advanced technology’s true value is realized in its ability to improve patient outcomes and efficiency.
Utilization of MedicalTechnology
7Information on cost and qualityof medical services is lacking ornot easily available to health-care consumers. This hasadverse effects on competition, cost and quality of services.
Lack of Transparency inCost & Quality
8Consolidation of healthcare providers and organizations can sometimes lead to competitionbeing drastically reduces and higher prices being charged for medical services.
Market Competition &Consolidation
The litigious society in which we live combined with the practice of defensive medicine ends up costing consumers billions in healthcare costs. Fraud is also rampant in our healthcare system at a cost of $80 billion per year.
9 Medical Malpractice Fraud & Abuse
10 Primary Care Shortage
The shortage of primary care physicians drives patients to specialists or worse, to emer-gency departments for their pri-mary care needs. Those who do not utilize primary care may miss out on detecting and treating a condition before it becomes a serious problem.
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