Middle Atlantic Actuarial Club September 17, 2009 Baltimore, MD

Shannon Brownlee, MS

Senior Research Fellow, New America Foundation

Overtreated: Why Too Much Medicine is Making Us Sicker and Poorer

Source: CBO

Source: CBO

MEDICARE

Source: WHO

POOR VALUE FOR THE $$$

$$$$

$8,600 – 14,300

$7,800 – 8,600

$7,200 – 7,800

$6,600 – 7,200

$5,280 – 6,600

Not populated

Source: Dartmouth Atlas

$8,600 – 14,300

$7,800 – 8,600

$7,200 – 7,800

$6,600 – 7,200

$5,280 – 6,600

Not populated

Medicare Spending per Beneficiary, 2005

pioneering research on variation in the delivery of healthcare services

Health Affairs: most influential health policy researcher of the past 25 years

10

John Wennberg, MD, MPH., Founder, Center for Evaluative Clinical Sciences at Dartmouth Medical School

63%12%

25%

Preference Sensitive Care

Effective Care

Supply Sensitive Care

Source: John E. Wennberg and Dartmouth Atlas

$8,600 – 14,300

$7,800 – 8,600

$7,200 – 7,800

$6,600 – 7,200

$5,280 – 6,600

Not populated

Source: Dartmouth Atlas

$8,600 – 14,300

$7,800 – 8,600

$7,200 – 7,800

$6,600 – 7,200

$5,280 – 6,600

Not populated

Medicare Spending per Beneficiary, 2005

Well Bob, it looks like a paper cut, but just to be sure, let’s do lots of tests.

What drives utilization?

Source: 2006 Dartmouth AtlasNote: Each dot represents Medicare spending in a single hospital referral region.

Relationship Between Prevalence of Severe Chronic Illness and Medicare Parts A and B Reimbursements per Enrollee (2000-01)

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

Inp

atie

nt s

ec

to

r s

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Source: Dartmouth Atlas

Medicare Spending During Inpatient Hospitalizations per Decedent in the Last Two Years of Life Among Patients with At Least One of Nine Chronic Conditions

Ask your doctor if taking a pill to solve all your problems is right for you.

$8,600 – 14,300

$7,800 – 8,600

$7,200 – 7,800

$6,600 – 7,200

$5,280 – 6,600

Not populated

Medicare Spending per Beneficiary, 2005

Source: Dartmouth Atlas

$8,600 – 14,300

$7,800 – 8,600

$7,200 – 7,800

$6,600 – 7,200

$5,280 – 6,600

Not populated

1. Not defensive medicine -- 15 % of variation

2. Not patient demand3. Not technology arms race4. Local practice patterns5. Local capacity

The Association Between Hospital Beds per 1,000 Residents (1996) and Discharges per 1,000 Medicare Enrollees (1995-96)

Hospital- Total FTE physician

labor inputs per 1,000 decedents

Total FTE specialist

labor inputs per

1,000 decedents

Hospital Bed inputs per 1,000 decedents

ICU Bed inputs per

1,000 decedents

Inpatient sector

reimburs-ments per decedent

NEW HAVEN 22 10 74 16 $43,324

BOS-TON 29 12 72 23 $50,156

MAYO 20 9 58 18 $34,371

INTMT. 20 8 46 14 $23,462Source: Dartmouth Atlas

Variation Among Teaching Hospitals in Resource Allocation per Chronically Ill Medicare Decedent in the Last Two Years of Life (2001-2005)

Does higher utilization and higher spending buy better outcomes?

1. Lower quality2. More hospitalizations, tests, drugs,

procedures; same volume of elective surgery

3. Worse communication between physicians

4. Lower patient satisfaction5. Worse access to care; longer waiting

times6. Worse coordination of care7. Higher mortality

Source: 2008 Dartmouth Atlas of Chronic Care

$8,600 – 14,300

$7,800 – 8,600

$7,200 – 7,800

$6,600 – 7,200

$5,280 – 6,600

Not populated

Source: Dartmouth Atlas

$8,600 – 14,300

$7,800 – 8,600

$7,200 – 7,800

$6,600 – 7,200

$5,280 – 6,600

Not populated

Medicare Spending per Beneficiary, 2005

1. $600-$800 Billion overtreatment

2. 30,000 premature deaths

Fisher E et al. N Engl J Med 2009;360:849-852

Annual Growth Rates of per Capita Medicare Spending in Five U.S. Hospital-Referral Regions, 1992-2006

1. $600-$800 Billion overtreatment

2. 30,000 premature deaths

3. Inefficient, expensive markets are getting more so faster

4. Models for greater efficiency – Mayo, Kaiser, Billings, Geisinger

5. Other models – direct medical practice

1. MEDICARE: penalties, shared savings for organizing (ACO), bundled payments, direct medical practice

2. PRIVATE PAYERS: bundled payments, shared savings, direct medical practice

WE NEED DATA FROM BOTH MEDICARE AND PRIVATE PAYERS :

1. Utilization per 1,000 population

2. In real time

THE HEALTH CARE TRAIN WRECK