April showers bring May flowers, and in that vein, it’s certainly been raining conversations about health care spending. Will those conversations take root and blossom into thoughtful solutions? We hope so!

Share your thoughts — drop us a line or tweet using #GoingBelowTheSurface.

Digging Deeper

One of the challenges to a comprehensive conversation about health spending is that it is too easy to have a narrow definition of costs — or a narrow definition of benefits — that skews how we think about value. This month, two critical pieces ask us to think more broadly to help understand why we spend … and what we receive in return.

When Healthy Is Only the Start

When it comes to defining what we seek from life, the World Health Organization’s well-known definition of health — “a state of complete physical, mental, and social well being, and not merely the absence of disease or infirmity” — is only a start. We need to ensure the next level up — the social determinants of health: education, food, transportation. And we need to go even a level beyond that, to flourishing.

The idea of “flourishing” was unpacked in a Journal of the American Medical Association piece this month, offering clinicians a roadmap for discussing with patients not only how they are feeling, but how they are doing in the most profound sense of the word. In many cases, what is valued in the quest for fulfillment goes beyond — or may even be in opposition to — what is valued in health.

Why It Matters: “Flourishing” will differ for every person, and may mean spending less resources on health services and more on other priorities. That idea should be at the center of how patients are treated, but such a perspective also underscores how dangerous one-size-fits-all assessments of value might be. Not only is medical value difficult to define at the societal level, it is even harder to standardize a definition of “flourishing.”

When Hospitals Are Full … of Staff

Venture capitalist Robert Kocher highlighted one of the less-recognized aspects of the continued boom in health care spending — the jump in hospital staffing — in a Health Affairs Blog post. Kocher runs the numbers: hospital staff is growing even as hospital bed occupancy is flat over the past 15 years, life expectancy is falling and medical errors remain a leading cause of mortality.

And the growth isn’t in the number of clinicians: it’s support staff, who now outnumber clinicians 3.6 to 1. Kocher’s argument isn’t solely that there is an over-staffing problem, but that we have a productivity problem: administration that doesn’t improve outcomes — a reality that has to change if the health system is to regain control of costs. “Let’s hope that one of the benefits of big technology companies such as Amazon, Google, and Apple entering health care is that they infect the ecosystem with their 10-times better labor productivity,” he concludes.

Why It Matters: Some parts of the health care system are subject to intense scrutiny around costs and cost effectiveness, but Kocher’s article is a reminder that other elements of the system almost entirely escape such examination. Solving the issue of spiraling health costs may mean promoting efforts to find ways to quantify costs that are now often invisible in such assessments.

What We’re Reading

Recent journal articles are sowing seeds of thought on how to address health care spending on both the macro and micro levels. Check out this month’s picks below:

  • Understanding the Burning Platform of Health Care Spending Growth
    Frist W, Hamburg M. March 21, 2019. Health Affairs Blog
    The co-chairs of the Health Affairs Council on Health Care Spending and Value outline their call for “a national discussion about whether we should — and how we could — constrain what feels like runaway health care spending.”
  • Next Phase in Effective Cost Control in Health Care
    Glickman A, DiMagno SSP, Emanuel EJ. March 7, 2019. JAMA
    Health care spending is slowing, but out-of-pocket costs are still increasing for people accessing services and treatments. The authors offer several recommendations to reduce overall health care spending, such as setting “national and state-level benchmarks for total health care cost growth that are linked to economic growth and population aging” and expanding “the adoption of alternative payment models in the private market,” among others.
  • Maryland Total Cost of Care Model: Transforming Health and Health Care
    Sapra KJ, Wunderlich K, Haft H. March 12, 2019. JAMA
    Through a partnership with the Centers for Medicare & Medicaid Services Innovation Center, the state of Maryland is developing a “total-cost-of-care model [that] will test new ways to reduce costs and improve quality across the health care continuum with an emphasis on population health.” The model builds on Maryland’s earlier program that demonstrated it “could accelerate transformation across payers and generate significant savings.”
  • Overview of Cost-effectiveness Analysis
    Sanders GD, Maciejewski ML, Basu A. March 11, 2019. JAMA
    Using a case study of a multimodal screening program for ovarian cancer, the authors explain how a cost-effectiveness analysis can be interpreted and used as part of health care decision-making.
  • When Is the Price of a Drug Unjust? The Average Lifetime Earnings Standard
    Emanuel EJ, April 2019. Health Affairs
    Dr. Emanuel posits a thought-provoking approach to addressing health care costs: Based on four ethical principles, the average patient’s lifetime earnings should be the standard used to establish an “ethical” drug price.

Dialogues on Health Care Spending

A little over a year after the launch of Going Below The Surface, the health spending conversation is more important now than ever. We checked in with David Cutler, PhD, Otto Eckstein Professor of Applied Economics at Harvard University (@Cutler_econ), who participated in our kick-off conference with Health Affairs in 2018, for his quick take on the topic and the importance of keeping this conversation going.

If we are ever going to address the problem of medical spending in the U.S., we need to go below the surface. We know much more about prices — why they differ so much across organizations and countries, and what we could do about that. I am optimistic that the country will be able to make meaningful changes to bend the cost curve. I look forward to contributing to this effort.”

– David Cutler, Otto Eckstein Professor of Applied Economics at Harvard University

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