News and significant developments in health care and health policy
Massive Savings Possible In US Health System
October 21, 2021
The management consulting firm McKinsey & Company has issued a new report estimating that administrative changes and efficiencies could save the US health system more than a quarter trillion dollars.
As noted in a Viewpoint article published in JAMA on October 20:
“The analysis dissected profit and loss statements of individual health care organizations, estimated spending on specific processes, and compared administrative spending in health care with that of other industries. The conclusion of the report is that an estimated $265 billion, or approximately 28% of annual administrative spending, could be saved without compromising quality or access by implementing about 30 interventions that could be carried out in the next 3 years.2 This set of interventions works within the structure of today’s US health care system in order to preserve its market nature (eg, multipayer, multiclinician, multi–health care center) and the associated benefits (eg, world-leading innovation in care delivery).”
According to the article:
“The starting point is 5 functional areas that account for approximately 94% of administrative spending (see eTable in the Supplement). The largest of these is industry-agnostic corporate functions: general administration, human resources, nonclinical information technology, general sales and marketing, and finance. This functional area accounts for an estimated $375 billion of spending annually. The second-largest category is the financial transactions ecosystem, which includes claims processing, revenue cycle management, and prior authorization, accounting for an estimated $200 billion annually. The rest is made up of industry-specific operational functions, such as insurance underwriting (an estimated $135 billion annually), administrative clinical support operations such as case management (an estimated $105 billion annually), and customer and patient services such as call centers (an estimated $80 billion annually).
“For each of these functional focus areas, known interventions that could reduce spending without harming patient care were considered. This meant using a financial and operational perspective for the analysis, but also acknowledging that these interventions could and likely will have broader benefits on other outcomes, such as access, quality, patient experience, physician satisfaction, and equity.”
The report from McKinsey & Co., entitled “Administrative simplification: How to save a quarter-trillion dollars in US healthcare,” is available from the McKinsey website. The publication is a free download however registration is required.
Health Care in the US Compared to Other High-Income Countries
August 6, 2021
On August 4, the Commonwealth Fund issued a new report entitled Mirror, Mirror 2021: Reflecting Poorly / Health Care in the US Compared to Other High-Income Countries.
The report compares health care systems in eleven nations: the United States, Canada, Switzerland, France, Sweden, New Zealand, Germany, the United Kingdom, Australia, the Netherlands, and Norway.
The report’s key findings: “The top-performing countries overall are Norway, the Netherlands, and Australia. The United States ranks last overall, despite spending far more of its gross domestic product on health care. The U.S. ranks last on access to care, administrative efficiency, equity, and health care outcomes, but second on measures of care process.”
The authors conclude: “Four features distinguish top performing countries from the United States: 1) they provide for universal coverage and remove cost barriers; 2) they invest in primary care systems to ensure that high-value services are equitably available in all communities to all people; 3) they reduce administrative burdens that divert time, efforts, and spending from health improvement efforts; and 4) they invest in social services, especially for children and working-age adults.”
Medical Debt in Collections in the US
August 6, 2021
On July 20, JAMA published an article on medical debt in collections in the US entitled “Medical Debt in the US, 2009-2020.”
The researchers found: “In this retrospective analysis of credit reports for a nationally representative 10% panel of individuals, an estimated 17.8% of individuals in the US had medical debt in collections in June 2020 (reflecting care provided prior to the COVID-19 pandemic). Medical debt was highest among individuals who lived in the South and in zip codes in the lowest income deciles and became more concentrated in lower-income communities in states that did not expand Medicaid.”
Additionally, “The analysis shows that Medicaid expansion was associated with reductions in medical debt in collections.”
The researchers also observed that “During the last decade, medical debt has become the largest source of debt in collections. The reductions in nonmedical debt in collections between 2009 and 2020 occurred simultaneously with the economic recovery from the Great Recession, consistent with the well-documented association between unemployment and loan delinquency.14 In contrast, total medical debt in collections decreased by a more modest amount. As a result, as of June 2020 individuals had $39 more in mean medical debt in collections than they had in mean debt in collections from all other sources combined ($429 vs $390), including credit cards, utilities, and phone bills.”
Health Systems Facts is a project of the Real Reporting Foundation. We provide reliable statistics and other data from authoritative sources regarding health systems in the US and several other nations.
Page last updated Oct. 22, 2021 by Doug McVay, Editor.