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Research has established that as much as a quarter of American health spending is waste.
There are two basic ways of tackling it, by focusing narrowly on specific types of patients or on the system as a whole. The patient-centered approach starts with this fact: A relatively small group of patients — 5 percent — account for half of all health spending.
It’s widely believed that making so-called super-utilizers even a little healthier — for example, giving them extra help once they’re out of the hospital to prevent a quick return there — would yield substantial savings. This idea, based on some weak evidence, has received considerable media attention and government support.
A rigorous study, published Wednesday, makes clear it’s not so easy. In fact, the study’s results are likely to be viewed by many as a major disappointment. Yet they also help guide us to what may be better strategies for cutting waste.
The study, published in the New England Journal of Medicine, was a big test of the people-focused approach: a randomized trial of a program in Camden, N.J., to reduce super-utilizer spending. About 800 very sick patients were randomly assigned into the program or to usual care. (The program has since expanded to other cities.)
To try to avoid a repeat hospitalization, the program provided an unusually large amount of care to very sick patients after they left the hospital, including from registered nurses, social workers, licensed practical nurses, community health workers and health coaches.
In the three months after a hospital stay, an average patient in the program received 7.6 home visits and 8.8 phone calls from staff. In addition, program staff went along on patients’ visits to physicians, which averaged 2.5 per person.
The result of all this effort?
For the six months after randomization, patients in the treatment and control groups had about the same chance of returning to the hospital, the same number of return hospital visits, the same amount of time spent in the hospital over all, and the same hospital costs. (It’s possible these measures differed across groups in small ways the study wasn’t large enough to detect.)
That doesn’t mean it’s impossible to reduce readmissions or health care spending of targeted patients. Some previous randomized evaluations of other programs have found reductions in hospital readmissions of 15 percent to 45 percent, and in some cases reduced spending.
But it’s important to understand the difference between those studies and the Camden one.
“The Camden model targets a population that has a much more varied set of medical needs and social complexity, and with higher health care spending, than the existing successful models,” said Amy Finkelstein, a health economist at M.I.T. and a co-author of the Camden study.
The other approach to fighting wasteful medical spending starts with looking at health care as a system of goods and services: medications and surgical procedures, administrative processes and physical infrastructure. Some of these enhance health and others don’t, while some of it costs more than its benefits warrant. If you can identify wasteful goods and services and deliver effective care at lower prices, you can make the system more efficient for everyone.
This idea is behind many policies that change how Medicare pays for care.
One advantage of the systemic approach is that it’s easier to replicate than programs focused on super-utilizers. If eliminating or replacing a drug, procedure or administrative process means that spending at a hospital goes down, it’s relatively simple to adopt that change at other hospitals. But conceptually simple doesn’t mean easy in practice.
“Directly and systematically reducing wasteful care is hard because the most successful strategies threaten the revenue of dominant health care providers,” said Michael McWilliams, a professor at Harvard Medical School and a general internist with Brigham and Women’s Hospital. “One person’s waste is another’s income.”
This may be why big health systems are resistant to systemic change and prefer patient-focused approaches. Dr. McWilliams and Aaron Schwartz, a resident at Brigham and Women’s Hospital, wrote a commentary in the New England Journal of Medicine arguing in favor of a systems view of cost cutting. A focus only on the relatively few high spenders could miss a lot of waste, it said. Even though the rest of the population may use less care than super-utilizers, collectively they could account for as much or more waste.
Another concern is that when cuts are made to health spending, patients could receive lower-quality care and might have worse experiences. Cutting waste without harming quality is hard but not impossible. Some Medicare programs and private insurer initiatives in recent years have succeeded in doing so, if only a little.
The people-focused approach, on the other hand, is more likely to improve some patients’ experience because it involves additional preventive care. This could manifest itself as less pain or anxiety, and more “satisfaction” with care. But saving money this way requires accurate predictions of who is likelier to use a disproportionately large amount of health care. We don’t yet know how to reliably do this for enough people to make the approach efficient.
“The prevention myth is that it necessarily saves money,” said Sherry Glied, a health economist and dean and professor at the Wagner School of Public Service at N.Y.U. “Usually you need to provide preventive services to many people to avoid one bad outcome, and that makes it more expensive over all, even if it is better care.”
In a commentary on the Health Affairs blog, she also points out that high-cost patients are not all alike. They require different mixes of services to avoid costly outcomes. That calls for a lot of fine-tuning, which itself costs money and poses coordination challenges. It’s also harder to replicate.
The Camden study, unfortunately, did not measure patient experience, which might have improved. If patients did better in some ways and at no statistically significant additional cost, that could make its efforts worthwhile, even cost-effective.
That’s what an exclusive focus on reducing spending misses. The answer isn’t necessarily to pick a patient- or system-focused approach to reforming health care, but to do both effectively.
