LectureA_transcript.pdf - Transcript Health Care Costs and...

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1 Transcript Health Care Costs and Value 1. Welcome to the lecture on Health Care Costs and Value. This is the first lecture companion to Jonas & Kovner’s Health Care Delivery in the United States , Chapter 12. 2. The presentation objectives include: Define value in healthcare Analyze U.S. cost and outcomes Identify causes of reduced value in healthcare Compare and contrast perspectives of value and efforts to improve value Summarize ACA provisions intended to improve value of U.S. healthcare system 3. Value is defined as the health outcomes achieved per dollar spent. As an equation, value equals outcomes over costs. Outcomes, the numerator, are measures of quality that we talked about in a previous lecture. They are the end points, such as mortality or morbidity. Co st, the equation’s denominator, refers to the total healthcare costs. These include the full cycle of care for the patient’s medical condition in the longer - term, not just an individual service. As we’ve discussed, value of healthcare in U.S. is very low, comparatively speaking. 4. So let’s look at the outcomes part of that value equation. Remember that you learned that, comparatively, the U.S. underperforms in many measures of health outcomes. According to the World Health Organization, we are in the top tier for life expectancy at 60 years old (which is good). However, our 23 year life expectancy at 60 years old ranks only thirtieth in the world. 5. Here’s a quality ranking according to the Commonwealth Fund report. As you can see, the United States ranks last overall compared to six other industrialized countries - Australia, Canada, Germany, the Netherlands, New Zealand, and the United Kingdom. 6. But on certain medical services, the U.S. performs really well. For example, in breast cancer survival rates we are second, and with prostate cancer survival, we are first. 7. Now let’s look at the cost part of the value equation. On the costs part of the equation, we are very high … and increasing precipitously. Here our total health care spending as a percentage of GDP which has risen from about 5% to over 15% in less than 30 years. 8. And, we spend much more than other countries in proportion the total economy over 17% of our GDP is spent on health care. Most other comparable countries are around 10% of GDP. 9. So the value of U.S. health care is very low. Why is this a problem? The consequence is that we spend the money on healthcare instead on other priorities. Value is reflected in the question, at
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2 what point do Americans choose to spend less on health care and more on other priorities, such as economic development, housing, education, infrastructure, military, and even public health activities? 10. Next, I will present some of the reasons that reduce value of the healthcare in the United States, including unwarranted variation of care, restricting appropriate access in order to reduce cost, healthcare fraud, waste and abuse, cost-shifting, and the practice of defensive medicine.
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