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http://www.nytimes.com/2002/06/11/business/11CARE.html

Study Finds Inefficiency in Health Care

By MILT FREUDENHEIM

arning that a surge in costs threatens to swamp the employer-subsidized health system within a decade, a new study by a group representing large employers says that $390 billion a year is being wasted on outmoded and inefficient medical procedures.

The costs pile up from several sources, according to the study, which is being published today. Among them is the overuse of surgical procedures, tests and medicines; the failure to routinely provide flu and pneumonia vaccines or appropriate tests and follow-up medicines for heart and diabetes patients; and inadequate screening for breast cancer, depression and certain venereal diseases.

"Poor quality in health care costs the typical employer an estimated $1,700 to $2,000 for each covered employee each year," said Jim Mortimer, president of the Midwest Business Group on Health, sponsor of the study. That was about a third of the $4,900 spent for each employee on health care last year.

The Juran Institute, an industrial management consulting firm, estimated the costs, drawing on information from hospitals, health policy experts and published research. The study urges companies and health plans to press for quality improvements by hospitals and doctors.

"You don't see the cost of poor quality until you go look for it," said Joseph A. DeFeo, chief executive of Juran. "If a surgical procedure takes two hours more at one hospital than another, you don't see it. We hope this opens people's eyes."

With health costs soaring again in the double digits and employees shouldering a growing share, the vast majority of companies still pay far more attention to prices than quality when they select a health plan, the report found. Many employers used to think that managed care would control costs. But the report said that the "easy" savings have already been taken.

"Looking ahead, the picture only gets worse," it said. The federal Centers for Medicare and Medicaid Services projects national spending on health care will soar to $2.82 trillion in 2011, almost double last year's $1.42 trillion. If current trends continue, "the cost of poor-quality care will likely exceed $1 trillion by 2011," the study said.

"Further emphasis on low price will likely yield few benefits today," it added, especially because many hospitals have merged, thereby increasing their ability to bargain for increases in fees.

The report urges employers and other purchasers of health care to select and reward doctors and hospitals that switch to more efficient processes and "best" practices.

There is plenty of resistance to change. Robert Berenson, a former Medicare official, said that hospital lobbyists had blocked proposals to publicize medical centers that report the best results. "The providers haven't bought into this stuff," he said. "The American Medical Association doesn't get it."

Carmela Coyle, a senior vice president of the American Hospital Association, said that comparing hospitals was "a very complex science" because of the differences in types of patients being treated. She said the association supported comparisons as long as they were "meaningful, reliable and helpful to consumers."

Dr. Yank D. Coble, president-elect of the medical association, said, "it is the patient, with the help of their physician who should be the primary decider, not a purchaser or institution or organization."

The report also said that too many specialist physicians in a city could lead to higher health costs. Patients typically see a doctor more often in those places, said Dr. John E. Wennberg, who has studied geographic disparities. "Doctors fill offices with revisits, they tell you to come back," he said. But patients who see specialists frequently do not live any longer than other people, he added.

The evidence for savings from demanding high-quality care is still sparse, and most employers have been slow to bet their money on the notion that improving quality will pay for itself. But many big employers believe in the strategy.

Diane Bechel, a health care expert at the Ford Motor Company, estimated that the company saved more than $5,000 on care for each of 500 employees, retirees and family members who used hospitals that met certain standards, including a lot of experience with certain surgical procedures and good communications with patients.

In parts of New York State, Verizon Communications, I.B.M., Xerox and Empire Blue Cross recently started to pay 4 percent bonuses for employee care to a handful of hospitals that have met quality and patient safety goals for prescription drug orders and intensive care units.

Eight hospitals — including New York University Hospitals Center in Manhattan, Maimonides Medical Center in Brooklyn, Montefiore Medical Center in the Bronx and several in the city-owned Health and Hospitals system — are receiving the bonuses. Several more are expected to qualify soon.

I.B.M., General Motors and Xerox are among companies that have long offered lower monthly premiums to employees who choose health plans with the best quality results. But recently, this system has brought only limited success, said Barbara Brickmeier, benefits director at I.B.M. "You really need to get down to the provider level," she said.

Blue Cross of California pays groups of doctors 60 cents a month extra for each patient if they provide services including regularly scheduled mammograms, eye exams for members with diabetes and appropriate drugs after heart attacks.

Oxford Health Plans recently told primary care physicians in New Jersey that they could receive fees up to 10 percent higher if they met quality goals — for example, 90 percent of their Oxford patients had appropriate mammograms. Dr. Alan Muney, executive vice president, said that in October the bonus system would be expanded to primary care doctors and specialists in New York and Connecticut as well as New Jersey.
 

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ALL INFORMATION, DATA, AND MATERIAL CONTAINED, PRESENTED, OR PROVIDED HERE IS FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT TO BE CONSTRUED AS REFLECTING THE KNOWLEDGE OR OPINIONS OF THE PUBLISHER, AND IS NOT TO BE CONSTRUED OR INTENDED AS PROVIDING MEDICAL OR LEGAL ADVICE.  THE DECISION WHETHER OR NOT TO VACCINATE IS AN IMPORTANT AND COMPLEX ISSUE AND SHOULD BE MADE BY YOU, AND YOU ALONE, IN CONSULTATION WITH YOUR HEALTH CARE PROVIDER.