Skip to main content

Is Healthcare A Drag?

Yes, says McKinsey in this article on reducing the drag on the American Economy.  Fixing healthcare is first on the agenda.

GDP growth is not going to happen "...until we free ourselves from four anchors that have acted as a drag on growth in this country for many years now: lagging productivity in healthcare, education, energy and infrastructure, and government services."

[...]

"In 2008, the United States spent $2.3 trillion on healthcare—that’s more than we spent on food, and more than China spent on everything. Adjusted for population, we spend $650 billion more on healthcare than any other developed country, yet our outcomes are no better. Much of this $650 billion in excess costs is driven by characteristics of our system that have proven difficult to change, including unusually high costs for outpatient programs, local market oligopolies, a failure to apply known best practices, price-insensitive patients who don’t see the cost of their healthcare and contribute little toward paying for it, and inefficient healthcare administration.

"Recently passed healthcare reform dramatically expands coverage, but we must now shift our attention to bending the cost curve. With an aging population, the demand for healthcare services will inevitably rise—indeed, even throughout the great recession, unfilled positions in healthcare in the United States have never dropped below 500,000. We need to find ways of meeting current and future demand at lower costs. Unless we do so, we will never be able to make progress on the deficit or overcome such a large “productivity tax” on our economic growth. So how do we achieve a more productive and value-based healthcare system? The way to start is by demanding more transparency, by designing better incentives, and by scaling approaches we already know work across the country."


Comments

Popular posts from this blog

Michael Porter On Health Care Reform

Michael Porter, writing in the New England Journal of Medicine, proposes "A Strategy For Health Care Reform - Toward A Value-Based System." His proposals are fundamental, lucid and right-on, meaning they're sure to be opposed by some parties to the debate, the so-called "Yes, but..." crowd. Most important, in my opinion, is this: "... electronic medical records will enable value improvement, but only if they support integrated care and outcome measurement. Simply automating current delivery practices will be a hugely expensive exercise in futility. Among our highest near-term priorities is to finalize and then continuously update health information technology (HIT) standards that include precise data definitions (for diagnoses and treatments, for example), an architecture for aggregating data for each patient over time and across providers, and protocols for seamless communication among systems. "Finally, consumers must become much mor

Being Disrupted Ain't Fun. Deal With It.

Articles about disrupting healthcare, particularly those analogizing, say, Tesla's example with healthcare's current state, are frequently met with a chorus of (paraphrasing here) "Irrelevant! Cars are easy, healthcare is hard." You know, patients and doctors as examples of "information asymmetry" and all that. Well, let me ask you this: assuming you drive a car with a traditional internal combustion engine, how much do you know about the metallurgy in your car's engine block? I'll bet the answer is: virtually nothing. In fact it's probably less than you know about your own body's GI tract. Yet somehow, every day, us (allegedly) ignorant people buy and drive cars without help from a cadre of experts. Most of us do so and live happily ever after (at least until the warranty expires. Warranties...another thing healthcare could learn from Tesla.) Now, us free range dummies - impatient with information asymmetry - are storming healthcare

My Take On Anthem-Cigna, Big Dumb Companies and the Executives Who Run Them

After last Friday's Appeals Court decision, Anthem's hostile takeover of, er, merger with Cigna has but a faint pulse. Good. Unplug the respirator. Cigna's figured it out but Anthem is like that late-late horror show where the corpse refuses to die. Meanwhile, 150 McKinsey consultants are on standby for post-merger "integration" support. I guess "no deal, no paycheck..." is powerfully motivating to keep the patient alive a while longer. In court, Anthem argued that assembling a $54 billion behemoth is a necessary precondition to sparking all manner of wondrous innovations and delivering $2.4 billion in efficiencies. The basic argument appears to be "We need to double in size to grow a brain. And just imagine all those savings translating directly into lower premiums for employers and consumers."  Stop. Read that paragraph again. Ignore the dubious "lower premiums" argument and focus on the deal's savings. $2.4 billion saved