As for "the problem" I've highlited above....I'd like to hear just what that problem is.
At the risk of oversimplification, the root cause of most of what people consider to be "waste" and "inefficiency" tends to be two interrelated things: how the major health care purchasers (insurance companies, employers, and the government) reimburse for care and how how health care providers organize themselves to capture that reimbursement.
Everything flows from that. Unnecessary services people get, duplicated tests, lost information or lack of coordination between doctors treating the same person, use of a higher-cost intervention that doesn't actually add any value over a lower cost alternative, medical errors, lack of incentive to drive out the unexplained variations in care delivery your report focuses on.
Providers get paid to to do discrete things (though not
all things), volume is revenue. Patient health and outcomes have historically never, even in an indirect way, been priced as an output good and, as a result, spending generally isn't correlated with health outcomes. Financial viability for the provider requires churning out more and more health widgets because each has revenue attached to it. Under that system, if you as a provider found a way to deliver better care more efficiently, you would
lose money. Because a patient being or getting healthier more quickly eliminates revenue streams.
For instance, here's a well-known health system
explaining their dilemma a few years back:
Unfortunately, health care providers today are paid for precisely those care delivery episodes that quality improvement seeks to reduce. As Intermountain teams implemented clinical management, clinical outcomes improved and costs fell. However, our payments also fell—often even further than our operating costs. For example, although improvement in Intermountain’s appropriate elective induction rates saved the citizens of Utah more than $50 million per year through reduced payments, Intermountain’s costs fell by only about $41 million. Intermountain thus lost more than $9 million per year in operating margins. Implementing better care required us to invest in education, work-flow redesign, and new data systems. As we improved, the resources to drive further change disappeared.
Improving efficiency and doing right by their patients actually
worsened their financial picture.
Here's Robert Mecklenberg and Gary Kaplan from Virginia Mason Medical Center boiling it down even more succinctly in a
very comprehensive look at these problems the Institute of Medicine put together a few years ago:
The current reimbursement model easily cancels savings achieved by providers when it fails to fund effective low-cost interventions and provides full reimbursement for unnecessary care.
Most of the design features one would bake into a high-performing care delivery system (coordination across doctors and care settings, collaboration, integration, etc) are impeded by the way those payments flow. Function follows form. The way that payment system is set up determines what health care providers can and will do when they provide services to patients.
If it's a smart idea to reach out to and provide additional supports to a patient after a hospital discharge (say, to prevent an easily avoidable readmission a week or two down the road), if there's not a discrete billable service associated with that function, it's not going to happen. Providers have to chase billable units, and those have historically not had much to do with how good the care delivered is or how the patient is doing. That is what's been standing in the way of organizing the delivery system such that it's set up to do all the things everyone knows are better for patients in the long run.
When people talk waste and inefficiency in the health system, this is what they're talking about. The resulting fragmentation is why tests and services get duplicated unnecessarily, this is why things get missed when patients move between providers or care settings.
You say you can't think of another industry that could survive that kind of inefficiency. Indeed! That's because most industries aren't set up to reward inefficiency and penalize efficiency. That's the perverse incentive structure that needed to be addressed. This is where the real action has been for the past five years or so.
