In the middle of political distractions that drown out most other news, the persistent bad news on American healthcare continues to roll in. In the past few months, the following has been reported:
Amidst the ongoing "who pays for healthcare debate", we seem to be missing the big picture. Who pays is part of the question; what difference does it make is a much bigger question. Shouldn't we all be upset about healthcare that costs more and delivers less? Shouldn't we all start challenging our politicians, our doctors and ourselves to ask different questions?
A few things to think about:
Access matters, but it isn't the whole issue
While increased access to healthcare proved to offset some mortality, there is little evidence that the expanded access of the ACA really helped make people healthier. This is partly because of the emerging realization that a rather small portion of overall health is determined by interaction with the formal healthcare system. Consider the following diagram:
Only 20% of health outcomes is driven by access to and quality of clinical care. Yet that is where our focus resides.
On the bad news front, much of this is illustrated by the reduction in life expectancy. Ohio is a microcosm of the major effects:
...the areas of the state that have the longest life expectancy tend to be in our suburban communities, which are doing better economically. The shorter life spans are happening in some of our urban communities, certainly, shorter lifespans for African Americans and then in, also, some of our rural and Appalachian counties.
...the overdose death numbers are really driving this. But we think that it's important that we continue to focus on tobacco. Ohio has much higher rates of smoking among adults with low incomes and lower educational levels and for people with mental illness and disabilities. We also know that people who have experienced trauma are much more likely to smoke. You know, imagine, for example, a woman who has lost her son to an overdose death and is now raising her grandchildren with special needs. Quitting smoking is probably not her top priority. In fact, she might see smoking as a way to cope with the stress. So all of these issues are really connected. And we need to be doing more to help people quit and help people struggling with addictions.
Addiction, overdose and suicide are predominately issues of the young, not the old. They are also issues that gather steam outside of the formal healthcare system and are more deeply affected by environmental, economic and educational issues.
On the good news front, some healthcare entities are recognizing this. United Healthcare continues to expand its housing initiative, addressing housing security, one of the primary drivers of poor health. Those enrolled in housing programs have 50% lower healthcare costs than those who do not participate. Healthcare entities focusing on these problems are becoming more and more creative, increasing access to transportation, starting conversations about nutrition and investing in healthcare education.
Big players in healthcare are also creating forums for innovation. For example, HIMSS is sponsoring tech and innovation challenges around rural health and aging. Robert Wood Johnson Foundation has also created initiatives to spur creative thought and energy around these issues. And Accenture has gone as far as appointing a physician lead focusing on these challenges.
Government has a role to play, but likely needs partnership
The focus of the policy debate continues to be on 2 things: who has access (everyone) and who pays ("Medicare for All"). These are important questions but the prior discussion implies that solving the access and pay question may not address the cost, quality or health challenge.
A little recognized fact in the push to a government-driven system: the UK has experienced a similar decrease in life expectancy over the past 2 years. This despite the existence of the notable National Health Service (NHS). Causes:
Government will always be a major funder of healthcare. But the building blocks of a system that works must be:
At i2g Consulting, we encourage people to think differently. Different perspectives lead to different conclusions. Let's start with healthcare.
Everyone knows that the cost of healthcare has gotten out of control. The average cost of employer sponsored healthcare is $20,000 for a family plan. We know that a portion of that money goes drugs, a portion to hospitals, a portion to home health and nursing. About 16% of the money spent on healthcare goes to doctors- approximately $550 billion a year.
To do some simple math, there are about 1 million physicians in the country. So, physician services average about $550,000 per year. Of course, doctors have to pay malpractice insurance, staffing costs, some office costs and other expenses. But, the average physician salary is still around $300,000 per year. Pretty good pay, right?
Right about now, the reader is checking the title of this piece and trying to connect "$300K per year" with "free med school". To better understand this, we need to answer 3 questions:
Why are physicians so well paid?
Physicians aren't necessarily well paid around the world. In the US, Western Europe, Australia and New Zealand, doctors are well compensated. However, in Spain, doctors make about $63,000 while in Mexico, doctors make about $22,000. These differences aren't in line with the difference in cost of living or the size of economies. Doctors in the US are well paid for a few reasons:
The simple answer is, no. In fact, the disparity between 2 doctors who may have gone to the same med school is pretty substantial. There are 2 primary reasons for this:
Medical School Role
By now, it should be obvious that the cost of medical school is part of this equation. The "pot of gold at the end of the rainbow" is one of the reasons that medical schools can charge what they do. The average annual cost of tuition at public schools is more than $30,000; more than $50,000 at private medical schools. But that doesn't capture the full cost. Students generally borrow for living expenses as well and often have to continue to borrow money through a portion of their training. As a result, the median debt for students at private medical schools is $180,000. That number drives behavior for years, from choice of specialty (higher compensation) to choice of location (cities or academic medical centers which pay more) to the actual practice of medicine (more patients, more volume, less personalized care).
This necessary appetite for higher compensation directly affects both the quality and the cost of healthcare in America:
Given everything we've discussed, free medical school may seem an illogical conclusion. An industry that generates $4 trillion in revenue annually seemingly has the money to pay high salaries and absorb high costs. However, the fiscal impact of medical school debt impacts what we pay for healthcare and where we can get healthcare far into the future.
With that in mind, consider this modest proposal:
Jim is the CEO of i2g Consulting