Filling in Healthcare’s Money Pit

The Atlanta Journal-Constitution ran a print article earlier this month entitled “Health care called a money pit,” bringing to mind the similarly titled movie of the mid-80s that detailed a couple’s near split over struggles with never-ending home renovations. Tom Hanks and Shelley Long certainly brought levity to the predicament of high-cost, low-quality construction that resulted in extremely unsatisfied customers. It’s no stretch to see parallels to healthcare’s current situation regarding cost, treatment, and patient outcomes and satisfaction.

The AJC story’s statistics regarding the $750 billion a year squandered by today’s health system won’t bring much of a smile to anyone’s face. The Institute of Medicine’s (IOM’s) one-year estimate of healthcare waste is “more than the Pentagon budget and more than enough to care for the uninsured,” and combines:

  • Unnecessary services worth $210 billion
  • Inefficient delivery of care worth $130 billion
  • Excess administrative costs worth $190 billion
  • Inflated process worth $105 billion
  • Prevention failures worth $55 billion
  • Fraud worth $75 billion

A Healthcare Finance News article also released this month dives a bit deeper, pinpointing “8 Kinds of Waste Driving Healthcare Costs:”

  • Transportation
  • Inventory
  • Unnecessary motions
  • Waiting
  • Overproducing
  • Processing Waste
  • Defects
  • Unused human potential

What neither item specifically points out is the fact that hospitals are providing more and more uncompensated care – the result of un- or under-insured patients seeking care in emergency rooms rather than through a traditional physician office visit. Perhaps this can be lumped into the “Inefficient delivery of care” column.

However you want to categorize it, Georgia is seeing its fair share of uncompensated care. According to a Georgia Hospital Association report issued earlier this year, hospitals in the state “provided more than $1.5 billion in uncompensated care in 2009, an increase of more than $27 million from 2008 and a whopping $116 million jump from 2007.”

Now, $1.5 billion seems like a drop in the bucket when up against a number like $750 billion, but it will have very real consequences according to the GHA, such as the closure of hospitals in rural Georgia because they can’t afford to keep their doors open.

So what’s the answer? How can the healthcare industry fill in this money pit? Seems to me that before we start rationing care, as some have suggested, we need to make sure we’re providing affordable, accessible care. Before we begin to talk about second opinions, let’s talk about giving people access to a first they can afford. The healthcare insurance industry will likely play a big part in this shift, wielding the biggest shovel, so to speak.

Blue Cross Blue Shield of Georgia, in response to the Supreme Court ruling on the Patient Protection and Affordable Care Act, announced it will continue to help improve the system by “advancing our partnership with primary care physicians, hospitals and health systems … that we believe will … potentially reduce the trend in overall medical costs by as much as 15-20 percent by 2015,” and “providing resources to help members find high quality, high value physicians and health care facilities.”

Though they mention nothing about reducing premiums up front or focusing on the under-insured, at least they’re well aware of the problem. (Fellow Healthflock bogger Bill Custer does a good job of digging into Georgia’s health insurance nitty gritty in his latest blog.) Now if we could just put a financial and clinical team together to fill in this pit with affordable, accessible treatment and improved outcomes.

3 comments Add your comment


September 23rd, 2012
12:15 am

A Very Good Place to start is with the Governor’s OFFICE. A reversal of the medicaid expansion would go a long way into expanding medical care for those among us who are in need of it the most.

Kelly Crofton

October 1st, 2012
8:02 am
Oh! such a huge amount is going away, Government should take proper steps to overcome this pits.

icon pack

October 8th, 2012
11:43 pm