HealthLawProf Blog

Editor: Katharine Van Tassel
Concordia University School of Law

Wednesday, September 12, 2012

On Waste

"Waste" (according to the Oxford dictionaries online): to use or expend carelessly, extravagantly, or to no purpose; to become progressively weaker and more emaciated; to kill (North American usage), to devastate or ruin; eliminated or discarded material; unwanted or unusable material; a large area of barren, typically uninhabited land; damage to an estate caused by neglect.  We hear a great deal about "waste" as a contributor to costs of health care in the US, but it is not always clear what sense of "waste" any particular commentator has in mind. Consider three news stories within the past week. 

First, the Institute of Medicine issued a report calculating, in the description of the NY Times report, that 30% of health care expenditures in the US--some $750 billion annually--are "waste." The Report, Best Care at Lower Cost: The Path to Continuously Learning Health Care in America (Sept. 6, 2012), begins with an epigraph from Goethe: 
     "Knowing is not enough; we must apply. 
      Willing is not enough; we must do."
It defends a "learning healthcare system," a system that dramatically enhances the knowledge base used for guidance of care.  Such a system would engage patients, re-align incentives, and continually improve care in light of the best available evidence.  The report demonstrates clearly that there are many ways in which US health care could do better, spending less, avoiding errors, and improving care in line with patients' preferences.  But waste?--perhaps, in the sense of careless, extravagant, or purposeless expenditure.  Waste in the sense of outright fraud is estimated to contribute only $75 billion--10%--of the $750 billion in excess expenditures.  The only lower category is "missed prevention opportunities" ($55 billion) and the highest category (at $210 billion) is "unnecessary services" (use beyond levels established by evidence, discretionary use beyond benchmarks, and unnecessary choice of higher-cost services.  Insurance inefficiencies, at $190 million, are the next highest culprit identified by the IOM.

Second, the Dartmouth Atlas just published a study in JAMA analyzing the cost savings associated with accountable care organizations.  Although cost savings overall were estimated to be "modest," for one group of beneficiaries, those dually eligible for both Medicaid and Medicare, savings were significant.  See Colla et al., Spending Differences Associated with the Medicare Physician Group Practice Demonstration (Sept. 12, 2012), Neither the article nor the accompanying press release use the term "waste"--but interestingly several news clips featuring it showed up in a lexis search using the terms "Dartmouth and accountable and waste" . . .

Finally, the US Preventive Services Task Force released another report on the evidence of screening--this time for ovarian cancer.  The Task Force gave routine screening a "D" grade, judging that for women without particular indications the screening causes more overall harm than benefits when weighing the harmful interventions associated with false positive results against the benefits of earlier detection.  Here, too, a lexis search (for "ovarian and screening and waste") turned up a host of newspaper reports.  Some of these framed the task force report as illustrating the "lack" of good options for women.  Many noted that one third of physicians recommend routine screening and the likelihood that this practice will continue.  In these discussions, to the extent that "waste" is used, it reflects overall cost/benefit judgments about screening in a low risk population.

So what is the upshot of these observations?  "Waste" is a catchy word: who could be against eliminating waste, and who could think that some might have good reasons for continuing to be wasteful?  (Granted, we could recognize that the problem of managing the "waste stream" is not an easy one.)  But underlying judgments of "waste" are the problematic incentives and forms of organization of health care in the US, together with a host of normative disputes about when expenditures are "excessive" or interventions "harmful."  Improvements in care coordination and the use of evidence are critically important--but it is too easy to regard them as simply the elimination of "unwanted or unusable material."


Cross-Posted to Bill of Health

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