Productivity improvements have helped many industries offer “more for less,” according to the report. For example, despite significant technological advances, the average price of a laptop computer fell from $4,080 in 1991 to the current price of $999.
Healthcare has lagged behind other industries in productivity improvement. According to McKinsey, the average cost of a commercial inpatient admission increased from $13,961 in 2007 to $18,142 in 2015.
“In reality, very few areas in healthcare have seen costs decrease to any real degree,” according to McKinsey. “Innovation in healthcare has created a range of new treatments, services, and technologies, but often at high prices not always commensurate with the benefits delivered.”
If healthcare had achieved productivity improvements comparable to industries such as wealth management, consumers would pay less for care and insurers and providers would be able to maintain margins, according to the report.
“If healthcare productivity is to rise — even if only to the level achieved by other service industries — two things need to happen: both payors and providers need to radically alter their business models, and we, as a society, will want to consider adopting ‘smart’ regulations,” according to the report.
Access the full McKinsey & Co. report here.
More articles on healthcare finance:
Tax credit program provides lifeline to distressed rural hospitals in Georgia
Partners posts $108M operating loss as insurance division struggles
CHS’ largest shareholder donates $115M to Caltech for brain research
Becker’s 3rd Annual Fall Chief Pharmacy Officer Summit is the top tier event that the people leading the future of pharmacy convene. This 3-day event is built specifically for Chief Pharmacy Officers and senior pharmacy leaders. The sessions examine the workforce, financial and clinical priorities shaping pharmacy today. Becker’s is where candid discussions flourish and new ideas thrive. Becker's 3rd Annual Fall Chief Pharmacy Officer Summit
