The Frail Anatomy of the U.S. Healthcare System

A new analysis of the U.S. healthcare system delves into why the system costs so much, how quality is worse than other developed countries and why chronic illness management among all ages is the key to righting the ship.

The topics were discussed in a new article in the Journal of the American Medical Association titled, "The Anatomy of Health Care in the United States." Specifically, researchers aimed at addressing six key areas, basing all analysis and conclusions on publicly available healthcare data from 1980 to 2011, and they found troubling trends for the U.S. system.

Economic anatomy
In 2011, U.S. spending on healthcare hit $2.7 trillion, or almost 18 percent of gross domestic product. Why has the healthcare system become so expensive?

Although the average life expectancy of U.S. citizens has lengthened by 30 years since 1900, averaging 81 years for women and 76 years for men, the authors said the rise of healthcare expenditures has little to do with the aging population. Instead, researchers attributed the cost growth to hospital care (4.2 percent growth per year since 2000), drugs and devices (4 percent) and professional/physician services (3.6 percent).

"These data contradict a commonly held belief that aging of the population and increased demand for services have driven spending historically," according to the study. "Between 2000 and 2011, increase in price (particularly of drugs, medical devices and hospital care), not intensity of service or demographic change, produced most of the increase in health's share of GDP."

In addition, the study found personal out-of-pocket spending on healthcare actually fell by half, from 23 percent in 1980 to 11 percent in 2011.

The U.S. healthcare profile
Who are the major healthcare players, and who are the primary receivers of care? In this era of "Big Medicine," large integrated health systems are quickly becoming the primary providers of care, with physicians as the point of contact. Patients who require the most care, and thus create the most costs within the system, are those with chronic illnesses, such as heart disease and cancer. Chronic illnesses account for 84 percent of all U.S. healthcare costs, and chronic diseases are scattered across all ages — not only among the elderly.

A popular claim made about the U.S. healthcare system, according to researchers, is it is among the best systems in the world, providing high-end care and cutting-edge treatments thanks to its continual investment. However, based on data with the 28 member countries of the Organization of Economic Cooperation and Development, the U.S. is far behind. It trails other OECD countries in several major healthcare quality outcomes, including mortality and morbidity in cardiovascular, infectious, perinatal and respiratory diseases. The U.S. also has one of the highest healthcare per capita figures in the world.

Study researchers said U.S. underperformance, compared to other industrialized countries, could be attributed to the financing mechanism that leaves many uninsured, cultural norms like gun ownership, obesity, risk of trauma and high rates of hospital-acquired infections.

Since the 1980s, many U.S. industries — energy, banking, airlines, automobiles, media — have become more consolidated at the top through rampant mergers and acquisitions. The healthcare sector is undergoing the same process right now, as hospitals, physicians and insurers are all trying to gain advantages by acquiring competitors. The authors said although horizontal or vertical consolidation achieves greater administrative efficiencies, it often leads to a hierarchical structure that becomes a "source of permanence, power and continued growth," which could hold back the goals of better care delivered at lower costs.

The past decade in healthcare has resulted in the largest investments in big data and information technology, but the industry has yet to produce mass-scale results in better-coordinated care through the IT. Although there is "great promise" within this front, researchers said gains will likely come in the next decade, and privacy concerns still must be fully addressed.

Patient experience
Patients are going from cogs in the healthcare system machine to active consumers, as measures like patient satisfaction are now tied to financial metrics for many organizations. However, patients also have high expectations, demand more accountability and transparency and expect a certain level of convenience. This, the authors said, could result in fragmented care delivery.

The article draws several implications. Patients, clinicians, policymakers and other stakeholders have conflicting expectations for the system, and it appears the current path "has been pursued without an overall strategy," according to the study. Looking at the best practices of other successful health systems and focusing on the actual drivers could help rectify the current situation in the United States.

"What can guide better choices than [those that] have been made in the past?" the authors wrote. "Perhaps a conversation, fully informed by the facts and acknowledging perspectives among those who receive, provide and finance healthcare, can do better than the political acrimony of the past few years."

More Articles on U.S. Healthcare Cost and Quality:
Study: American Hospitals Outspend Those of Other Industrialized Nations
U.S. Healthcare Spending Grows Faster Than Most Other Countries
IOM Report: Why do Americans Live Shorter, Unhealthier Lives?

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