Healthcare's wasted $

December 23, 2017 10:33 PM

A Prescription for Reducing Wasted Health Care Spending. "It’s been estimated that the U.S. health care system wastes about $765 billion a year — about a quarter of what’s spent. We’ve identified ways that tens of billions of dollars are being wasted, some of them overlooked even by many experts and academics studying this problem." A ProPublica article series.

Also of note:

posted by storybored (46 comments total)

I worked in health care software for many years, Companies charged $10K for an "interface" so our software could talk to their Hospital Information System...

Simple stuff. An hour of programmer work. Ten thousand dollars...
posted by Windopaene at 11:22 PM on December 23, 2017 [5 favorites]

Also of note:

I think you left something out
posted by adept256 at 11:29 PM on December 23, 2017 [7 favorites]

The fact that the US spends approximately twice as much per capita on healthcare as, e.g., France and Canada, for significantly worse results in terms of life-expectancy, suggests that ~25% is a very conservative estimate of waste in US healthcare spending.
posted by howfar at 1:02 AM on December 24, 2017 [26 favorites]

Simple stuff. An hour of programmer work. Ten thousand dollars...

Really? I'd be shocked if the problem could be scoped out in an hour. Determine the business requirements, translate those into technical requirements, then into specifications, get buy-in from all parties, write the software, test the software, test the integration, install the software on the premises, ensure it meets and regulatory compliance requirements. 10k doesn't sound like very much money in the world of software development. That might sound like a lot of overhead and not very nimble, but I'm not sure I want 'quick and nimble' with health software integration.*

*Disclaimer: I've never worked on medical related software - I've avoided software that's super important and instead have worked on financial and security related software.
posted by el io at 1:05 AM on December 24, 2017 [34 favorites]

So waste is another way of saying graft, right? To say waste is to imply lost. It's not lost. They know where it goes.
posted by Beholder at 1:14 AM on December 24, 2017 [43 favorites]

Really? I'd be shocked if the problem could be scoped out in an hour. Determine the business requirements, translate those into technical requirements, then into specifications, get buy-in from all parties, write the software, test the software, test the integration, install the software on the premises, ensure it meets and regulatory compliance requirements. 10k doesn't sound like very much money in the world of software development. That might sound like a lot of overhead and not very nimble, but I'm not sure I want 'quick and nimble' with health software integration.

If you're claiming that the overhead is buying some measure of quality -- e.g. correctness, flexibility, usability -- you'll have to be more convincing. Everything I've ever read about healthcare software in particular paints it as being terrible on those axes compared to much less "important" software.

If I was going to live or die based on the correct operation of a piece of software and I had to choose between a random piece of hospital infrastructure or Metafilter's server, I would literally pick Metafilter's server.

The overhead doesn't have to be useful to exist, because there is no market to speak of for health care in the US; it's just a giant money hole with no feedback loop or incentive structure to make it any good.
posted by value of information at 1:51 AM on December 24, 2017 [12 favorites]

To further Beholder’s point, frequently the so-called “waste” is actually theft, enabled by the deadly embrace of piss-poor procurement oversight and supplier greed.
posted by Lesser Spotted Potoroo at 4:01 AM on December 24, 2017 [7 favorites]

Some of it's waste caused by bad practice enabled by poor incentives (like stocking a whole bunch of stuff that often turns out not to be needed then not noticing it gets chucked out) and some of it's high prices/ theft/ transfers caused by market power and a weak, uncaring, captured or incompetent government.
posted by hawthorne at 4:18 AM on December 24, 2017 [1 favorite]

So none of the issues in TFA address the massive duplication of work involved in having all these private insurers, and their marketing costs to compete with one another, and their lobbying costs to maintain this crap, and the actual healthcare services having to deal with them?

Wow. I was not expecting that.

Surely at least drug expiration is an issue that all healthcare systems face, no? Like, even those systems that cost far less, in less wealthy nations, for better healthcare outcomes.
posted by pompomtom at 5:29 AM on December 24, 2017 [29 favorites]

I worked for a Healthcare payer (insurance company) for several years. in that time, the CEO greenlit a 24 million dollar deal to outsource all the company's IT services to a similar insurance company that developed a side business in (supposedly) being better at it than my employer could be. after a year of work and about 75% of the contract price paid, the whole project was abandoned as not feasible. IT experts and business stakeholders within the organization had warned leadership of the problems from almost day one, but no one who could have done anything about it paid them any mind. the CEO, who's pet project this was, reportedly told someone who asked about the challenges that "sometimes you just have to go with your gut." after the project failed, this same CEO "retired" with a huge payout. so yeah, there's waste (and incompetence, and poor management) all around.
posted by gorbichov at 5:33 AM on December 24, 2017 [17 favorites]

I have worked in healthcare since 1972 I have seen many changes in that time. The loss of small rural hospital is sad but a lot waste and and "profit" occured in these small hospitals and if you questined it you were a troulble maker. As the corparation moved in and took over momey flowed like water in a fast river. It took several years but tracking systems and better record keeping have helped. There are still things that need improvment. Hospital information systems that have order sets based on symtoms waste time and effort on extra testing and treatment not specific to patients. Things will get better as better documentation is enforced.

My opinion only.
posted by bjgeiger at 5:51 AM on December 24, 2017 [3 favorites]

The keyword there is profit. There shouldn't be a profit motive for healthcare. Just make it all public and a lot of the problems go away.
posted by adept256 at 6:00 AM on December 24, 2017 [34 favorites]

I worked in health care software for many years, Companies charged $10K for an "interface" so our software could talk to their Hospital Information System...

Simple stuff. An hour of programmer work. Ten thousand dollars.

Another model that is replicated over and over is - having one provider pay for the development costs of a new feature they need and then charging it to all other providers as an add-on.

The keyword there is profit. There shouldn't be a profit motive for healthcare. Just make it all public and a lot of the problems go away.

The thing is, lots of health care profit isn't actually for health care products.

It's construction, manufacturing and IT and the providers will often not be specific to health care. A single hospital has thousands of vendors. There's a big difference between contracting for a drug from a pharmaceutical company (obviously health care) and procuring a vendor for a data solution or to build a wing of a hospital (not obviously health care.) Where I'm from (public health care), the desire to drive profit out has led to procurement provisions that require people to pick lowest possible cost which often leads to bad vendors, long-term problems or missed opportunities to make things better for patients.

Let's not oversimplify what is in fact a very complex problem - particularly on the IT side, health care everywhere is seriously fucked up and saying "everything's public now" is not going to solve everything.
posted by notorious medium at 6:12 AM on December 24, 2017 [11 favorites]

A major cause of pharmaceutical over-spending, that you don't see mentioned as much as it warrants, is that in the US there are laws forbidding the Federal Government from negotiating drug purchses in bulk as a major buyer. Since every other country does that to hold prices down, Drug companies transfer the difference over to another group, the group that doesn't use its buying power, and that would be all of us here in the US.
posted by StickyCarpet at 6:16 AM on December 24, 2017 [14 favorites]

If you're claiming that the overhead is buying some measure of quality -- e.g. correctness, flexibility, usability -- you'll have to be more convincing. Everything I've ever read about healthcare software in particular paints it as being terrible on those axes compared to much less "important" software.

No, $10,000 is the price for something that does approximately the right thing and doesn’t break every time you look at it. Having written interfacing software (in another industry) and being vaguely familiar with external billing rates for software work, $10,000 seems eminently fair - it’s hard work and no fun.
posted by wotsac at 6:19 AM on December 24, 2017 [8 favorites]

It's funny... according to Milton Friedman's four ways to spend money, it should be the healthcare systems which are most dominated by government spending which are most wasteful. And yet it's the American system, which has more private spending than any other, which is the most wasteful. Hmm.
posted by clawsoon at 6:25 AM on December 24, 2017 [15 favorites]

Milton's Austrian economics are usually wrong and fail when actually tried in the real world.
posted by nofundy at 6:29 AM on December 24, 2017 [10 favorites]

I'd be happy to be corrected by someone in health care, but "These neurosurgeons are wasting tons of money by opening lots of surgical supplies they don't even use!" sounds to an outsider like "Aircraft manufacturers waste tons of money putting in tertiary hydraulic systems that hardly ever even get used!"
posted by GCU Sweet and Full of Grace at 7:42 AM on December 24, 2017 [15 favorites]

I'd be happy to be corrected by someone in health care, but "These neurosurgeons are wasting tons of money by opening lots of surgical supplies they don't even use!" sounds to an outsider like "Aircraft manufacturers waste tons of money putting in tertiary hydraulic systems that hardly ever even get used!"

It's probably worth more study, but unless they are Ikea medical parts, having them at the ready but still packaged is probably just as good.


Also, $10k at industry standard billing rates is 2 weeks worth of work, which is a very short IT project. Also, most software has licensing costs (especially integration between systems software) that are way more than $10k alone. I agree that this is not an example of excess costs.
posted by The_Vegetables at 8:01 AM on December 24, 2017 [5 favorites]

So waste is another way of saying graft, right? To say waste is to imply lost. It's not lost. They know where it goes.

In a competitive market, prices approach the cost of production, and margins get thinner. The real profit lies in exploiting inefficiencies. But what do you do if there aren't any to exploit - well you create them.

A month’s supply of the two inexpensive drugs costs about $40. The company billed insurance $3,252 for the Vimovo.

So why do the doctors prescribe the new dual drug in that case ? "incentives" mostly. They aren't ripping off the patient - they're ripping off the insurance company, and, if we are being honest, that company deserves it, too.

Anyway, the ideal ("spherical") business in a capitalist system takes all your money and gives you nothing back, and every mechanism of every business is designed to drive towards that point. That works for internet access and car warranties and blue jeans and handbags, I guess. It really sucks for health care.
posted by Pogo_Fuzzybutt at 8:04 AM on December 24, 2017 [4 favorites]

I know it's a well-meaning study, but, to me, it kind-of comes off as nibbling at the edges because the powers-that-be won't allow a conversation (let alone action) on the real issues affecting healthcare costs in the US. I mean, if you're down to measuring the size of eyedrops...
posted by Thorzdad at 8:06 AM on December 24, 2017 [9 favorites]

Related: The ‘Frequent Flier’ Program That Grounded a Hospital’s Soaring Costs -- In Dallas, Parkland Hospital created an information-sharing network that gets health care to the most vulnerable citizens—before they show up in the emergency room. (Arthur Allen for Politico, December 18, 2017)

Parkland Center for Clinical Innovation (or PCCI) was a joint effort with community partners such as homeless shelters and food pantries to build a network of what was hoped would eventually be hundreds of community-based social services around Dallas County, with Parkland Memorial at the center of it. A sophisticated software platform would enable the hospital to easily refer homeless people discharged from its emergency room to shelters and pantries, and to let social workers at those places see what their clients were doing: whether they were filling their prescriptions, or getting healthy food, or had a place to sleep, or money for the bus. It would be so much cheaper to meet those needs outside the medical system than to pay for the consequences inside it. Two years into the program, evidence is mounting that PCCI is working.

Also, we could expand the system to cover everyone and implement the cost-savings identified in the OP article.
posted by filthy light thief at 8:20 AM on December 24, 2017 [11 favorites]

expand the system to cover everyone

That would never work! There aren't dozens of examples of where that works! We wouldn't make any money!
posted by adept256 at 8:27 AM on December 24, 2017 [5 favorites]

These inefficiencies don't seem like a lot to me relative to the massive scale of health care in the US, but a couple of them do suggest a sort of "consultants who hire consultants who hire contractors who hire subcontractors" system, which is for some reason both an American fetish (most Republicans and some Dems seem like they won't be happy until every part of government is replaced with such an abomination, likely to ensure maximum graft for lobbyists) and of course a giant waste of money.
posted by en forme de poire at 8:43 AM on December 24, 2017 [8 favorites]

And yet it's the American system, which has more private spending than any other, which is the most wasteful.

It is not "wasteful". Having "the largest flagpole in the United States" a big LED sign out front, lots of mowed lawn and big sheets of glass are just business expenses and not waste for the insurance business.

Heck. everyone KNOWS that healthcare HAS to have this middle layer of insurance otherwise who's going to address the idea that a person should be able to obtain a price quote before obtaining 'healthcare' and allow them to shop about for who's going to charge the least for doing nothing more than reading off the report from tests done at Quest Medical, looking at your weight to say "Lose some weight" and then read the blood pressure and say "here is some pills and have you considered less stress in your life?"

Gosh, without the process of getting the insurance company to pay for the things they claimed they would pay for or the ability to go to the corner pharmacy and get the standard set of drugs used to address common conditions and instead need "a professional" with some process of approval and monitoring by the State who knows what kind of stress reduction due to the heathcare process and effects on personal budgets would result?

But yea, it is ALL the fault of big pharma and their vats of chemicals and microbes making expensive drugs in billion pill lots.
posted by rough ashlar at 8:45 AM on December 24, 2017 [4 favorites]

This year, my brother was kicked out of a care facility because the insurance decided that his wound (from a pressure sore) wasn't healing fast enough. So they sent him home to get worse. That's efficiency!
posted by thelonius at 8:49 AM on December 24, 2017 [6 favorites]

Milton's Austrian economics are usually wrong and fail when actually tried in the real world.

Friedman is part of the Chicago school and specifically espoused monetarism which has very little to do with the Austrian school. Both groups are strongly in favor of laissez faire policies and favorites or libertarians but they are not the same thing.
posted by nolnacs at 9:01 AM on December 24, 2017 [5 favorites]

A lot of surgeries use "procedure packs" that are sterile ready-to-go trays of supplies and tools that are used for the surgery. So for example you might have three different titanium screw sizes available in your tray, but only one fits the patient's bone. Needless to say, there's money to be made selling these things, and clinicians would rather be doing procedures than taking inventory in a stockroom.
posted by RobotVoodooPower at 9:20 AM on December 24, 2017 [3 favorites]

And hey, his home nurse today says the wound is deeper and looks infected and he should call 911 and go to the ER. Mission accomplished!
posted by thelonius at 9:52 AM on December 24, 2017 [4 favorites]

A lot of smaller procedures also use pre-pack kits, which may contain items that don't get used. I never use the pre-packed stole gloves in any kit, for example, because they're terrible and don't fit me anyways. Port access kits for some reason always include a measuring tape that I've never seen anyone use. Foley kits include multiple styles of stickers to label who placed the cath and when, since some facilities might do it differently.

Problem is, once you pop these kits open, they're no longer sterile, so it's not like you can put them back or recycle the pieces. Most everything in them are designed to be single use anyways, so even the more durable pieces aren't worth the cost or even able to be sterilized and re-used.

ProPublica also highlighted unnecessary imaging tests, like extra mammograms and ultrasounds

This is just kind of tucked in there, but I think it's kind of indicative of some of the "waste" talked about in the article. Physicians can be very defensive in their practice, and would often rather over-medicate, use newer drugs, and order all the diagnostic tests rather than miss something or otherwise open themselves up to accusations of providing substandard care. In the ED, the bane of my existence is vague abdominal pain. Maybe you just ate the wrong egg salad, or maybe you've got diverticulitis, or maybe a perforation, or a blockage. Who knows? Regardless, you're probably going to get an expensive scan to find out, because no physician wants to be the one who sends you home with a gastroenteritis diagnosis, only to have you come back a few hours later with a septic bowel.
posted by Panjandrum at 9:55 AM on December 24, 2017 [21 favorites]

I remember reading somewhere that the NHS keeps their MRI machines operating more hours in the day than American hospitals do, and therefore get more scans done on the old model before it's time to upgrade to the new one.
posted by The Underpants Monster at 10:13 AM on December 24, 2017

If I was going to live or die based on the correct operation of a piece of software and I had to choose between a random piece of hospital infrastructure or Metafilter's server, I would literally pick Metafilter's server.

I've watched JRun errors glitter in the dark near the Tannhäuser Gate. All those moments already lost in time, like tears in rain.
posted by srboisvert at 10:15 AM on December 24, 2017 [12 favorites]

Stock too much of Drug X and some of it will expire before you can use it. Stock too little and you won’t have enough on hand when it’s needed, requiring you to borrow it from somewhere else, or if that’s not possible, forcing the patient to miss a dose or two while you order more. I can tell you in my personal experience that the latter scenario happens much, much more frequently in the hospital setting than the former. And that the former is a relatively trivial contributor to waste in the hospital system. The stuff most frequently thrown out are extemporaneously prepared IV admixtures, which generally have an expiration date of 24 hours, not due to stability but due to the risk of microbial growth. Updating stability data won’t really affect that.

You know what causes a huge amount of waste? Inhalers. They’re ridiculously overpriced, especially the combination products. Out of pocket costs are commonly in the $200-500 range, and for some inhalers go as high as $1000. In the hospital setting, inhalers go missing all the time. Patients get transferred to different rooms or units, often multiple times in a given stay, and the inhalers frequently get lost in the process. So patients end up getting charged lots of money for inhalers that may only get used a handful of times. It’s kind of infuriating.

If you want to optimize drug use, both for cost and outcomes, the best way to do that is to increase pharmacist involvement in clinical care. Give a pharmacist five minutes with a patient’s profile and they can give you a handful of suggestions for how to lower costs without sacrificing quality of care. But for the most part, no one asks how to lower costs for individual patients, and input on the system level (e.g., P&T committee) frequently faces pushback from doctors who are opposed in principle to being told how to prescribe.

A major cause of pharmaceutical over-spending, that you don't see mentioned as much as it warrants, is that in the US there are laws forbidding the Federal Government from negotiating drug purchses in bulk as a major buyer.

This.

So why do the doctors prescribe the new dual drug in that case ? "incentives" mostly.

Honestly, I think a lot of doctors either don’t know or don’t care about drug prices.
posted by dephlogisticated at 11:37 AM on December 24, 2017 [11 favorites]

You can nitpick all day about this little item or that little item. The fact of the matter is quite simple. People in the U.S. consume no more healthcare and no more health stuff than other advanced countries. They just pay twice as much for each doctor, each procedure, each drug, each device. Other countries control these prices. In the U.S. we let the doctors, pharmaceutical manufacturers and device manufacturers to set the price. That's the difference.
posted by JackFlash at 11:53 AM on December 24, 2017 [11 favorites]

*Disclaimer: I've never worked on medical related software - I've avoided software that's super important and instead have worked on financial and security related software.

Seems like security could be pretty important. Even super important to the people needing the security.
posted by notreally at 12:25 PM on December 24, 2017 [1 favorite]

Honestly, I think a lot of doctors either don’t know or don’t care about drug prices.

Doctors seem to be shockingly ignorant about the prices of pretty much everything healthcare-related, especially any services or tests they might send you to a specialist for. I'll give my old doc credit, though...He was good at handing out bags of samples for various ailments, in place of what might have been an expensive (even with insurance) prescription.

........................
The fact of the matter is quite simple. People in the U.S. consume no more healthcare and no more health stuff than other advanced countries.

That can't be true! I've been told over and over how Americans need to have more of the cost of healthcare pushed onto them, so they have skin in the game and will be less likely to use precious healthcare resources.

e.g., Anthem plans to switch emergency room coverage to be based on diagnosis.
Do yourself a favor and don't read the comments in that first link.
posted by Thorzdad at 12:31 PM on December 24, 2017

The placebo effect has been well-tested by science and its efficiency proven. When I come to power, I shall oblige all drug manufacturers to make one in ten of their pills as simple starch tablets, and to distribute these pills at random in each pack of the genuine article. The cost saving would be passed on to patients and the therapeutic benefits (I assume) left unaffected.

Fortunately, I can see no political difficulties whatsoever in actually implementing this plan. You're welcome, America!
posted by Paul Slade at 12:57 PM on December 24, 2017 [1 favorite]

Hmm... Having worked in hospitals and nursing homes, sure, there is a ton of waste. Really bad for the environment. But it seems glaringly obvious by looking at every other country on Earth that the bulk of financial waste comes from letting drug companies and insurance companies gouge us.

I favor single payer, but even other countries with private health insurance systems are orders of magnitude more financially efficient simply by regulating how much and how they charge.
posted by latkes at 2:07 PM on December 24, 2017 [7 favorites]

The keyword there is profit. There shouldn't be a profit motive for healthcare. Just make it all public and a lot of the problems go away.

Even if the system itself is non-profit, it's run by people with bills to pay, med school loans to pay off, or Lexuses to finance. How much of what we call 'waste' is someone else's paycheck? 50 percent? That's what you have to deal with socially, far more than flushing excess Warfarin down the toilet. Every hospital administrator and private practitioner is aligned against single payer, because their salary writing is on the wall.

Even non-profits can use competition as a means of getting better; hospitals with abnormally high medical accident rates can enter a death spiral of passing on increasing insurance costs to fewer and fewer patients as their fees rise. Conversely a hospital with a strong track record and ability to continually improve can experience a virtuous cycle. For this sort of thing to happen, new entrants need to be able to walk on site. Instead we have a system where new hospitals have to get a certificate of need from their would-be competitors.

What we have in the US is the worst possible option: socialized medicine, intermediated by employer paid insurance agencies. Many people have no idea how much things cost and their providers prefer it this way. Next time you need an MRI, try asking around for a price. Somehow, it's worse than buying enterprise software. Instead of "Pricing: call us!" it's "Pricing: We'll discuss the bill once your procedure is done." Which is why the 'skin in the game' policies have largely failed. There's not nearly enough people on the HDHP / HSA track to justify catering to them, especially when doing so will largely drive customers away.
posted by pwnguin at 2:31 PM on December 24, 2017 [5 favorites]

Stock too much of Drug X and some of it will expire before you can use it. Stock too little and you won’t have enough on hand when it’s needed,

This at least is a moderately solvable problem. Restaurants and factories have very similar issues, and there's at least one American hospital i read about that copied the just-in-time practices that Japanese factories use. If that particular kind of efficiency was the biggest problem - that's a really easy problem.

Restaurants regularly do efficiency and wastage evaluations, and I would be very, very surprised if hospitals did not. Especially since the mass privatization in the 90s.
posted by Rainbo Vagrant at 2:51 PM on December 24, 2017

Well no doubt capitalism will force hospitals to become more efficient. God knows pay for GPs and pediatricians has already sunk. If overbuying is a zone where those at the top can squeeze, they will.. but a focus on that is a little disappointing from pro Publica. I totally love them and donate to them but just think the expose that says, Hospitals buy too much IV tubing is a bit shallow when it comes to the crazy rent seeking of health care.
posted by latkes at 5:22 PM on December 24, 2017 [1 favorite]

"Worst possible option" describes so much American policy tbh.
posted by en forme de poire at 6:06 PM on December 24, 2017 [1 favorite]

Well no doubt capitalism will force hospitals to become more efficient.

Sadly, I think the "answer" will be something along the lines of breaking the last remaining nurses' unions, declaring victory over waste, and calling it a day.
posted by Thorzdad at 6:52 AM on December 25, 2017 [1 favorite]

I had a different experience: I worked for a digital agency in the healthcare field, we worked with big Pharmas, and though I wasn't on the business side, I don't believe we overcharged for our work. To be fair, our work didn't have to do with things like compliance or medical records or patient data, so it was somewhat peripheral to healthcare per se, and we weren't directly charging healthcare providers. It may be different because our clients were the Pharmas.

I have also had another job where we were building medical hearing testing rooms for hospitals, and again I wasn't involved with the business side but I don't think we were overcharging (in any crazy way) there, either. I was making $14/hr and the company seems to have been losing money overall.

Just two datapoints, I guess.
posted by rainy at 10:35 PM on December 25, 2017

so they have skin in the game and will be less likely to use precious healthcare resources
I love how the concept of 'skin in the game' has become this kind of economic cure-all (looking at your work N. Tableb) while it exists on the other side of the economic house from concepts like prisoners dilemma and tragedy of the commons where it is literally shown that having 'skin in the game' solves nothing.
posted by The_Vegetables at 6:53 AM on December 26, 2017 [3 favorites]

I totally love them and donate to them but just think the expose that says, Hospitals buy too much IV tubing is a bit shallow when it comes to the crazy rent seeking of health care.

There are a bunch of critiques in this thread similar to this one... I wouldn't say they are wrong, but I think they sort of miss the point of Pro Publica's work here. There is already a ton of analysis of problems in health care, good work and analysis. Pro Publica is trying to contribute to the discussion in ways that haven't already been well-explored. I don't think they are trying to say that the problems they identify are the largest problems, or the biggest problems to be solved, but I think they are trying to cover new ground.

So, while it might not be the most important work they've done, I think they did a good job at what they set out to do.
posted by el io at 10:32 AM on December 27, 2017 [1 favorite]