Thursday, November 28, 2019
Rising Healthcare Costs Costing Americans Quality Healthcare Essay Example
Rising Healthcare Costs: Costing Americans Quality Healthcare Paper Abstract            America is currently experiencing an economic crisis, and among the cries of the American public is the burden of increasing healthcare costs that have also suffered a marked decreased in quality. Using the current environment as a platform, healthcare industry leaders are proposing policy reforms that focus on ensuring quality healthcare provision in order to reduce the cost of healthcare in America. This is done in the hopes that by solving the issue of unsustainable healthcare costs, these policies can offer a partial solution to the financial problems facing America today. Rising Healthcare Costs: Costing Americans Quality Healthcare Introduction We will write a custom essay sample on Rising Healthcare Costs: Costing Americans Quality Healthcare specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Rising Healthcare Costs: Costing Americans Quality Healthcare specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Rising Healthcare Costs: Costing Americans Quality Healthcare specifically for you FOR ONLY $16.38 $13.9/page Hire Writer The United States is currently undergoing an economic crisis of scales. Americans are experiencing the burdens imposed by higher oil costs, housing costs, food prices, increased unemployment rates, and the continuing inflation rates. The cost of providing basic needs to an average American family has gone up that families are not feeling the effects of wage hikes. The economic crisis befalling America is so widespread that it affects different facets of American living and one such important facet being affected is in Healthcare – an area Americans highly value. Already on average, American families are spending more on healthcare than they do on basic commodities – a fact that healthcare experts view as alarming. Not only has the cost of living become unreasonable, but it is also unreasonable that a large chunk of this cost is largely due to the cost of healthcare. What concerns healthcare leaders more is that, although healthcare costs are continuously increasing, the quality has not. It is this growing concern that has prompted leaders in the healthcare industry to call for a reform on present health care policies.  If there is any good at all that could be attributed to the economic crisis befalling America today is that the current crisis has cast into light the problem of high healthcare costs and low quality healthcare services. At the same time, the recent economic crisis â€Å"has created a ‘near perfect’ political storm†(Smith, 2008) that offers a window of opportunity for policy reforms, especially now that America is looking for a way to reduce the impact of a sloping economy. After all, the United States tends to gain financially by establishing policies that reinforce quality healthcare as a means towards decreasing healthcare costs thereby lending to a decrease in the overall expenditure average American families make annually. Definition of Terms            To begin the discussion on the costs of quality in healthcare, certain terms must first be defined. In the economics of healthcare, quality has no right or wrong definition for it is a multidimensional concept and is primarily defined by varying perspectives (e.g., of the client, the client’s family, the community or the physician). It should be noted that â€Å"quality†can also have opposing definitions that operates at the same time, for example: a â€Å"provider’s technical accuracy of not giving injections conflicts with a parent’s expectations of a shot as the best available treatment.†Quality however, can still be defined as â€Å"technical accuracy†as a result of compliance with standards or as advocates of total quality management defines: â€Å"Doing the right thing, right, right way†(Cost and Quality in Healthcare Reference Manual, 2001, p.1).            The dimensions of quality in health care include the following: technical performance, effectiveness of care, efficiency of service delivery, safety, access to services, interpersonal relations, continuity of services, physical infrastructure and comfort and lastly, choice.            Quality Assurance (QA) is then defined as any act that measures and improves upon standards of quality. Samples of such activities include medical supervision, medical bookkeeping, staff training, and patient education. It is composed of three levels: the tool, the approach and the program. QAs are mainly aimed at looking for problems in the â€Å"system and processes, not bad performers†(Cost and Quality in Healthcare Reference Manual, 2001 p.1).            Cost, similar to quality, also has varying definitions. Its definition is usually tied with the varying perspectives and as to who incurs the cost (Cost and Quality in Healthcare Reference Manual, 2001). Cost can be defined through any of the following economic jargons described as follows.            Financial cost – incurred expenses at a given time for the provision of a product, service or input (Cost and Quality in Healthcare Reference Manual, 2001). Opportunity cost – benefits forgone in the provision of alternate products or services (Cost and Quality in Healthcare Reference Manual, 2001).            Accounting cost – a cost not actually incurred but is used to reflect the real value of a product or service (Cost and Quality in Healthcare Reference Manual, 2001).            â€Å"Shadow†prices – costs of goods and services â€Å"whose true value is not the same a s listed†(Cost and Quality in Healthcare Reference Manual, 2001, p.6).            In healthcare quality assurance, some of the costs that have the most value are the ones that are â€Å"unknown and unknowable†– costs that are results of poor quality that may not be immediately known or recognizable such as consumer dissatisfaction and health worker frustration (Cost and Quality in Healthcare Reference Manual, 2001, p.7). The three major categories of cost are personnel, capital and renewable resources (Cost and Quality in Healthcare Reference Manual, 2001). Cost of Quality is then defined as the quantified value of resources that were saved or lost in the delivery of (healthcare) services. It is both the â€Å"costs incurred in achieving or maintaining quality standards†and the â€Å"costs resulting from not achieving or maintaining quality standards†(Cost and Quality in Healthcare Reference Manual, 2001, p.9). The cost of quality has â€Å"four major components: prevention costs, appraisal costs, external failure costs and internal failure costs†(Cost and Quality in Healthcare Reference Manual, 2001, p. 9). The former two (prevention and appraisal) are costs associated with attaining and maintaining quality standards, while the latter two are the costs incurred from being unable to maintain or attain quality standards. Therefore, the relationship between cost and quality, as theorized by Ishikawa, is that of an inverse relationshipâ€â€higher levels of quality lead to lower costs. The theory is based under the assumption that as quality increases, system wastes are reduced and productivity increases and â€Å"improved productivity implies that a product or a service can be produced at the lowest cost possible†(Cost and Quality in Healthcare Reference Manual, 2001 p.12). However, the facts imply that the relationship is more dynamic than what Ishikawa’s theory implies. The Problem Healthcare costs have always been on the rise. In fact, the continuous inflation of healthcare costs is often the culprit behind the changes that has shaped the healthcare industry during these past decades. Examples of such events were the â€Å"tipping points†that has occurred in the early and late 1980s to the early 1990s. The first tipping point in the healthcare industry happened in the early 1980s where a shift from full indemnity coverage to comprehensive major medical led to the giving-way of â€Å"100% first dollar coverage†to â€Å"$500 [or higher] deductibles†a change that occurred within a period of four years (Halvorson, 2005, n.p.). The second tipping point occurred years later, during the late 1980s and early 1990s when the healthcare industry shifted from completely unmanaged care into a managed care system. Both of these changes transpired as a reaction/adaptation to the rising costs of healthcare and resulted in â€Å"periods of relative pri ce stability at least until the harvest of low-hanging fruit and one time savings ran its course for each new direction†(Halvorson, 2005, n.p.). In the article by Halvorson in 2005 entitled Healthcare Tipping Points: Two Tipping Points, Cost and Quality, Promise to Forever Change the Healthcare Landscape as We Know It, the author warned that the healthcare industry at 2005 was already nearing the next tipping point. He points out that the environment was already ripe for this next tip. As early as 1994, results of economic studies indicate that healthcare has taken up more and more of the gross national product (GNP) and has no signs of stopping (Leibowitz 1994)  a sign that America is increasingly spending on healthcare year after year. In 2001, premiums for family coverage have outpaced wage hikes and inflation rates, rising to 78% compared to the 19% and 17% of the latter two respectively. The same premiums, in the years between 2000 and 2007, have more than doubled together with workers’ out-of-pocket costs in the periods between 2001 and 2007 (Baker, 2008). In 2005, healthcare costs were already in an upwa rd spiral of â€Å"unsustainable double digit increases†(Halvorson, 2005, n.p.). Employers are angry, frustrated and scrambling for â€Å"cost-shift strategies†that offer higher deductibles. Buyers are growing more concerned over increased costs that do not bring along increased quality care (Halvorson, 2005). Various reasons are offered as to how America’s healthcare industry has gotten to where it is now. Reasons for the increased costs include the increased unemployment rates (more than $900 of a family’s premium is used for the treatment of the uninsured), new expensive drugs and technologies, an ageing population, increased unnecessary medical consumption, excessive unnecessary procedures and operations, increased fear of malpractice suits and litigation, and a variety of other excessive costs. As it seems, in the year 2008, these â€Å"low-hanging fruits†produced by these two earlier tips have all been harvested, and healthcare costs have risen yet again much to the American public’s dismay. With all these increases, most everyone intuitively subscribe to the thought that â€Å"the more I pay for something, the better quality it has.†However, in the present healthcare situation, this is in fact quite surprisingly the opposite. In fact the quality of healthcare has even gotten worse. Over 98,000 Americans die annually as a result of medical errors  a trend that has gotten worse and worse as healthcare costs grew higher and higher. An explanation offered for this phenomenon is now that healthcare has been removed from the hands of the buying public (direct consumption) and is instead handled through third party contractors (managed care providers, HMOs, Medicare). The public has since viewed seeking medical care as relatively â€Å"free†and thus has become victim to over consumption. Over consumption leads to unnecessary tests and longer hospital stays that increase the chances for medical errors happening. Another possible cause according to Wennberg (cited in Smith, 2008) is that the current system rewards systems with poor quality. Medicare siphons more funding into such systems in order to provide for more tests and technologies while efficient quality systems receive nothing. This practice also allows for marginally competent and incompetent doctors to hide behind a barrage of test that are sometimes unnecessary. All these practices eventually lead to prolonged hospital stays and unnecessary procedures that puts the consumer directly in harms way while at the same time protects those who endangered the consumer in the first place. To cap it off, Dr. Denis Cortese states that the current system feeds off on the concept â€Å"the sicker the patient is, the more money you get†(cited in Smith, 2008, n.p.) . The Proposed Solution All the various papers and articles that have come out due to the issue of increased healthcare costs and decreased quality care offers numerous methods of solving the problem but all carry one unified message: reboot the system. It seems that Halvorson (2005) was correct when he said that â€Å"changes–in the way health care is delivered and financed–will, I believe, come not gradually, but much more quickly†(n.p.). A mere three years after this statement, America does indeed find itself at a tipping point amidst cries for policy reforms. As Baker (2008) pointed out: â€Å"About one third of all health care spending pays for poor quality [†¦] We can do better – and we can save money at a time when 47 million Americans are uninsured and tens of millions more worry about losing the coverage they have†(p. 3). These policy reforms, in large part, are all appealing for a new approach towards managing the costs of health care and that this approach is best served by enacting policies that will ensure and enhance the quality of healthcare America is receiving. This is largely due to the faith of healthcare leaders on the economic concept that increased quality can reduce costs for this concept has served other industries extremely well, surely, the health care industry cannot be immune to this economic phenomenon. Under this approach, leaders in healthcare suggest handing back the purchasing power to the consumer. No longer shall a third-party payer or the managed-care system decide for the client on what treatments the consumer would avail but instead inform consumers about their options. The idea behind this is that by allowing the consumer to â€Å"shop†for the services he needs effectively allows the patient to avoid excessive costs related to excessive use of medical services and avoid costs associated with the â€Å"paper pushing†administrative aspect of healthcare. This creates an incentive for the patient to use medical care efficiently. It is even proposed that the â€Å"savings†made from this approach can be used in a â€Å"medical savings account†(MSA) (Leibowitz, 1994). In this approach, the employer insures the patient and his beneficiaries with catastrophic plans only and instead allots part of the premiums paid into the MSA which the patient can u se to pay for small, routine medical bills. Any unused funds from the MSA can then be rolled into other accounts after retirement. Economizing medical care will hopefully encourage patients to be wise and efficient in seeking medical care (Leibowitz, 1994). The above approaches would also be supported by a system based on quality assurance. This system will allow for the public reporting of quality measures and the cost/quality data of doctors and hospitals. This will allow for a market that is competing in terms of costs and quality thereby creating a market for consumers that is both low cost and high quality (Lass, 2008). An example of this is approach is a research conducted in Pennsylvania which revealed the hospital cost of acquiring nosocomial infections, a cost amounting $185,260 and 20.6 days of hospital stay. A staggering amount when compared to $31,389 and 4.5 daysâ€â€the average cost for individuals who did not acquire the infection. Having such data available to the healthcare network allows for the systems being employed by various healthcare institutions to be re-engineered. Having such data available to the public allows for the informed choosing of facilities to seek care from. Another example of how quality assurance can aid in decreasing the cost of healthcare is its ability to pinpoint the â€Å"wobbly cogs†of the healthcare system (Halvorson, 2005). For example, having identified that the costs in inconsistent healthcare spending lies in the 1% that actually utilizes the level of care offered by their premiums (30% of the cost) while the upper 5% accounts for 2/3 of the cost then a solution can be found by addressing the issues that make up the percentile. Halvorson (2005) adds that the â€Å"solution lies in identifying the specific chronic and acute conditions that move people into that high cost 5 percent bracket, and then systematically and consistently bringing to bear strategic, targeted, consistent, high-leverage interventions to keep those people from migrating to the high-cost end of the curve.†Conclusion The healthcare industry is currently at its worst shape in the history of America. Healthcare is now increasingly becoming unsustainable and unattainable. The quality of care has eroded and the system is highly fragmented and filled with â€Å"wobbly cogs.†All the literature cited in this paper decry the burden increasing healthcare costs have caused the American public, especially now that America is experiencing an economic recession of sorts. This is specifically why healthcare leaders and other advocate groups are using the current crisis as a platform to launch campaigns for policy reforms involving the healthcare industry, suggesting reforms that values quality assurance as a tool towards cutting the excessive costs associated with current practices in the healthcare industry. The main driving force behind this call is the view that by having policies that guarantee the quality of healthcare services allows for the smoother, more productive functioning of the healthcare system and that in the long run saves the American public dollars that would have been wasted trying to correct costs caused by â€Å"wobly parts.†By establishing policies that value quality healthcare, America gains back opportunity costs that otherwise would have been lost to a broken system thereby gaining financial advantage that may be used as a means towards decreasing the financial burdens American families face annually References Baker, A.H. (2008, June 3). Rising costs, low quality in health care: the necessity for reform. Senate Finance Committee Testimony. Retrieved on December 4, 2008 from http://finance.senate.gov/hearings/testimony/2008test/060308ahbtest.pdf. Cost and Quality in Healthcare Reference Manual. (2001). Quality Assurance Project: Core Training Series. Bethesda, MD: Center for Human Services. Retrieved on December 4, 2008 from http://www.qaproject.org/training/cq/ref.pdf. Halvorson, G.C. (2005). Healthcare tipping points: two tipping points, cost and quality, promise to forever change the healthcare landscape as we know it. Healthcare Financial Management. Retrieved on December 4, 2008 from http://findarticles.com/p/articles/mi_m3257/is_3_59/ai_n13487275/pg_1?tag=artBody;col1. Lass, S. (2008, January 21). Healthcare cost and quality. Computer Architecture, Cache, Health Care, U.S. Economy and Life. Retrieved on December 4, 2008 from http://showcase.netins.net/web/stanlass/healthcare.html. Leibowitz, S. (1994, June 23). Policy analysis: why healthcare costs so much. CATO Institute. Cato Policy Analysis No. 211. Retrieved on December 5, 2008 from http://www.cato.org/pubs/pas/pa211.html. Smith, T. (2008, November 25). Health care leaders decry high costs, low quality care. Minneapolis Daily. Retrieved on December 5, 2008 from http://www.mndaily.com/2008/11/24/health-care-leaders-decry-high-costs-low-quality-care.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.