7 big cost-cutting ideas from the Birnbaum panel

With the nation’s health care cost crisis worsening, we invited three leading experts on the topic to address Group Health’s annual Birnbaum Endowed Lecture on May 8. Challenging our community to deliver on its promise of affordable care for all, the panel offered plenty of ideas—along with some comic relief. Here are my favorite points from the discussion. Watch the brief video clips to discover yours.

1. We can reduce cost per unit of care without harming quality.

For decades, political forces have resisted change, stoking fears that cost curbing would lead to rationing and degrade quality. But our biggest challenge is the cost per unit of care—not the volume of care, said Dr. Arnold Milstein, professor of medicine at Stanford University Clinical Excellence Research Center. Americans spend 50 percent more on health care than other wealthy counties do, but we don’t use more services. “The big difference,” he explained, “is in unit price for service, which is primarily driven by the fact that people in the health industry—including people like myself who are professors in medical school—tend to be paid more compared to our peers in other wealthy countries.”

The panel also pointed to extreme variations in the cost of care, indicating opportunities to reduce waste and increase efficiency. “If we could somehow rapidly replicate the most cost-effective, high-quality approaches to delivering care ... it would reduce health care spending in the U.S. by 20 to 30 percent—and the quality would actually improve,” Dr. Milstein said.

2. We must help people understand: Less can be more.

Many people associate more services with higher quality, but more care is actually linked to higher death rates. “It can be better to have less intervention, to have less risk of longer stays in the hospital with multiple physicians not knowing what the other is doing,” said Mary McWilliams, MS, executive director of the Washington Health Alliance. The panelists praised initiatives like Choosing Wisely, a nationwide initiative led by the American Board of Internal Medicine and involving many medical specialty groups. Its goal is to reduce low-value care, which doesn’t improve health and may actually be harmful. They also recommended shared decision-making to help patients understand treatment options and make choices based on their own preferences and values.

3. New benefit design and price transparency can lower costs.

Insurance products that let consumers save by choosing less expensive providers are making a difference, the panelists explained. Ms. McWilliams cited a study in New Hampshire where an all-payer claims database posts price information. “Where prices are no longer hidden from purchasers and patients, high-priced providers are renegotiating terms,” she added. Similar efforts are underway in Washington state.

4. Build it cheaper and they will come.

Lower prices largely trump consumer loyalty, said Dr. Mark D. Smith, founding president of the California Healthcare Foundation. He likes to compare health care to the airline industry as it eliminates frills like meals and assigned seats. “If you can deliver a dramatically more affordable service, even if it lacks elements customers thought were quality, but not essential…people are willing to change.”

5. Look to other countries for cost-reducing knowhow.

Among examples, Dr. Milstein described how a research team at the University of British Columbia went to India to learn a dramatically less expensive approach to cataract surgery that achieves better outcomes. If doctors in Vancouver could mimic the Indian methods, they would reduce their cost by 85 percent—even taking into account Vancouver’s higher labor and non-labor costs, the researcher found.

6. Self-care is ripe for innovation.

New technologies are creating “growing opportunities for self-service and self-care,” said Dr. Smith. “And much of the protocolized care that nurse practitioners and physician assistants deliver can be delivered by the average well-motived patient or parent.” Dr. Milstein described innovations that now allow three in 10 patients in Canada and Idaho who need renal dialysis to administer the treatment for themselves in their own homes.

7. Our region can lead the way.

Dr. Milstein suggested establishing “innovation zones,” where government lets geographical regions experiment with safe but alternative regulation for issues such as scope of practice. Ms. McWilliams proposed a regional economic development strategy, calling on innovative care-delivery and biotech organizations to create “a sustainable approach that will help the economy as well as our wellbeing.” And Dr. Smith called upon the community to push “progressive and disruptive organizations” such as Group Health to make health care “better, faster, cheaper”—and “stimulate the rest of the provider community to go in that direction.”

Thanks to all who helped make this year’s Birnbaum Lecture and Research Rounding poster session that followed a rich opportunity for learning.

—Eric B. Larson, MD, MPH
Vice President for Research, Group Health
Executive Director, Group Health Research Institute