|
June 2009
|
||||||
 |
  Wanna See a Scary Graph?Take a look at the graph below, including the sourcing that shows its credibility.  To many of you, the discrepancy between the increase in workers’ earnings and inflation, and the level of health insurance premiums, is no doubt familiar information. To others, the difference, and especially the magnitude of the difference, between these parameters may be a revelation. Whether the information is new or old to you, as we have written before, the growing divergence between these parameters can no longer be “chowed down.” The businesses that typically bore the brunt of paying for these increases each year cannot, in today’s economy, continue to do so. Nor is there room in the slowly growing rate of wages to continue to pass these costs along to workers, through such mechanisms as increased co-pays. It goes without saying that in today’s economy, federal and state governments are unlikely candidates to step in and fill the gap. As many of you know, I have been writing extensively in recent months about the disruption in health care, and thus the disruption in the health care business sector as well. This graph clearly indicates that things will, indeed, need to change rapidly, and significantly, if health care is simply not to run out of money. When I was doing my undergraduate work at the University of Pennsylvania, one of my least favored required courses was calculus. I knew it had something to do with the area under the curve, but that’s about all I remember. Somehow, I passed the course, went on to get my Ph.D., and have avoided calculus ever since. Until now. As I look at the amount of real estate that increasingly exists between wages, inflation and health insurance, I am fascinated by what cause, or more likely causes, is driving the premium line so divergently apart from the other two. Does it have to do with the cost of delivering the health care itself, or the overhead function of handling the payment for this health care? Or both? More fundamentally, why is the cost of health care, and health care insurance premiums, going up so quickly in comparison to everything else? Some have estimated that about 35 percent of health care expenditure is waste, with much of this waste obviously being contained in the area between these curves. Put another way, there must be some reason or reasons why health care costs are going up so much more quickly than other economic metrics. In order to thoroughly rethink health care and improve its effectiveness and its efficiency, we will need to conduct research to determine where this waste is occurring, and which are the biggest waste items. A question that should fascinate all researchers is what methodology/methodologies should be used to conduct this research. In point of fact, this waste determination process will, I predict, constitute a large percentage of the activities of a fairly large number of health care company employees and consultants for years to come. More importantly, it will constitute the first step in the process of “disrupting” health care, i.e., cutting out the waste and reallocating those dollars to more effective and more efficient health care. Again, this will be a multistep process that will take a small army of highly skilled workers with a wide variety of core competencies, and some years, to carry out. The end product will be the attainment of a condition in which the wisdom of health care developed by the best minds and with the best funding will be distributed to efficient, convenient health care delivery points. In summary, the debate over whether health care is a right or a privilege can at that point finally be put to rest. That is, health care costs have been increasing at such a rate that they cannot even be managed as a privilege anymore. Eliminating the 35 percent waste that is built into these charges, and the astronomically rising costs that result, is becoming increasingly important to the private sector lucky enough to have health insurance, and to the employers that usually pay for the bulk of these expenses. Additionally, the increase in efficiency in the delivery of health care should permit us to provide health care to those patients in the United States currently uncovered by health care insurance, with the worldwide implications of these efficiencies being obvious as well. To turn our investigative efforts in the direction of waste identification and reduction, given where we start now, will be quite a challenge. A review of the work that GfK Healthcare did in 2008, for example, found that virtually all research we conducted centered around helping products beat out their competition. Virtually none of it centered around such issues as electronic patient records, patient noncompliance and other factors that may be contributing substantially to waste. This, obviously, will need to change if we as health care research professionals are to contribute significantly to the increase in effectiveness and efficiency in health care delivery and in the health care business. I, for one, look forward to relying less for our business on testing visual aids and more on investigating the disruption of medicine and medical marketing as it is currently practiced. 
Richard B. Vanderveer, Ph.D. CEO, GfK Healthcare 
| |||||
        
|
||||||