Deflating results of major study point to better ways to cut health care waste

By | 3 minute read | February 12, 2020

Originally published on January 8, 2020 in The New York Times:

Research has established that as much as a quarter of American health spending is waste.

There are two basic ways of tackling it, by focusing narrowly on specific types of patients or on the system as a whole. The patient-centered approach starts with this fact: A relatively small group of patients — 5% — account for half of all health spending.

It’s widely believed that making so-called super-utilizers even a little healthier — for example, giving them extra help once they’re out of the hospital to prevent a quick return there — would yield substantial savings. This idea, based on some weak evidence, has received considerable media attention and government support.

A rigorous study, published Wednesday, makes clear it’s not so easy. In fact, the study’s results are likely to be viewed by many as a major disappointment. Yet they also help guide us to what may be better strategies for cutting waste.

The study, published in the New England Journal of Medicine, was a big test of the people-focused approach: a randomized trial of a program in Camden, New Jersey to reduce super-utilizer spending. About 800 very sick patients were randomly assigned to the program or to usual care. (The program has since expanded to other cities.)

To try to avoid a repeat hospitalization, the program provided an unusually large amount of care to very sick patients after they left the hospital, including from registered nurses, social workers, licensed practical nurses, community health workers, and health coaches.

In the three months after a hospital stay, an average patient in the program received 7.6 home visits and 8.8 phone calls from staff. In addition, program staff went along on physicians’ visits to patients, which averaged 2.5 per person.

The result of all this effort?

For the six months after randomization, patients in the treatment and control groups had about the same chance of returning to the hospital, the same number of return hospital visits, the same amount of time spent in the hospital overall, and the same hospital costs. (It’s possible these measures differed across groups in small ways the study wasn’t large enough to detect.)

That doesn’t mean it’s impossible to reduce readmissions or health care spending of targeted patients. Some previous randomized evaluations of other programs have found reductions in hospital readmissions of 15% to 45%, and in some cases reduced spending.

But it’s important to understand the difference between those studies and the Camden one.

“The Camden model targets a population that has a much more varied set of medical needs and social complexity, and with higher health care spending, than the existing successful models,” said Amy Finkelstein, a health economist at MIT and a co-author of the Camden study.

The other approach to fighting wasteful medical spending starts with looking at health care as a system of goods and services: medications and surgical procedures, administrative processes and physical infrastructure. Some of these enhance health and others don’t, while some of it costs more than its benefits warrant. If you can identify wasteful goods and services and deliver effective care at lower prices, you can make the system more efficient for everyone.

This idea is behind many policies that change how Medicare pays for care.

One advantage of the systemic approach is that it’s easier to replicate than programs focused on super-utilizers. If eliminating or replacing a drug, procedure or administrative process means that spending at a hospital goes down, it’s relatively simple to adopt that change at other hospitals. But conceptually simple doesn’t mean easy in practice.

“Directly and systematically reducing wasteful care is hard because the most successful strategies threaten the revenue of dominant health care providers,” said Michael McWilliams, a professor at Harvard Medical School and a general internist with Brigham and Women’s Hospital. “One person’s waste is another’s income.”

The Camden study, unfortunately, did not measure patient experience, which might have improved. If patients did better in some ways and at no statistically significant additional cost, that could make its efforts worthwhile, even cost-effective.

That’s what an exclusive focus on reducing spending misses. The answer isn’t necessarily to pick a patient- or system-focused approach to reforming health care, but to do both effectively.

Learn more about how IBM Watson Health is addressing problems with fraud, waste and abuse

Visit the Government Health and Human services page for more

Most Popular Articles