Copying what works to reduce healthcare costs

If, as a country, we cared about improving the ratio of quality to costs in our healthcare system, why wouldn’t we:

  • Look for examples of things that already “work”, either in the USA or abroad; and
  • copy them?

In a post yesterday that got me thinking, John Goodman makes the point that:

  • there are real examples out there of individuals who have found ways to dramatically change the cost/quality ratio of healthcare (he gives interesting examples); but that
  • we are not doing a good job of systematically looking for such examples and then trying to replicate and scale them.

It is well worth reading the full article.

While depressing, it makes you realize there are probably some exciting opportunities out there that are not being exploited as yet.

Disease economics: COPD and Pneumonia

Following on from my last post on asthma, here are the economic details for the other two big respiratory disease expense categories: COPD and Pneumonia.


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Disease economics: Asthma

Asthma and COPD (Chronic Obstructive Pulmonary Disease) show up as the the fifth most costly clinical category in US healthcare at $60+ Billion / yr. (see footnotes for source etc). As with prior posts in this series, I wanted to see if a deeper analysis of the economics suggested possible interesting business opportunities.

And I have recently seen several interesting healthtech startups attacking the asthma space and wanted to use these expense numbers to understand better the opportunity they are targeting.


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Disease economics: Backpain

I was interested to see that Back problems are the ninth most costly clinical category in US healthcare at almost $40B / yr. I chose back pain as the second in my series on disease economics.

Back pain

Most ($31B) of the costs falling into the back problem category come from a single clinical condition code #205 (Spondylosis; intervertebral disc disorders; other back problems).

And most of these expenditures go toward hospital in-patient visits/procedures ($11B), and Clinician office visits ($13B).

For the details, read on.

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Disease economics: heart disease

I wanted to see what insight I could gain by looking a bit deeper into the economics of specific diseases. I started with heart disease. As in prior posts on disease economics, the data comes from AHRQ (details here and here and at bottom).

Expense color coding

Color code for graphs below

From my post on disease costs, the big heart disease clinical condition codes are Disorders of lipid metabolism, Essential hypertension, Coronary atherosclerosis etc, Acute MI, and CHF. Below are some details of the economics of each of the clinical conditions.

To read what I think it all means, scroll to the bottom of the post.

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Disease cost drill down (1)

To be actionable, I felt it more useful to look at healthcare costs by specific clinical condition, rather than by the general disease groupings of my last post. Here is the graphic I came up with (excluding mental disease categories for now).

The 8 red dots represent clinical condition codes with annual expenditures each in excess of $20 Billion. The green dots represent 14 clinical condition codes with costs in excess of $10 Billion (but less than $20B).

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Disease through the eyes of an accountant

There has been a lot written recently about how some diseases cost the healthcare system more than others, and the fact that some patients (the sick ones and the old ones) cost more than others. I wanted to learn more about which clinical conditions are the big contributors to our national healthcare bill. So, for the purposes of this post I pretended I was an accountant, responsible for thinking about where to save money in the USA’s health budget. Here is what I learned.

My interest in this topic is part of my quest to identify new opportunities that I believe will arise as a result of turmoil and reshaping of the healthcare landscape over the coming decade (more on this topic here). It’s not that I think there is anything especially surprising or worrying about the fact that healthcare expenditures flow more to some diseases and patients than to others. To me that seems only to be expected. However, I do believe there is going to be increasing pressure to reduce costs, and that the logical places to look for new opportunity are where lots of money is presently being spent.  [Read more…]

Petri dish for innovation: Consumer driven health?

Petri dish of innovationI’ve written before about the idea that segments of the healthcare system where patients pay for themselves may be a fertile focus for innovation because of the tight connection between “who pays” and “who benefits”. News today reinforces this hypothesis, suggesting there are actually quite a few of these potential customers. [Read more…]

Who pays for US healthcare?

Funding sources for healthcareIt’s a truism to say that “Patients don’t pay for healthcare” in the USA. And historically, new ventures based on the idea that patients would pay out of their own pockets for healthcare innovations mostly adapted to this reality, or went to the wall.

But as I have been watching various healthcare experiments unfold, and innovations emerge, I keep seeing promising ideas and ventures for which at some limited levels patients do seem to be paying. And for a variety of reasons, about which I will write another time, I am starting to wonder if the most promising changes to our healthcare system are going to emerge outside the traditional ecosystem (as Clayton Christensen suggests they may do), and in particular outside the traditional funding ecosystem. With that in mind, I decided I wanted to get clear in my mind just who pays for US healthcare today. Below are a few of the interesting things I learned, that I think may be relevant in thinking about future opportunities. [Read more…]

Hospitals bent the cost curve in the 90’s

Healthcare costsHospital Expenditures and Physician and Clinical Expenditures are the two largest categories of the NHE (National Health Expenditure), comprising 51% in 2010. Intriguingly, while these cost categories have been growing rapidly from 2000 to the present, we seemed to do an excellent job during the 90’s of bending the healthcare cost curve in these two categories. If only we knew how we did that.

This post looks at the growth rates of these big cahunas of healthcare, and is a continuation of our quest to understand the growth of healthcare costs.
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