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“Creative Destruction” of Healthcare?

February 26, 2014

dietandexerciseYesterday’s HIMSS keynote by Aetna CEO Mark Bertolini highlighted some unsettling metrics about healthcare in the US, but to me, the biggest one was this:

About 30% (over $800 billion) of annual healthcare spending is wasted in the United States.

Mr. Bertolini suggested that if we could solve that, the US could pay back half its debt over the next 10 years. Wow. I guess the trick is finding that “waste.”

Here are some other numbers from the keynote to diagnose:

  • Of the $880 billion spent in Medicare, the top 5% of patients consumed 43% ($378.4B) of it, an average of $108,000 per year, per person.
  • Healthcare premiums are growing at four-times the rate of inflation.

I need to navigate this post to the shore of how Kronos can help, but first, I want to mention a BIG and SWELLING part of the problem. We’re destroying our healthcare with our forks and fistfuls of fries. In fact:

Nearly 70% of adults in the US age 20 years and over are overweight or obese.

No wonder we didn’t win any speedskating medals. All kidding aside, the costs of our poor diet and exercise practices are staggering. Fixing that would go a long way toward fixing our healthcare system.

Anyway, back to shore. One article on yet another study indicated hospitals are slashing labor costs, including nurses (accounting for about 1/3 of the cuts) because Medicare will pay hospitals about 1.1% less over ten years under the Affordable Care Act. The study estimated the cuts were about 1.7 full-time jobs for every $100,000 lost in Medicare revenue, and while it didn’t examine the impact on quality of care, I would guess it’s not a positive one.

Rather than cut nurses and other key positions, hospitals can first make sure they’re using the best scheduling tools available to they don’t overstaff and waste money. That’s where Kronos for Healthcare can help organizations “control labor costs, minimize compliance risk, improve workforce productivity, and deliver quality, cost-effective care.”

Sorry for sounding so “markety” there at the end, but now I have to plan for a lunch consisting of the gym and a salad…

2 Comments leave one →
  1. Ron permalink
    February 26, 2014 2:32 pm

    Perhaps a less interesting fact regarding the reduction of Medicare reimbursements to hospitals is a result of better efficiency and cost-effective care. As Medicare measures the success of these programs the reward is lower reimbursements.

    Medicare has begun to recognize and measure Quality of Care that is suppose to translate into financial rewards for those who perform. While the intent is clear, we must wait to witness when and how this will be successfully accomplished.

    There are many reasons contributing to Medicare waste. Wrestling with issues involving end of life treatments, tort reform and our own eating habits are not easily nor quickly altered. These changes must come in the form of a cultural change that gradually is adopted by society.

    Off to the buffet….



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