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Why are we wasting money on healthcare with poor outcomes?


I am frustrated with the unprecedented amount of money being spent on healthcare in the United States, particularly since, compared to most other nations, we do not have better results from this “would-be investment.”

Editor’s Note: Welcome to Medical Economics' blog section which features contributions from members of the medical community. These blogs are an opportunity for bloggers to engage with readers about a topic that is top of mind, whether it is practice management, experiences with patients, the industry, medicine in general, or healthcare reform. The series continues with this blog by Jeffrey Gene Kaplan, MD, MS, a senior pediatrician and retired physician executive. The views expressed in these blogs are those of their respective contributors and do not represent the views of Medical Economics or UBM Medica.



Jeffrey Gene Kaplan, MD, MSI am frustrated with the unprecedented amount of money being spent on healthcare in the United States, particularly since, compared to most other nations, we do not have better results from this “would-be investment.” 

In other words, we’re wasting our money and I say this, for the most part, regardless of the medical or surgical condition.  For example, given the acuity or case mix, compare the cost of dental or surgical care in Mexico or Europe to getting the same service in the United States.

More from ME blogs: Young doctors are jumping ship to non-clinical roles


Nevertheless, the skeptics will say our care is better. Is it?  To answer that question, we need to look at all the costs, determine the quality of care, acuity-adjust the benefit, if any (i.e., the outcomes) and verify that there are no problems with access. [These three parameters-cost, technical and perceived quality and access will neatly come together in my definition of “value,” below.]

Obviously, the challenge in medical management is to get the costs down without compromising access and to get the quality up. 

Next: Costs that can't be justified


Costs That Cannot Be Justified

One of the things insurance companies like to do is charge out-of- pocket fees for some recommended care through the use of co-pays, deductibles, multi-tiered pharmacy benefits, etc. This is done in the hopes that patients will thereby become more judicious in the menu of procedures, tests, admissions, referrals and so forth that are put before them in their hour of need. [As if they can “choose”?]

Lost in translation: The physician-caregiver relationship

It has been my experience that this cost sharing can quickly become a veritable barrier to appropriate access. In other words, in my role as health plan medical director, I always had to ascertain that the patients were not being dissuaded from getting the care that they actually needed.

At the same time, I had to be wary of CYA medicine where every test in the book is ordered, willy-nilly. Inappropriate charges, barriers to access, overutilization, mindless medicine, can all contribute to the costs of care without improving value.

Next: Quality that can't be assured


Quality That Cannot Be Assured

Let’s examine quality by looking at a particular indicator of hospital quality-identifying potentially preventable hospital readmissions. This is an important, common and accessible litmus test of healthcare quality and efficiency, but it fails to address all the issues in the continuum of care. For example, patients can be readmitted for other than clinical reasons such as unaddressed social factors; specialists may not communicate with other specialists or primary care practitioners; a lab test may go unnoticed; there’s always the insidious bureaucratic delay to contend with; there may be hidden diagnoses such as substance abuse, drug-drug interaction, etc.

Anyway, why choose “readmissions” as a critical indicator?  Simply because it obeys Willie Sutton's Law (Why rob banks? Because that’s where the money is!) 

Hospital readmission rates are low-hanging fruit when it comes to evaluating the value of key components of care. If you are a healthcare director, manager or simply an interested party, however, will you put all your eggs in that basket? 

Next: Indicators of quality of care


How good an indicator of quality of care is readmissions?

A study comparing 2009 and 2011 hospital readmission rates for MI's showed that they ranged from 15% to 26%. But there was a statistical observation-only 1.7 percentage points separated the bottom from the top quartile ranking hospitals’ performance. [Read: there is little differentiation here.

The authors also scrutinized the relationship between readmission rates and several commonly-used hospital quality indicators, including “risk-standardized mortality rates, volume, teaching status, and process-measure[d] performance.”

A strange finding emerged when the data were analyzed in this study: while rankings fluctuated, readmission rates for lower-performing hospitals in 2009 tended to improve by 2011, and the obverse-at the very same time, readmission rates for higher-performing hospitals tended to worsen. In fact, the investigators found that “readmission rates were higher in teaching hospitals and were weakly correlated with the other indicators of hospital quality.”

Next: Translating data into information about value


Translating Data Into Information About Value

When looking at quality, accessibility and cost, hospital readmissions are a convenient place to start, but they are insufficient for defining value.

It is common to have “value*” expressed as a simple relationship of “quality” to “cost,” but it is not that simple.

When attempting to manage care more effectively and efficiently, one has to consider the continuum of care, the past medical history, the history of present illness, socio-economic factors, genomics, the relevant specialty guidelines, compliance or adherence rates, and so forth.

These aspects of care are data, hard to computerize but coming to the medical manager, actuaries and policy makers. If applied correctly, this new information will lead to a more accountable healthcare system. 

* Please see for a better definition of “Value” –one that incorporates the notion of “accessibility.” 

Next: Translating data into information


The translation of data into information

To better understand our evolving information technology as it applies to medical management, let me recapture some exciting developments,

I had a discussion a few years ago with John Eisenhandler, Ph.D. of 3M Health Information Systems in Wallingford, Ct. about economic incentives and how to operationalize comparative effectiveness research. It is remarkable how sophisticated 3M is about what I call “measurement and management.”

The link at the end of this article, goes into greater depth on “Planning, Budgeting and Controlling – One Look at the Future:  Case-Mix Costs Accounting.”  See it to look at identifying preventable readmissions using what should be readily available data; hone in on a methodology to look at outcomes-heart failure, in particular; and, check out Richard Averill of 3M’s comments about re-hospitalizations among Medicare fee-for-service patients.

For more on the state-of-the-art of marketplace logistics, economic incentives, ways to improve quality across and between settings, comparative effectiveness and cost-effectiveness analyses, care-coordination, case-mix (acuity) adjusted data, episodes of care, etc. see 3M Health Information Systems. If interested, please also visit “Efforts That Reduce Preventable Readmissions” in "Predicting and Preventing Readmissions."

Next: Share your thoughts



Please share your thoughts and/or frustrations with potentially preventable readmissions.

         Please comment, especially about:

· Basic awareness of Evidence-Based Medicine and Medical Necessity criteria

· Reducing variation, a key concept of quality assurance

· Equity in access

· Ensuring proper reimbursement for rendered, appropriate care

· How to maximize revenue and decrease claim denials

· Not raising any red flags



Press MJ, Scanlon DP, Ryan A, et al. “Limits Of Readmission Rates In Measuring Hospital Quality Suggest The Need For Added Metrics.”Health Affairs June 2013 vol. 32 no. 6 1083-1091.

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