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HEALTHCARE REFORM

Cutting Healthcare Spending with Occam’s Razor

Looking at the most obvious places to address rising costs.

PETER J. PITTS

The Burrill Report

“If we want to lower healthcare costs (or, more honestly, healthcare spending), we need to look at where the spending takes place.”

Why did Willy Sutton rob banks? According to urban legend he pointed out, “That’s where the money is.” This apocryphal aphorism led to what is called “Sutton's Law,” the notion that when diagnosing, one should first consider the obvious.

President Obama and Medicare directors nationwide should pay heed. If we want to lower healthcare costs (or, more honestly, healthcare spending), we need to look at where the spending takes place. It’s a classic case of Occam’s razor.

According to the Agency for Healthcare Research and Quality, the top 1 percent of healthcare spenders is responsible for more than 20 percent of all healthcare spending. And the bottom 50 percent represent only 2.9 percent of the nation's healthcare bill.

While this is not news, it seldom seems fit to print. After all, it just doesn’t justify a lot of political agendas and editorial opinions that prefer a simplistic, one-size-fits-all single payer national healthcare “solution.”

According to a story in the National Journal, “The data suggest that healthcare policies designed to reduce spending of healthy populations may be of limited value in reducing overall costs. The big savings can be achieved by reducing the costs of the biggest healthcare users.” This raises important questions. Why didn’t Florida maintain its “Healthy State” program where high-cost Medicaid recipient care was being managed and overall costs were going down? And why aren’t more states aggressively pursuing solutions like the Hoosier State’s “Healthy Indiana” program, where Governor Daniels shifted authority and made personal responsibility central? Instead, public and private payers continue to rely on population-based approaches when science, data, and best practices suggest that what we require are more personalized and preventative approaches.

And, to address the 800-pound gorilla in the room, it also demands a thoughtful national dialogue on end-of-life care. (Some 77 percent of Medicare decedents’ expenditures occur in the last year of life—52 percent in the last two months of life and 40 percent in the last month).

What better time to raise this issue than during a Presidential election cycle.

Peter J. Pitts, a former FDA Associate Commissioner, is President of the Center for Medicine in the Public Interest



January 13, 2012
http://www.burrillreport.com/article-cutting_healthcare_spending_with_occam%e2%80%99s_razor.html

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