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The High Costs of Ill-Considered Cost-Cutting

March 11, 2014
4:51 pm

If I had the ability to make anything required reading for the powers that be in Washington, D.C., it would be Dr. Marc Grodman’s blog post on The Hill’s website.  Dr. Grodman is CEO of Bio-Reference Laboratories, Inc., a New Jersey-based clinical lab and is also a member of the Healthcare Leadership Council.   In his post, he explains clearly and compellingly that simply cutting healthcare spending is not inherently synonymous with achieving a more cost-effective healthcare system.

Dr. Grodman uses the Medicare reimbursement cuts faced by clinical laboratories as his example, pointing out that simply chopping away at Medicare payments for lab services will undermine the advancements laboratories have made in developing genetic testing “that precisely identify disease, (enabling doctors) to select the best treatment for each patient,” speeding the healing process and reducing overall healthcare costs.

If reimbursement cuts hamper this progress, he writes, physicians must rely more on trial and error, leading to greater redundancy, higher cost and reduced quality.

This is true for clinical labs, but it speaks to a larger issue surrounding healthcare policymaking.  Even though per-capita Medicare spending is at historic lows, many on Capitol Hill insist there’s a healthcare spending problem.  In part, they are right because the aging of the baby boom population and the rapid growth in new Medicare beneficiaries will lead to a rise in utilization of healthcare services.  We can’t address this rapid growth in patient numbers and demands, however, by enacting healthcare budget cuts that have no correlation with healthcare value.

As Dr. Grodman writes, “We have yet to establish the balance between managing the cost to provide and access healthcare with maintaining the ability for development at all levels of the care spectrum.”

Finding that balance is imperative if we’re to meet the daunting healthcare challenges that are inevitable and that can’t be addressed without health innovation.

A Thoughtful Approach to Healthcare’s Most Difficult Decisions

March 06, 2014
5:23 pm

As policymakers look for ways to address Medicare’s financial challenges and make the program more cost-efficient, it’s inevitable that the discussion will turn at some point to end-of-life care.  And it’s easy to understand why.

As you break down Medicare spending, it becomes clear that a disproportionate amount of resources are devoted to providing care to beneficiaries in their final year of life.  The Centers for Medicare and Medicaid Services (CMS) has estimated that 25 percent of Medicare expenditures are spent on services for the five percent of beneficiaries who die each year.

But, as Premier Healthcare Alliance president and CEO Susan DeVore wrote in a thoughtful essay in the Wall Street Journal, the key to effectively addressing this issue is not to look at end-of-life care as a cost challenge.  Rather, the focus must be on empowering patients and their families to fully understand their healthcare options.  “If this is done well, the rest will follow,” she wrote.

In her WSJ piece, Ms. DeVore, a Healthcare Leadership Council member, addresses the variation in end-of-life care among hospitals, pointing out that some terminally ill patients were spending their final days in intensive care settings even though there were no medical solutions that could improve their health outcomes.  Better, she wrote, that patients and families have the information and the conversations with caregivers to make educated choices about whether a patient’s final days should be spent in a hospital or at home.

I recommend that individuals, particularly those who are in caregiving roles, read Ms. DeVore’s essay.  As she put it so well, “This topic (of end-of-life care) shouldn’t center on cost.  It’s about dignity, compassion, comfort and making the most out of the last days of a terminal patient’s life.”