Why Is It That the More We Spend on Health Care the Less Healthier We Get?

20 December 2011 | Dr. Dennis Schmuland, Chief health strategy officer, U.S. Health and Life Sciences, Microsoft
​In the first post in my series on improving healthcare in the U.S., I talked about the tacit and embarrassing irony that all of us in the US health industry experience every day: that, over the last two decades, the more we've spent on healthcare as a per cent of our GDP, the less healthy we've actually become as a nation.
 
Nearly half the nation’s population has at least one chronic disease. The prevalence of both chronic disease and obesity, now at 47% and 33% respectively, are both projected to get even worse in the next decade.
 
And healthcare spending is totally our fault. Every year for the last 25 years our health care delivery system has devoured roughly 3% more than our annual GDP growth rate--in spite of every policy or price control effort to stop it. This 3% excess spend above GDP is referred to as the "trend to bend." The Bureau of Economic Analysis' recent downward forecast of annual GDP growth to 2% from 2.5% means that our healthcare spend as a percent of GDP in 2020 will be even higher than the 19.8% forecasted earlier this year. The runaway cost of healthcare is now everyone's problem because, for the first time in history, the rising cost of healthcare is a threat to our national credit rating, our education, our global competitiveness, and an economic threat to every family because out of pocket costs are also out of control.
 
As I mentioned in my last post, a big part of the blame for runaway medical cost growth lies in the growing prevalence of chronic diseases such as diabetes, cancer and cardiovascular diseases and the increasing rate of obesity. A population that grows sicker by the year not only requires more care but also more costly care year after year. I'll get back to this in a few paragraphs.
 
I also proposed in the last post that the health information technology (HIT) industry adopt the Triple Aim --better population health and better individual care at a lower price point--as the core criteria for designing and bringing to market new breakthrough solutions that actually arrest or reverse the runaway costs and prevalence of chronic disease. The market is now opening for Triple Aim solutions in the areas of value based payment, care coordination, and chronic disease prevention.
 
Triple Aim breakthrough solutions will first need to identify the optimal role for technology in achieving the Triple Aim by answering this question: Is it the care we receive or is it our declining health as a population that's bankrupting our nation, companies and families the most? In other words, what are the root cause growth drivers behind the "trend to bend" that these breakthrough solutions must address?
 
If you unpack the infamous "trend to bend" you find that, above and beyond the incremental costs of an aging population, 67% of medical cost growth1 is due to the growing prevalence of chronic disease and 27% is due to the doubling of obesity since 1986. In other words 67+27=94% of the "trend to bend" is directly driven by the growth in chronic disease and obesity in our population. This explains why, even though we spend twice as much as comparable OECD countries, our health and life expectancy is declining and our waist sizes are expanding. And since 78% of our healthcare spend goes toward the treatment of chronic diseases, it's not surprising that this is a huge cost lever. And since obese and overweight people develop more chronic disease than those with normal weights, obesity is also a growth lever for chronic disease.
 
But our spending problem is even worse because our delivery system keeps lowering the threshold for treating chronic diseases and obesity with high cost, advanced diagnostic, treatment and procedural technologies – and this has created a vicious cycle that is easy to miss. Said another way, our already high and growing prevalence of chronic disease and obesity has created a target rich environment for high cost drugs, devices and procedures to be prescribed by clinicians. Ken Thorpe has referred to this vicious cycle as the growing "treated prevalence of chronic disease".
 
The inescapable implication here is a bit sobering. If the "trend to bend" is largely due to our declining health and our reactive care delivery system's propensity to endlessly ratchet down the threshold for high cost interventions then the only way to sustainably slow or arrest it is to become a healthier nation. Unfortunately, the determinants of our health have little to do with what happens in hospitals, emergency departments or the doctor’s office--current estimates are around only 10%. The other 90% of the determinants are the decisions we make, our genetics, our personal behaviors, our health literacy levels, and our community and living environments.
 
Finding a sustainable Triple Aim breakthrough solution to this "more care, less health" problem presents a real challenge because our current delivery system is tooled to the hilt to support the business of caring for but not preventing acute conditions and complications of chronic diseases. And based on our projected growth in chronic disease and obesity and an additional 32 million people with new insurance coverage under healthcare reform, the current delivery system is unlikely to be in a position to even begin to address the problems of declining population health and chronic disease prevention.
 
Triple Aim Breakthroughs Needed: Calling HIT to the Rescue
 
Is it possible that HIT could save the day here? I've recently spent a lot of time thinking about why, despite our prodigious investments in the current generation of meaningful use HIT solutions--like EHRs, CPOE, e-Prescribing, analytics, and HIE--we aren't witnessing a corresponding outflow of Triple Aim breakthroughs being reported as a result of these HIT deployments. Is HIT turning out to be a no-show for Triple Aim breakthroughs? Technology is like an amplified lever -- it can dramatically amplify the impact of an action, event, or process. If used to solve the wrong problem, the result is the wrong action or process performed more quickly, effectively, and efficiently. Undoing or working around the wrong action or process typically requires costly human interventions and costly human expertise.
 
If our hope is for HIT to save the day by delivering higher leverage, Triple Aim breakthrough solutions then we need to first answer the question, "What's the optimal role of HIT in achieving the Triple Aim?" Up until now, our nation has acted on the assumption that the optimal role for HIT lies in solving the current "informational disorganization and dis-integration" problem by digitizing, organizing, capturing, analyzing, integrating, and moving health record information around the clinical ecosystem mostly to improve the efficiency and effectiveness of individual clinicians.
 
Could the reason for HIT being a no-show for Triple Aim breakthroughs be that we've made the wrong the assumption about the optimal role of IT? Have we focused and spent nearly all of our HIT resources on our care delivery system.
Sure there’s plenty of waste to remove—the Institute of Medicine found that 30-40 cents of every dollar spent on health care in the US today is waste associated with "overuse, underuse, misuse, duplication, system failures, unnecessary repetition, poor communication, and inefficiency.” But our delivery system is also the very area that contributes the least to the health status of individuals and populations. Could this explain why HIT isn't delivering a steady stream of breakthroughs that improve population health and individual care at a lower cost point? This could also explain why HIT is not proving to be the answer to our runaway cost problem.
 
If in fact the optimal role for HIT in achieving Triple Aim breakthroughs turns out to be on the demand side rather than the care delivery side then we also may be completely missing the Triple Aim breakthrough boat. Perhaps we should not focus on subsidizing and using HIT resources on our current healthcare delivery system at a time when we should be cultivating a new generation of innovations where individuals and families live, learn, work, and play.
 
So let's now get back to the question, “What is the optimal role of HIT in helping us achieve Triple Aim breakthroughs?”
 
Is it to mimic or scale the current care delivery system set-up by solving the informational disorganization and dis-integration problem?
 
OR
 
Is it to help us become a healthier, more productive, and more competitive nation that requires and demands less costly care?
 
Becoming a healthier nation that requires and demands less costly care will require us to apply incentives and technology innovations at both personal and population levels in fundamentally new ways and create the conditions where all of us have the incentives, tools, and opportunity to get and stay as healthy as we can possible be.
 
Where do you think the greatest opportunities for Triple Aim breakthroughs lie? On the care delivery system side where nearly most HIT innovations are focused today or on demand side related to personal behaviors and living environments and involving consumers, families, employers, and communities?
 
  1. Thorpe K. The Rise In Health Care Spending And What To Do About It. Health Affairs. 2005;6:1436-1445
Dr. Dennis Schmuland
Chief health strategy officer, U.S. Health and Life Sciences, Microsoft