Where Does the Money Go?

In 2014, U.S. health expenditures reached $3 billion (yes, with a B), according to analysis by the American Medical Association.

As we've talked about before, at more than $9,000 spent per person on average, that's the highest rate in the world--and by many measures, doesn't equate to quality care.

So where does all that money go? The AMA summarizes:

Out of that $3.0 trillion, only 15.9 percent went to physician services. Furthermore, physician spending grew by an average of only 4.1 percent per year between 2004 and 2014, which is 1.5 percentage points lower than the average annual growth rate for hospital spending and a full 2 percentage points lower than that for clinical spending, showing physician spending is not the main driver behind rising health care costs.

On the other hand, prescription drug spending rose 12.2 percent in 2014, marking an abrupt departure from growth rates of recent years. "There hadn't been double digit growth in this category since 2003," the analysis said, "and post-2006 growth rates had remained well below 6 percent." More than one-third of the new drug spending was from new treatments for hepatitis C.

Check out the AMA's infographic:

[caption id="" align="alignnone" width="353"] Source: AMA Policy Research Perspective[/caption]

Think about this:

For every dollar that Americans spend on healthcare every year, less than 16 cents of it goes towards physician care--that is, quality control and health maintenance. Instead, the bulk of the cost goes towards hospital visits, and all the extra (read: administrative) costs therein.

The top dollars are going toward the most high-stakes scenarios. Hospital visits come when patients are at their most critical, having the most dire treatment needs. In some cases, such as accidents or the discovery of disease or cancer, those visits are completely unavoidable. In other cases, these visits come as the result of misdiagnosis at the physician level, or, more importantly, lack of meaningful care at those levels.

In essence, we can be paying more because we're not receiving the preventative/maintenance care we need at the physician level.

That's why we're so passionate about the Health Rosetta paradigm at Captiva Benefit Solutions. The solution to inadequate care at the physician level is Value-Based Primary Care. Properly incentivized primary care is the front line defense against downstream costs.

The VBPC model also delivers a substantially better experience for patients, often in one or more of the following ways: More time with their provider, same day appointments, short or no wait times in the office, better technology (e.g., email, texting, video chats, and other digital-based interactions), 24/7 coverage by a professional with access to their electronic health record, and far more coordinated care.

And, even when patients have to go to the hospital (which would inevitably be reduced by better primary care), we address the pricing failure at hospitals by demanding Transparent Open Networks.

Transparent Open Networks call for:

• Fair, fully transparent price to employer/individual at high quality centers who readily accept quality reporting such as Leapfrog.
• Providers able to set a price that works for them while avoiding claims/collections hassles and accompanying receivables.
• No charge for individual going to these providers. No EOBs, bills, etc. -- just a thank you note.

While plenty of executives are dreaming of a time when healthcare prices will level off (or even decrease!), the truth is, that dream has come true--companies just don't know where to start.

Contact Captiva Benefit Solutions today to find out how to reduce healthcare costs and improve care--and return plenty of dollars to your company and its employees.

 

The following article Where Does the Money Go? was originally published to: Captiva Benefit Solutions Healthcare Blog