Costs - Why the U.S. Spends So Much on Health Care

The December 17 WSJ Health Blog highlights a McKinsey report that purports to explain why the U.D. spends $650 billion more on health care than you’d expect in a nation with our GDP.

The report concludes the scoundrels in our midst are specialists who practice in outpatient settings – office, ERs, surgical, diagnostic, and imaging centers – where $850 billion out of the $2.1 trillion, 42% of health spending, takes place.

The report concludes,

Outpatient care is very profitable, particularly for specialty care and diagnostic procedures, and such profits encourage growth in supply. In addition, physician judgment is involved in determining the best course of treatment for most outpatient care, and current outpatient reimbursement methods reward providers for delivering more care.

Whose judgment should one trust? Health plans, government agencies, HMO medical directors, or the physicians who perform these procedures? I trust doctors most.

Anyway, the blog drew a lot of fire, including comments blaming lawyers, lack of universal coverage, patient irresponsibility, greedy HMOs, and specialists’ greed.

I weighed in by pointing out: 1) patients (and their lawyers) “expect” the very best and highest standards of care, for example, CT and MRI scans for evaluating heart and joint problems and invasive procedures for correcting them; and 2) the U.S. lacks a broad primary care base, which delivers care at 30% less with comparable results in primary-care rich regions of the U.S. and in most other developed countries. Simple math: 30% X $2.1 trillion = $630 billion, almost the precise amount the McKinsey report deplores as excessive. I don’t agree with the nation that specialists are culprits.

Besides, I noted, specialists have a hammer (their skill), and they will use it to hit the nail (evaluate and treat patients who come or who are sent to them).

Procedures are what specialists are trained to perform, and are what patients, lawyers, hospitals, and referring doctors expect them to do. Specialists might do fewer procedures if paid less, and primary care doctors might refer less if they were paid more to spend time advising patients, but that is another issue for another day.