At the AHIP conference in June, I asked the audience to think about the population health interventions they are running, their efficacy, and the annual investments that all of us are making to improve clinical outcomes.
Even with the best of intentions, many of our investments are wasted on ineffective interventions. And I believe that if we look across the spectrum of population health – from medication adherence, to the management of chronic illness, to palliative care, to pre-term birth, to name just a few – we see that we’re investing in interventions that don’t drive the behaviors we want; and consequently don’t produce the outcomes we are hoping for.
So what’s the price tag?
We estimate it’s more than $500 billion per year in wasted costs. That’s $500 Billion in ineffective interventions and hundreds of billions more in the downstream medical costs.
Let me unpack that number a little bit. From a top down perspective we start with the fact that we, as a nation, just crossed the $3 trillion mark in 2014 for annual healthcare spend. For the purposes of this calculation, I conservatively estimated that about half of the annual U.S. spend is on interventions. So $1.5 trillion in annual intervention investments. I used various data sources, including one estimate that sited that nearly two-thirds of the rise in health care spend is linked to interventions and their associated costs (including treated disease prevalence and innovations in medical treatment).
Further, we know through scientific research that more than half of all prescription medications and up to three-quarters of certain medications generate no health benefits to the individual. And while prescription medications are likely to be more effective than other interventions, I assumed for the case of this calculation that approximately half of all interventions have efficacy on the health and financial outcomes they are trying to achieve.
These calculations put us far north (as high as $750 Billion) of a conservative, yet alarming $500 billion in estimated wasted interventions. These are the blind spots in our healthcare system, which drive tremendous cost, with little benefit.
I challenged the audience at AHIP to think about how we can dramatically improve intervention effectiveness and I continue to have these conversations with many of you, the thought leaders and innovators in our healthcare system. Making our interventions more effective, knowing which ones will work for which individuals, and being able to predict outcomes will illuminate our blind spots, support better health and financial outcomes, and help us put a dent in the annual $500 Billion price tag in wasted spend.
Colin Hill is chairman and CEO of GNS Healthcare. He can be reached at Colin.Hill@gnshealthcare.com.