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Cutting back on healthcare spending

The United States outspends all other Western nation-states and commits the highest percentage of its own gross domestic product (GDP) to healthcare. According to the World Bank, the United States has devoted 17 to 18 percent of its annual GDP to this sector since 2008. In a campaign season where healthcare is a heavily debated topic, we should try to develop an understanding of the causes of the costs. What are some contributing factors to the high costs of healthcare? The ratio of highly trained specialists to general practitioners (family doctors) and overutilization of medical equipment and prescriptions are two of the largest drivers.

The healthcare system is heavily subsidized. American hospitals and graduate medical schools receive subsidies of up to $13 billion a year to train students, and the result is a healthcare system with higher-paid specialists and a low number of general practitioners. Most medical training occurs in hospitals, which increases the likelihood that medical students will follow role models who are surgeons or in inpatient/critical-care settings. When graduates walk away from five years of medical school with student debt, it is rational that these students would look for a higher income.

General practitioners are decreasing every year. In 1980, 1990, 2000 and 2008, the total number of doctors in general practice was 32,500, 22,800, 15,200 and 9,600, respectively. General practice, out of 29 listed categories, is the only category with a declining trend. Orthopedic surgery, for example, has seen a steady increase from 14,000 doctors in 1980 to 24,800 in 2008. With fewer general practitioners and clinics, patients will have to seek out hospitals and specialists for basic medical issues and concerns. Specialists’ time is more expensive, leading to higher medical bills and more expensive healthcare.

The most important contributor to the high cost of U.S. healthcare is overutilization. Overutilization occurs when hospitals recommend tests such as MRI and CT exams and prescribe medication more often than necessary. The Organization for Economic Co-operation and Development (OECD) states that in October 2013, the United States had nearly twice as many MRI and CT exams as the average. The American commercial average for exams like MRIs and CTs is far higher than that of almost all of the other countries. As public hospitals provide more exams, the cost to the hospital to provide the procedures and to pay the specialists increases. The costs then are shifted to the state and federal government.

There is a patient side to overutilization as well. American patients tend to shop for the best prescriptions, which is profitable for the companies. The Mayo Clinic reported that nearly 70 percent of Americans are on at least one prescription drug. Physicians ultimately make money on interventions like high-tech procedures and exams, and patients, through their insurance, do not pay a great deal for their prescriptions. Overutilization is inefficient and costly and promotes a culture of intervention which might have no benefit to the patient.

It’s safe to say the U.S. needs to reverse these two trends in healthcare. General practitioners’ roles are vital, and communities need more of them. Larger hospitals, as well, need to cut back on expensive testing.

 

Contact James Stephens at [email protected]

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