Consider these simple statistics. According to government numbers, in 1960, total health expenditures in the United States totaled approximately $27.4 billion. This represented 5 percent of the gross domestic product of the U.S. at that time.
Fast forward to 2013. The total health care expenditures in America totaled $2.919 TRILLION, representing 17.4 percent of the entire GDP of the country. If that’s not a phenomenal growth record, it’s hard to imagine what is. In fact, we spend far more of our GDP on health care than any other developed nation. In the UK, the number is 9.1 percent. In France, it’s 11.7 percent. Germany, 11.3 percent. Japan, 10.3 percent. Some of these nations have life expectancies equal to, or greater than, the United States. Now, we tend to think of some of these countries as “socialist”, with cradle-to-grave social benefits, whereas America is much less so, with our history of laissez faire economics and individual freedom. So what’s the deal here?
A couple of years back, I wrote a column that asked a question, namely, who gave up that other 12 percent of the GDP? Some answers are fairly obvious: domestic manufacturing, for one. The military’s share of the GDP today is much lower than it was then. In any event, it’s obvious that we’ve shifted a significant portion of our national resources and treasure to health care. I believe that this shift signals profound change for this country in the coming years – for businesses, for individuals, for health care providers, for health insurers, and for the government. Just what are some of those changes?
I recently had the opportunity to get acquainted with Steve Dobbs, the new CEO for Merit Health in Central Mississippi. Running a health care organization with 6 hospitals, many clinics, and 3,300 employees would certainly qualify Steve to provide some of the answers I was looking for.
“Well, certainly, one of the things to look at is the fact that life expectancies in this country have increased dramatically since the early 1960s,” he said. “People are routinely living 10 years longer than they did in those days, and considering the fact that the older we get, the more health care we typically need, it’s inevitable that the costs would escalate.”
I get that. It’s a result that we can be proud of, and there probably aren’t many of us, when asked if we’d prefer to live to A.)70 or B.)80, who would choose A These days, if someone passes at 65, most folks think they “died young”. That’s a real tribute to our health care system, which I believe we’d all agree is still one of the best in the world.
Second, Steve pointed out that the cost of technology has played a key role in the increased costs of health care.
“We can do some amazing things with the technology available to us these days,” he suggested. “It’s one of the main things that has helped to extend life expectancies. But that technology doesn’t come cheap. And we have to have the qualified personnel to work with that technology.” He also suggested that the United States is in many ways, at the forefront of research and development in health care for the whole world, and that means we’re bearing the brunt of the cost for that R & D in other countries.
Whatever the case, Steve said that “it’s obvious that we’re going to have to dramatically change the way we do things.” In his view, this will encompass a number of areas, such as the importance of health analytics, careful management of the data and algorithms of care, and management tools that will enable health care providers to handle the needs of patients in more economical and efficient ways.
“Obviously, the costs of delivering health care cannot keep increasing and increasing as a percent of our GDP,” he said. “Sooner or later, there simply won’t be the funds to continue that trend. Market forces and the government will either limit the dollars being spent on health care, or else they will limit the care. I don’t think the second option is one that most of us would like to see.”
He also suggested that the regulatory burden is continually increasing, along with the cost of compliance.
“Health care is the most regulated business in America,” he said. “Unfortunately, the costs of compliance and the potential of large fines for non-compliance are also increasing.”
He’s not just speaking of issues at the federal level.
“Many communities are going to have to make some decisions about their health care, and the facilities that deliver it,” he suggested.
So, what are some of the changes that can help to get control of the costs, and hopefully, deliver quality care in an efficient way? Steve pointed to three key areas that will certainly change.
“First, the delivery side is going to change. By that, I mean that alternate health care methods will come into play, most certainly including tele-medicine. That’s going to explode. Secondly, I think the prevalence of Physician Assistants and Nurse Practitioners will also grow in a major way, particularly in clinical and rural environments. And finally, I think major employers will all step up to the plate with on-site clinics, wellness programs, and so on. That can save a ton of money not only on evaluation and diagnosis, but also on drugs.”
As he sees it, there will simply not be enough doctors to cover the growing health needs associated with the aging baby boom generation, who are turning 65 at the rate of 10,000 a day, with that trend continuing for the next 10 years.
Despite the challenges, Steve is not pessimistic about the future of health care, but simply thinks it will be a tighter and more efficient system.
What about single payer? I asked him if he considers the adoption of a single payer system as an inevitability at some point.
“As an individual, I hope not,” he said. “However, it’s hard to see how the politics and funding will ultimately play out, so I’m certainly not going to suggest that we won’t have a single payer system 10 years down the road.”
From Steve’s perspective, one of the very most important needs in American health care isn’t in the delivery of care, but in the lifestyles and personal accountability of individuals.
“Obviously, if we could get folks to take responsibility for the simple things, such as a balanced diet, maintaining a healthy weight, a reasonable amount of exercise, and so on, there would be a heck of a lot less health care needed,” he said.
He believes that physicians can and should help their patients live healthier lifestyles, and that more and better communication among doctors could lead to good outcomes.
“In the end, it’s all about delivering the best care we can, and helping our patients at every stage to live healthier lives,” he said.
That’s something we should all focus on.
» Contact Mississippi Business Journal publisher Alan Turner at email@example.com or (601) 364-1021.
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