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Answering Sen. Alexander’s challenge: Eliminating waste from health spending in the right way


Earlier this month,  Sen. Lamar Alexander sent a letter  to a broad swath of heath care stakeholders, from physicians to executives to economists to patients to governors, asking them for suggestions on how to find the “Holy Grail” of medical cost-cutters: ways to root out wasteful spending.

Sen. Alexander’s quest is based on the dispiriting reality that a huge amount of the money that we spend on health care is wasted. The National Academy of Medicine estimates 30 percent. A witness at one of Sen. Alexander’s hearings suggested it could be 50 percent. A paper published last year concluded that we spend twice as much on low-value care as we do on high-value care.

{mosads}There are two sides to the health care spending story, both good and bad. The good news is that we know many of the sources of waste at the highest level, from gratuitous paperwork to duplicative testing or needless interventions. The bad news is that we haven’t yet demonstrated a will or ability to move the needle. Our health care system isn’t built to incorporate new ideas quickly, and structures are hard to change. It’s not just a problem in the United States: a just-published analysis in the United Kingdom showed a major government push to avoid the use of certain low-value medications appears to have had no impact whatsoever on prescribing.

It’s especially hard to change one piece of the system without getting everyone on the same page. That’s why some of the most important endeavors in health policy are the least flashy: the growing number of partnerships and collaborations between various stakeholders.

That’s where my group, the National Pharmaceutical Council, has put much of our attention. It’s not enough to repeat the same tired talking points in hopes that we can be louder or more persuasive than the next group. We need to determine where we can create or contribute to a larger dialogue to create high-value solutions. It’s part of the reason we’re working with Health Affairs to broaden the discussion on health spending and why we’re building a forum called Going Below the Surface to ensure that the right stakeholders are at the table.

This collaborative approach works and is paramount as we think about the future of health care. Take gene and cell therapies, which will require an altogether different payment model in which health systems and insurance companies pay over time for the benefit, not the intervention itself.

That’s going to be a sticky issue, and requires open dialogue among these often-disparate stakeholders to ensure that patients have access to these life-saving medications. However, the level of cooperation and thought going into these solutions is a prototype for other multi-stakeholder efforts that can create incentives for high-value care. MIT, through its NEWDIGS initiative, is spearheading one such community, and another effort is underway at the Duke-Margolis Center.

With a health care sector that accounts for nearly 20 percent of our total gross domestic product, believing that there’s a silver bullet to cure wasteful spending is misinformed. Tackling drug prices, for example, may be politically satisfying, but it won’t get to the root of the problem. Major system savings cannot be achieved through a singular focus, and our efforts to slash costs in the name of waste often means confusing high-priced intervention with low-value approaches to health care. It’s easy to assume that big-ticket items are the problem, and that if we just slashed that spending, we’d save money.

{mossecondads}Sometimes interventions that seem expensive actually save money in the long-term, which is why recent focus on value frameworks – quantitative approaches to assess whether a given medical approach is cost-effective – could be helpful, but only if they are executed appropriately.

Pulling more than a trillion dollars out of the health care system, as Sen. Alexander wants to do, is a laudable goal, and even a modest success would free up a tremendous amount of money for our priorities as a society. Of course, there isn’t a single solution, a silver bullet or a “Holy Grail” to curb health care spending, but the combined impact of smaller changes can add up to significant outcomes. And we’re getting there, not only because groups like NPC and our Going Below the Surface partners are brainstorming the topic, but because so many of us are brainstorming together.

Dan Leonard is president and CEO of the National Pharmaceutical Council.

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