In Tuesday’s epic blog post, Anil cited a somewhat surprising development from a recent Politico article: the falling cost of Medicare’s spending per patient.
Politico actually has an entire section devoted to the future of Medicare that explores where America’s largest single purchaser of health care could be headed next as the older population in the U.S. surges (I highly recommend reading through it). In that special report is another fantastic piece about digital health data by Arthur Allen, who notes that “a full third of Medicare’s budget is spent on the sickest 5 percent of patients, and that 5 percent absorbs half the spending of Medicaid.” Better coordination of care for the sickest patients is key to cutting back on spending, a point that Allen touches on in the article.
It makes sense that keeping better track of a chronic patient’s health data could lead to better management of the care they ultimately receive, preventing repeated procedures that help drive up costs “with each hospital admission or ER visit.” But as I’ve come to learn, often times these superfluous tests are in the best interest of the hospital itself (as they can bill accordingly), so there’s no guarantee that access to the patient’s health history will prevent excess spending. That oversight must come from the payers, who can better incentivize these institutions by removing pay-per-procedure reimbursement and switching to “risk-sharing arrangements that prioritize outcomes.”
Allen goes on to state in his article: “An increasing number of Medicare and Medicaid patients are in so-called accountable care organizations, a new kind of payment system in which doctors share some of the financial risks and rewards with the government. Millions more are in other managed-care programs that offer financial rewards for better-coordinated medical care,” which is why more hospitals are investing in tech solutions that they hope will help them organize the data, potentially cutting costs as they coordinate patient information for better outcomes.
We’ve always believed that giving patients control over their health data in a digital, actionable, easily shareable format would improve their care options, but the potential for better data organization to help lower costs as well—with a program as large and expansive as Medicare, no less—is also quite inspiring. A 2014 study published by Health Affairs opined that: “Big data may have the potential to create approximately $300 billion annually in value in the health care sector, two-thirds of which would be generated by lowering health care expenditures.”
We just need to clean it up, organize it, and allow patients to start sharing it on their own behalf.