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Reduce Health Care Cost By Providing Better Care

by retirebyforty on February 9, 2011 · 35 comments

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Is it possible that we can reduce health care cost by providing better care? I heard this story on NPR a few weeks ago and it is fascinating to me because the rising cost of health care is a huge obstacle to my early retirement plan. In fact, health care cost is my #2 obstacle to early retirement, right after #1 – the baby. Health care cost is rising much faster than inflation and sometime I wonder if my investments can keep up with it.

Dr. Jeffrey Brenner in Camden, NJ started looking at ER visits the way police investigated assaults. He asked where the hot spots are and why are they happening. He collected data and found that 1% of patients account for 30% of the healthcare costs in Camden.

In Camden, 1% was about 1,000 people and he thought this might be a manageable number. Dr. Brenner approached his colleagues and asked to take over the care of their most difficult cases. He and his team followed up with these hard cases and took care of them like a primary care provider would. The problem with many of these chronically ill patients was that they were poor and many did not have health insurance, so they went to the ER for medical care. The ER helped in the short term, but inevitable they kept going back to the ER over and over again.

Dr. Brenner and his team were able to lower the overall health care cost by taking better care of these most difficult cases. They followed up with patients to make sure they took their medication, tried to get them to quit smoking, and encouraged them to rejoin their churches and communities. They were basically coaching these patients to take better care of themselves. Their efforts were very successful and many patients improved their long term health and their overall costs were lowered as a result.

Could it be this simple? That we can lower overall health care costs by just coaching chronically ill patients to take better care of themselves? It does make sense. If we can keep these patients healthier, they wouldn’t go to the ER all the time. It’s much cheaper to take heart medication than to go to the ER for heart failure. The story went on to cover another experiment to reduce healthcare cost.

One company increased their co pay for doctor visits and medications in an effort to make employees more cost conscious about going to the doctor. What do you think happened? Their health care costs kept rising. The chronically ill patients’ costs spiked because they hesitated to go see their doctors and some even stopped taking medication. The key to reducing health care cost is to have accessible and affordable health care so everyone can lead healthier and more productive lives.

What can we do as a society?

So what’s my conclusion? We need to eliminate ER services to those people that don’t have health insurance and can’t pay the hospital bill. If we eliminate services to these 1% cases, we could all save 30% on our medical bill. What do you think about this? Make sure they can pay and if they can’t, just send them out the door. 30% off is a huge saving.

OK, I was just trying to be controversial. Today I am in a reasonable good shape and I have insurance, but someday I may fall into the 1% cases. We should provide better long term health care to those 1% patients so they wouldn’t use so many resources. How can we as a society do this? This will clearly benefit everyone, so why is there so much resistance to universal healthcare in the US? These 1% patients are often poor and public healthcare is the only way I can see them getting long term care. Can you think of another options? I know there are quite a few Canadian readers out there, can you comment on your public health care? What are some downside to public health care?

Listen to the rest of this story on NPR. It’s a 30 minutes story, but this is one of the best show recently.

You can get a quote from eHealthInsurance to see how much healthcare would cost.

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{ 32 comments… read them below or add one }

Invest It Wisely February 9, 2011 at 8:38 am

The more you subsidize something, the more you’re going to get of it. Encourage people to pop expensive pills and subsidize it and of course costs are going to rise stratospherically. I think it needs to come down to the root: People need to be aware of the true costs of poor health and therefore be motivated to take care of themselves to be healthy and stay in good shape. The public health care system is such crap that relying on it is not very wise, anyways. You will wait months for important operations that are not life-threatening yet still debilitating, and doctors will be annoyed with you and will try to get rid of you as fast as they can. My own personal goal is to avoid becoming sick in the first place by practicing healthy habits and healthy eating, and to avoid reliance on the public sector. If I feel that I need an important diagnostic I will pay for it instead of waiting many months, even though I already paid for the system through my taxes.

Sorry, this turned into a bit of a rant. ;)

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Invest It Wisely February 9, 2011 at 8:48 am

P.S. from a moral imperative, I agree that we have a duty to the poor but with the way the system is currently setup I disagree that we have the right to make others pay to enrich doctors and insurance companies so that we can cleanse our consciousnesses that we are “helping the poor”. That is just hypocritical.

Instead, what I believe is that we can help them better by breaking down the walls that cartelize medicine and make it so expensive. There are thousands of rules and regulations that in the name of protecting the patient actually protect the doctors and industries, instead. This is a problem in some other industries as well but it is especially a problem in medicine. Thank god that the Supreme Court of Canada struck down a ban against private care in some sectors, otherwise I wouldn’t even have any options.

If we want better health, why do we subsidize unhealthy agriculture? If we want people to walk more, why do we subsidize roads? If we want to lower the cost of medicine then why do we give so much protection and privileges to the insurance companies? There are so many factors and they are all so connected, but at the root a large part of the problem comes from insulating people from the costs of their care and insulating companies from the consequences of their decisions. I don’t want to give medicine to the insurance companies; I want to blow the field wide open so that doctors become accountable to their patients, and not insurance companies or a public plan.

Sorry for continuing the rant :P

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retirebyforty February 9, 2011 at 9:38 am

I don’t have any answers, but maybe other readers will.
Doctors are making less than 10 years ago so I don’t think they are the real problems. If a patient can bankrupt a doctor for messing up a procedure, who would want to be a doctor? Sure, they should be accountable, but doctors are human and they make mistakes right? From what I understand, if a doctor repeated make mistakes, he/she would lose his license. Maybe make the process more transparent?

OK, I see your point. You want a doctor to take care of their patients with out another layer of bureaucracy. How would the doctors make money then? The healthy people wouldn’t come see the doctor. They would just be overwhelm with sick people and costly procedures.

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Invest It Wisely February 9, 2011 at 10:10 am

Everyone has their own idea of how to fix things, but I say why not use the market to figure these things out instead of trying to plan it top down? And I don’t mean the insurance companies. It’s easy to blame privatization when you have the US as a model but that isn’t really what I consider a free market in medicine. What’s most important is that patients not only have a choice of insurance companies or doctors but that they have a choice of SYSTEMS. If what you have now is like being able to buy different Android phones but the iPhone, Symbian, etc… all didn’t exist, then do you really have choice?

I don’t have all the answers either, but I think that if you allow innovation and don’t grant special privileges then you help to level the playing field. We see that all these people are dependent on the system, but what we don’t see is that the system also fosters that dependence due to the lack of innovation and bad incentives.

Can you imagine how crappy the mobile market would be if we had government-run phones or had many restrictions on who could enter the market? What if you couldn’t buy phones made by a manufacturer out of state? People are always skeptical but the free market works and it is the top-down solutions that try to make things better that actually create many of these problems in the first place.

I’m sure we can both agree that if someone comes in to the emergency from a gunshot wound they should be treated no matter what (though if they don’t carry catastrophic coverage I think it’s fine for the hospital to bill them — resources don’t appear out of thin air for free). The question is how can we best improve the health of people? What set of incentives help to accomplish this? Evidence has clearly shown that the way things are done here in Canada is not the way to go.

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retirebyforty February 9, 2011 at 9:21 am

I take it you don’t like public health care? :)
What about people who already are chronically ill? The 1% of the population that needs pills. If they can’t get pills, they’ll keep going to the ER with multiple heart attack, diabetic attack, and who know what else. (That’s what they do in the US.)
I try to stay in good shape and eat healthy too, but you never know what will happen.

So it sounds like public health care is not much better than going to the ER. You have to wait a long time for care. What are some other problems? Bad doctors? You said public health care is crap, why?

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Invest It Wisely February 9, 2011 at 9:53 am

Well that’s what catastrophic insurance should be for. The whole point of insurance is to protect against unpredictable events, but somewhere along the line it got perverted into something that pays for every little thing. If you use cars as an analogy we have insurance against car crashes, but do you use insurance to pay for your oil changes? It makes no sense.

Things can’t change in one night. You make a good point in that many people are dependent on the current system and have gotten to this point, in part due to bad habits and probably in part due to bad advice from doctors and bad incentives. Pills can be necessary but I find doctors are all too ready to prescribe pills and patch over the symptoms instead of addressing the root cause.

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Invest It Wisely February 9, 2011 at 9:56 am

Some problems with public health care in my experience:

1) Difficult to get a family doctor. If you don’t have one then you need to go to the ER for any little thing and where waits can be up to 11 hours if not more, all while waiting in a room full of other sick people.

2) Even if you do have a family doctor, many of them are trying to get as many people through the revolving door as possible. You need to be a stubborn pain in the ass and spend a lot of time in order to get the doctor to follow up, otherwise you’ll only get treated once whatever problem you have has progressed to a worse stage.

3) Long waits to get operations. When my grandmother needed a hernia operation, the doctors refused to give her a date and said that “oh, we will call you soon” and this went on for months. Eventually she went to another hospital and finally after some more waiting she was able to get her operation, but in all she waited well over 6 months. I recently had an estimated wait of over a year for a diagnostic, so I said screw it and paid for it in the private sector out of pocket. My taxes should have gone to pay for good service, at least in theory, but the reality is different.

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retirebyforty February 9, 2011 at 1:05 pm

Thanks for your perspective! Now I know much more about public health care.
I think you’re right about decoupling long term and emergency care. It’s going to be difficult to implement though.
Ideally there should be several level of care.
1) Health coaches to help you be more healthy. This is what the NPR story talked about.
2) doctors/RN to provide long term care. Diagnose and take care of chronic conditions.
3) ER and big operations

I have a family doctor, but it takes 4-5 weeks to see him. It seems like we need a lot more doctors and nurses.

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Invest It Wisely February 9, 2011 at 1:11 pm

Thanks for sharing the post and letting me rant a bit :P Here in Canada it would be good if we didn’t force foreign doctors to become taxi drivers. Surely we can improve the situation here.

Joe Plemon February 9, 2011 at 12:38 pm

I might have missed this in the comment thread, but I have a question as relating to the post. NPR made the point that improving health care will decrease health care costs because fewer of the chronically ill uninsured will be showing up in the ER. My question, pertaining to public health care is this: Would public health care, because doctors will have to meet certain quotas of patients per day or per hour, decrease overall health of the patients (less time spent with each and inclination for the quick fix), thus increasing the cost of health care? Stated differently, would public health care have the opposite effect of what this post presents?
Your thoughts please.

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retirebyforty February 9, 2011 at 1:11 pm

I don’t know about quotas, but Kevin answered your question above. The wait time to see doctors or get operations is extremely long. So public health care is not the answer because there are not enough doctors to handle the population.

In the NPR story, they also made a point that health coaches are very helpful. These are not doctors, but they consult with the doctors and follow up on the patients. It seems we need to reform health care from the ground up.

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Barb Friedberg February 9, 2011 at 4:24 pm

Wow, not only the story, but the comments were all thought provoking. I really appreciated the spirit and content of the story. Malcolm Gladwell, in Blink had an interesting story along the same lines as the Camden NJ research. It would be a great idea to do some indepth research to identify some of the big holes in the system.

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retirebyforty February 9, 2011 at 7:44 pm

I hope we figure a way to reform health care soon. The US is just so politically divided at this point.

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krantcents February 9, 2011 at 4:43 pm

I remember reading about a Wall Street firm years ago decided to front end their coverage for the long term benefits. They provided physicals to all with no deductible/co-pay or cost at every level. In this way, they identified the issues early and worked on remedies which ranged from diabetes control, detecting cancers, cholesterol lowering drugs, and other solutions. After four or five years of this program, their costs actually went down! This can be an overall solution, however execution is key. Changing the medical delivery system is even more controversial! I am not an advocate of health management organizations (HMO), however a less expensive delivery system must be found.

I believe in incentives for staying healthy and finding out about diseases early so they can be treated. I would like to see increasing benefits or decreasing cost for people to took care of themselves better. For example, you maintain your health by taking your prescriptions, you receive a lower price. I saw this first hand in regard to a dental plan (at Xerox). starts at 80% reimbursement, if you get a cleaning 2 times a year, it increases 10% each year until 100%.

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retirebyforty February 9, 2011 at 7:47 pm

Right! The execution is definitely the key. My company added an on site clinic and it is so much easier to go see an RN or a doctor. They also gave various incentive for employee to come in for blood test and consult with health coach. It’s great for me right now, but I can’t depend on the company to provide my health care forever.

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Moneycone February 9, 2011 at 7:18 pm

The fact that you need a job just for healthcare means the system is horribly broken. I don’t know if universal healthcare is the right solution, but I do know what we have currently, privatized healthcare is horribly wrong. $3000 a night for admittance? Really?

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Roshawn @ Watson Inc February 9, 2011 at 7:33 pm

This is a subject that is very dear to my heart. The old saying about an “ounce of prevention…” is true in so many instances. I do think it is tragically understated how much we can do to improve our overall health, yet all too often we ignore the facts. I have definitely heard about the downsides of public health care before. I know part of the answer is the ever-unpopular personal responsibility. One thing is for sure: we cannot continue as things are.

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retirebyforty February 10, 2011 at 8:00 am

Everyone is frustrated by the state of health care, but it’s such a huge business so it’s going to be tough to reform. Hopefully, it’ll be better by the time we’re 65….

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LifeAndMyFinances February 10, 2011 at 3:25 am

It sounds like a great idea to only treat those that have insurance, but can we really do that? If I were in the medical field, it would be so sad to send someone away that I knew I could probably help. What if they died because we didn’t treat them? I just don’t think this is going to happen. The human life is too important.

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Invest It Wisely February 10, 2011 at 7:48 am

Why can’t the doctors choose to treat them free of charge at their own discretion if the person is truly that poor and in the doctor’s estimation they truly do need the treatment? Are all doctors simply too greedy and heartless or is it the way the system is setup that makes things that way?

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retirebyforty February 10, 2011 at 12:24 pm

I think Dr. Brenner in the story took pretty good care of the 1% patients. He got some grants and other source of funding, but every year he has to evaluate whether he can keep it going. The current medical education program is not great either. It takes over 10 years of higher education before the doctors can start paying back their student loans. Many newly minted doctors are in huge debts.
There should be a shorter program (5 years?) for family doctors. That way we would get more doctors and they can refer more difficult cases.

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Invest It Wisely February 10, 2011 at 12:34 pm

I agree, and I have read that many are motivated to specialize because it takes so much time just to get to the level of GP. There also needs to be programs to help recognize the skills that immigrants bring to the table, instead of forcing them to become taxi drivers.

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Invest It Wisely February 10, 2011 at 9:30 am

Together we pay roughly $6000 a year in taxes, insurance premiums, and out of pocket fees for two people for our healthcare, dental, eye, and examinations, but since a large chunk of this is taken from taxes and a smaller chunk from the employer, the actual costs are much less visible. I guess one advantage is that the care is still there even should one become unemployed, but the disadvantage is that resources aren’t created out of thin air so that is why we end up with 6 to 12 month waiting lists.

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Invest It Wisely February 10, 2011 at 9:31 am

To clarify, the public plan does not cover dental, eye, etc… or any private examinations so the quality of care would still be substantially reduced were one to become unemployed.

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retirebyforty February 10, 2011 at 12:19 pm

$412 a month is a huge expense. Did your wife’s work help reduce the cost?
When I leave work, the Mrs. will keep working full time so her work will help with insurance. I’m much more worried about when we both quit working. I really hope we will have some kind of reform by then.

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101 Centavos February 10, 2011 at 5:39 pm

Hi RB40, good post and good questions, but I’m afraid there’s no good solutions. The best definition I’ve heard is “sick care”, not health care. Seems that there’s not a whole lot of profits (big pharma) or power (big gov) in preventative health or ensuring that people are healthy and stay off prescriptions. My personal solution is to try and stay as informed, healthy and fit as I can.

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retirebyforty February 10, 2011 at 10:17 pm

I also try to stay healthy by eating right and staying fit, but we’ll all get sick someday. I’m afraid the health care situation will keep worsen as we get older. Health care definitely need reform, but nobody seems to know what to do.

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Mr. BP February 10, 2011 at 8:41 pm

I agree with 101 Centavos 100%. There are no easy (humane) answers and preventative care in this country stinks. I heard once that in foreign countries you pay doctors until you get sick. There is not enough incentive in our country to get big pharma, etc., to find outright cures for diseases.

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Hunter June 30, 2011 at 8:18 pm

I can see the common thread in our articles, even though they are from very different sources (I really like NPR by the way). One thing seems clear, keeping people from presenting at the ER saves bucket loads of money.

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Jerry November 4, 2011 at 4:08 pm

This is brilliant. My brother is going to med school right now and it’s a topic that gets discussed quite often in our family. I think you are getting closer to treating the crux of the problem. When you do that it leads to results. And, costs go down and insurance companies are happier. It’s a win win for everyone.

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oxycodone treatment December 5, 2011 at 1:40 am

G’Day! Retireby40,
Thanks, on a related note, When it comes to lowering your health insurance premiums it takes no rocket scientist to figure out how it’s done. If you’re trying to reduce your insurance premiums then you need to become less of a risk for the insurance companies. You can become less of a risk for insurance companies through exercise, eating healthy and preventative care.
All the Best
False

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retirebyforty December 5, 2011 at 2:40 pm

Becoming more healthy is also better for you right? :)

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