Putting “Affordable” Back in the Affordable Care Act

In the last five years, much of the press coverage and analysis of healthcare has been dominated by politics, doctor-patient relationship disruption, sticker shock, and legalities swept in by the Affordable Care Act (ACA). Those are important, but the efficacy and the cost of treatment are ultimately most important. The great majority of medical treatment costs occur in doctors’ offices and hospitals and through pharmaceuticals. Each of these needs continual rethinking in a quest for cost cutting ideas. We’d all like to make “Affordable” an honest descriptor.

There are 35.4 million annual admissions to US hospitals, each incurring a staggering $15,734 for the average hospital stay. At $557 billion per year, inpatient hospital costs need cutting, but at the same time we must maintain medical efficacy.

Also in hospitals, 136.3 million ER visits in 2014 each cost $383. Emergency room (ER) visits are often for minor complaints that could be handled at a physician’s office (where a routine visit charge averages $89) or at a retail store clinic (for an average charge of $45 to $75). While hospitals are required to provide uncompensated care for indigent ER patients until they are “stabilized,” hospitals recoup most of that shortfall by shifting costs to insured and self-pay patients.

Retail store clinics are sprouting at pharmacy chains such as Walgreen and CVS. Their physicians and nurse practitioners are fully able to handle a large portion of complaints that show up in conventional doctors’ offices. Despite charging 16% to 49% less than a doctor’s office, they known to be effective.

An alternate to inpatient care is a “hospital at home” arrangement where patients who are medically stable can be seen by a visiting nurse, treatment specialist, or physicians via telemedicine. Compared with hospitalization, this approach cuts treatment time by one-third, has the same or better medical outcomes and costs 20% less.   Hospital at home is not suitable for all hospital admissions, but the savings and outcomes argue for its more widespread use.

One challenge that seems common across hospitals, doctors’ offices and clinics is compatibility among electronic health records. When patients are treated in clinics, the professional’s notes and treatment plan needs to be added to the patient’s permanent record, aka “medical home.” There needs to be a standardized way to exchange health records from one platform to another. It cannot be that difficult. When patient records are not kept current, it leaves gaps and questions that will waste a physician’s time.

In another instance, some physicians and clinics claimed incompatibility, because they were unable to use the state’s upgraded prescription tracking and database system. The cause of the “incompatibility” was not an incompetent redesign, but physicians’ out-dated browsers. Operating systems and browsers need to be kept up to date to maintain cyber-security. Perhaps stale browsers are a HIPAA violation.

The tradeoff of drug efficacy and pricing is a massive issue. A few drug prices are stratospheric, but in some instances, the new drugs cure the malady rather than merely decreasing the symptoms – so the high cost is a one-time event. Gilead’s Sovaldi, at $64,000 for the recommended course of treatment, and Harvoni (at a higher price) provide an almost 99% cure rate for Hepatitis-C. Insurance companies will usually pay for them when the patient’s liver is sufficiently damaged.

On the other hand, some cancer drugs cost $9,900 per month without curing the condition. Similarly, new multiple sclerosis drugs reduce relapses and slow progression of the disease but do not cure it. For that MS “disease modification,” the drugs cost $62,000 per year.

When pharmaceutical companies succeed in creating these miracle drugs, they deserve a risk-related profit. However their pricing strategy must not force modest-income Americans to subsidize the world. If the genuine proprietary drugs can be bought at lower prices in other nations (e.g., Canada or India) then Americans should be lawfully able to import the drugs from those places or receive the same prices in the U.S.

These ideas are certainly not the only ways to improve the cost-performance of the health care system. Perhaps the most effective cost containment tactic is to make sure patients inquire about the cost of treatments they are about to receive and pay for.