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Quality Digest

Health Care

Baby Boomers Could Swamp U.S. Health Care by 2017

Published: Thursday, April 3, 2008 - 22:00

(Tefen USA: New York) -- The imminent surge of more than 70 million aging baby boomers could overwhelm the U.S. health care system and engulf the nation’s tenuous economy, according to “Will the Boom Bust Health Care?” a new study by management consulting firm Tefen USA.

A recent report from the Centers for Medicare and Medicaid Services (CMS) predicts that unless decisive action is taken, total U.S. health care spending will double to just over $4.3 trillion by 2017, nearly 20 percent of the nation’s gross domestic product. Tefen USA estimates that this figure could be considerably higher, based on its assessment of data that people over the age of 65 experience nearly three times as many hospital days per thousand as the general population, and that 62 percent of 50-to-64-year-olds report having at least one of six chronic health conditions: arthritis, high cholesterol, cancer, diabetes, heart disease, and hypertension.

According to Tefen, a decline in hospital capacity compounds the problem. The number of community hospitals decreased from 5,384 to 4,915 between 1990 and 2000.

“There’s an immense, growing disconnect within the U.S. health care sector,” says Barry Calogero, president of Tefen USA, and author of the study. “Capacity is shrinking, costs are skyrocketing, and the patient population is about to explode. Our nation must bring these disparate factors into alignment in order to preserve the foundation of U.S. health care while adapting to the economic, medical and political conditions of today and tomorrow.”

Severe consequences are projected as baby boomer-induced health care costs grow; the problem of uninsured Americans will escalate, as employers seek to reduce the burden of retiree health care coverage and trim their contributions to health care premiums or, in some instances, eliminate the health care benefit entirely.

“Despite what many people think, the solution is not a single-payer system,” says Calogero. “While socialized medicine provides some advantages from an access standpoint, it does not address the underlying cost and quality issues that threaten the functional integrity of health care in the U.S. The real solution to America’s health care challenges requires three components: implementing tort reforms, mandating the use of best practices, and driving systemic process improvement.” The Tefen study provides insights and details on each of these elements.

Implement tort teforms

The study’s author suggests that the threat of lawsuits causes providers to hide problems and engage in unnecessary procedures to avoid potential negative occurrences.

“If caregivers document mistakes, they are immediately exposed to litigation,” observes Calogero. “Consequently, obfuscation and secrecy become the standard practice when confronted with errors. Quality issues are concealed and knowledge is suppressed, leading to the high likelihood that mistakes will be replicated.”

The solution is a system of health courts similar in practice to the arbitration system utilized to address other complex issues requiring dispute resolution, such as workers’ compensation, tax and patent disputes, and vaccine liability, where claims against institutions are adjudicated. Health courts would administer peer reviews and independent analysis of procedural errors—differentiating between human error and negligence—and determining damages proportionate to the mistakes.

Mandate the use of best practices

The current system of medical reimbursement actually rewards providers for delivering more care, but not necessarily better care.

“With fairly uniform medical pricing across the industry set by the government and private insurers, providers can optimize revenues only by increasing the number of procedures,” explains Calogero. “This perverse system creates immense variability in how care is delivered. It gives hospitals and doctors little incentive to consistently provide treatments that medical research has shown produce the best results.”

The solution is a mandated system that holds providers accountable for delivering health care using the best known practices and protocols. Such a system would reduce variability and administer compensation that is directly tied to improving practice patterns and medical outcomes.

Drive systemic process improvement

When compared to other industries, health care is the single largest suboptimized sector of the U.S. economy. Rampant opportunities exist to transform inefficient, serial processes into efficient, parallel ones that eliminate unnecessary activities in the care-giving process. As an example, Calogero cites a study at a major academic medical center which found that only 25 percent of nurses’ time was spent actually providing care in a patient’s room. The rest was consumed with administrative chores.

The solution suggested by the study is to change inefficient paradigms. “By removing redundant duties, implementing new, time-efficient systems and eliminating supply management tasks, we have demonstrated the ability to more than double the time nurses spend with patients, with attendant improvements in quality of care,” says Calogero.

For more information, visit www.tefen.com/data/uploads/reports/Will%20the%20Boom%20Bust%20Health%20Care%20-%20Final2.pdf.


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