Health system wasting money on things that don't work

Want to save money in the health system? Health workers need to be more accountable, says Norman Swan.

The buzzword in health departments around the nation is “disinvestment” – which means stopping paying for things that don’t work. The trouble is that there’s lots of talk and not a lot of effective action.

Some authorities estimate that 20-30% of the money spent on healthcare in countries such as Australia and Britain is wasted on inappropriate diagnostics and treatments, and general service inefficiencies. In the United States it could be as high as one in every two dollars – more than a trillion dollars a year. In Australia waste is estimated at up to $40 billion, year in and year out. And what’s really outrageous is that state and federal governments are rationing health care – cutting services – before they’ve fundamentally tackled this issue of waste, even though they know much of it is useless, harmful or needlessly expensive. It’s unethical.

Bringing scientific rigour to decisions over how our healthcare dollars are spent could end these practices. Let me give you some examples.

We use prostate-specific antigen (PSA) screening supposedly to detect prostate cancer in men. However, PSA tests grossly over-detect life-threatening cancers. According to one of the two randomised inquiries into PSA screening, up to 48 men have their prostates removed for one man’s life to be saved over nine years. These needless extra operations often leave men with incontinence and impotence and ongoing costs to themselves and the system.

The same now seems to be happening with kidney cancers found incidentally when someone has had a scan for another reason.

Two well-conducted trials suggest that around nine out of 10 knee arthroscopies for osteoarthritis are a waste of time and money, and potentially harmful. Evidence from recently developed physiotherapist-led hip arthritis clinics in Australia implies that hip replacement surgery could be better prioritised if candidates first attended these clinics to assess their situation and be given some alternatives first.

Every emergency department in the nation has beds occupied by frail elderly people from nursing homes who, if they’d been asked before they succumbed to dementia, would not have wanted to be in hospital and certainly wouldn’t have wanted the expensive scans and treatments they’re going to be subjected to. A Brisbane project showed that advanced care planning in nursing homes could halve the rate of transfer of the frail elderly to emergency departments while improving standards of care at the same time.

We need politicians who are prepared to fight for taxpayers and consumers.

The irony is that one mechanism for reining in wasteful spending may add to the problem. We have moved to a payment system for public hospitals called activity-based funding (ABF), which pays hospitals for what they do rather than the less transparent mechanisms of the past. ABF allows governments to pull levers more effectively to change services provided. The trouble is that ABF still rewards hospitals for their mistakes. A recent study in the U.S. suggested that unsafe, poor quality care was a significant source of profit for some hospitals and the risk is that, unless ABF specifically penalises poor quality care, the same thing could happen here.

So what are the answers?

Well-shared risk is a wonderful thing. When you get on to a plane, you know you are sharing the risk of crashing with the pilot. Doctors, nurses and other health professionals share none of the risk – financial risk included – in healthcare. That is borne by hospitals, state and federal governments, health insurers and, most importantly of all, by you and me as patients. Obama’s health reforms in the US have created financial risk for clinicians by bundling healthcare costs and funding into Accountable Care Organizations, which have to stay within their budgets but benefit if they can provide desired outcomes for lower cost.

We have to stop paying for failures in Australia and make it much easier for doctors to do the right thing. That’s not easy but a lot can be done by changing how interventions and diagnostics are paid for and how they are requested.

For example, a system at Massachusetts General Hospital has managed to halt escalating radiology costs by questioning doctors’ orders and giving them feedback on the appropriateness of ther test-ordering.

As such cases show, many sources of waste are known and cutting them simply means providing clinicians with timely data on their own performance, benchmarked against evidence-informed guidelines and that of their colleagues. Consumers need access to these data, too, to keep the system honest and transparent. Among other things, this means putting the foot to the floor in introducing the government-implemented personally controlled electronic health record and linking it to highly granular data systems.

And for all that to happen, we need politicians who are prepared to fight for taxpayers and consumers rather than providers. Trouble is, they’re as rare as hen’s teeth.

Latest Stories
MoreMore Articles