Expert argues healthcare costs can be cut
The spiralling cost of Bermuda's healthcare could be cut using lessons learnt in America, an expert said yesterday.
Joe Flower, an international authority on healthcare, said that the US, like Bermuda, was being forced to tackle the huge cost of healthcare — in the US, a $3 trillion year doctors' bill.
He added that employers should act more like customers to help cut the cost of healthcare.
Mr Flower said that the cost of healthcare in the US spiked in the 1980s after diagnostic related groups — a system of codes and charges for services — was introduced, a system which was intended to control healthcare costs.
He added: “Somehow, it was exactly the opposite. One thing that would do, it would encourage physicians in hospitals to do things that weren't strictly necessary.”
Mr Flower added that around $1 trillion of the $3 trillion healthcare spend in the US was wasted on unneeded procedures — which inflated costs.
He said: “I don't mean waste by using too many Band Aids in ER. I mean doing things that we don't need to do.”
And he added countries like France and Germany, which proportionately spend around half the US healthcare budget — had better health outcomes than the US.
Mr Flower said: “In the United States healthcare system, even reformed as it now is, it's still possible to not really have access to healthcare at all.
“And it's still possible for even people who are well insured to go bankrupt because they have fallen foul of the manically complex healthcare system we have in the United States.”
Mr Flower said that cost of an MRI on an ankle in Washington DC varied from $400 to $2,183, while the cost of a hospital room also varied massively across the country, with prices ranging from $1,500 a day to $12,500 a day, with no difference in quality.
He added: “We have to reinvent medicine and people have to reinvent the relationship to medicine.
“Medicine has to drop this code-driven, fee-based model.”
He said that groups of employers getting together to fund GP clinics for employees on site was one way of reducing costs.
And bundled pricing — payment of healthcare providers on the basis of expected costs for clinically defined episodes of care — could also reduce costs for employers and employees, rewarding healthcare providers for the best results at the lowest cost.
Mr Flower added that reference pricing, a form of defined contribution health benefits, where plan sponsors pay a fixed amount or limit their contributions towards the cost of a specific healthcare service, and health plan members must pay the difference in price if a more costly healthcare provider or service is selected, also cut costs dramatically.
He said: “You change the inputs to a system, the system will change. It doesn't matter if people inside the system think that's the way to go. It will change.”
He added: “If employers in Bermuda are paying for healthcare, they could try these strategies.
“I don't know, but I think employers could find some of these resources available to employers, consulting companies and such, that can tell them how to do it.
“I would be surprised if some of these weren't willing to give the same advice to Bermuda employers.”
Mr Flower was speaking after he delivered the keynote speech at the annual Bermuda Captive Conference at the Fairmont Southampton yesterday.
“The measure of the urgency is how much it's impacting people.
“The shift in that line, the drop in the relative costs, did not happen under Obamacare, it happened before it.
“The things that are pushing costs down, or keeping them flat, are largely not government-generated ones. It's generated through shifts in the way employers and pension plans are paying.”
Mr Flower explained: “Costs had gotten too high for employers. It was impacting their bottom line. It's also because they began to see it was becoming a national conversation.
“This sped up the private sector's activity with these kinds of engagements.”