Structural Inefficiencies in American Health Care

Eric Bernstein, MD, MPHNew Mexico Cancer Care Associates

Santa Fe, NM

Safe topics

• Money

• Politics

• Cancer

• Health care reform

National Health Expenditures and Their Share of Gross Domestic Product, 1960-2009

Source: Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group, at http://www.cms.hhs.gov/NationalHealthExpendData/ (see Historical; NHE summary including share of GDP, CY 1960-2009; file nhegdp09.zip).

Dollars in Billions:

5.2% 7.2% 9.2% 12.5% 13.8% 14.5% 15.4% 15.9% 16.0% 16.0% 16.1% 16.2% 16.6% 17.6%

Insurance premiums are rising and fewer people can afford them

• 1,516,971 Personal bankruptcies 2011• 62% of these are classified as “medical”

(Himmelstein D, et al, Am J Med 2009)• ~940,000 “medical bankruptcies” in 2011• 8% of NSCLC patients bankrupt within 5 years of diagnosis (Ramsey SD, et al. 2011)

Claxton G, et al. Health Aff (Millwood). 2010 Oct;29(10):1942-50.

Health care spending worldwide

Best Health Care in the World?For many specialized things, the USA is terrificBUTAverage life expectancy at birth =33rd DALE (disability-adjusted life expectancy) =24th WHO World Health Report 2000 =37th

United Kingdom WHO World Health Report 18th

6% of GDP spent on healthcare

76

88 8981

8899 97

109116

10697

134

115 113

127120

55 57 60 61 61 64 66 67 74 76 77 78 79 80 8396

0

50

100

150 1997–98 2006–07

Deaths per 100,000 population*

* Countries’ age-standardized death rates before age 75; including ischemic heart disease, diabetes, stroke, and bacterial infections.See Appendix B for list of all conditions considered amenable to health care in the analysis.Data: E. Nolte, RAND Europe, and M. McKee, London School of Hygiene and Tropical Medicine, analysis of World Health Organization mortality files and CDC mortality data for U.S. (Nolte and McKee, 2011).

Mortality Amenable to Health Care

HEALTHY LIVES

Source: Commonwealth Fund National Scorecard on U.S. Health System Performance, 2011.

Why Are Our Outcomes Not Better?

Uninsured:• More ill when seek treatment= Breast cancer: 30-50% higher mortality Colon cancer: 50-60% higher mortality• Mortality of uninsured hospitalized children= 1.6 times that of the insured childChronic conditions poorly managed; Not systematic

JPUBHealth10/29/09 advance publication on lineCalHealthReform.org accessed 11/14/2009

Budgets Cut

• N.C. Division of Mental Health, Developmental Disabilities, and Substance Abuse Services

• Community Care of North Carolina

• N.C. Office of Rural Health and Community Care

Administrative Costs• USA: easily the world leader at 30% (6XOECD*) • France 4%• Canada 6%• Taiwan 1.5%

In USA, 1 insurance employee for every two doctors

68K/year in billing costs per doctor in an office-based practice*Organization for Economic Co-operation and Development

Where Does Your Health Care Dollar Go?

Hospitals 31 centsAdministrative Costs 30 cents: - Insurance Company -20 cents -Doctors, Hospitals -5 cents eachDoctors 21 centsDrugs 10 centsOtherGoing UP Going DOWN (as a percent)

2010 Revenues of Top Insurers 1. UnitedHealth Group - $87 billion (25)2. WellPoint - $65 billion 3. Aetna - $34.7 billion (85) 4. Humana - $30.9 billion (98)5. Cigna - $18.4 billion (141) 6. Health Net - $15.7 billion (179)7. Coventry Health Care - $13.9 billion

“Sometimes it’s good to be a health-care CEO. Health-care company chief executives had the highest median pay of any industry captured by the recent The Wall Street Journal CEO Compensation Study.” 2011

“…hired more than 350 former government staff members”“…At least ten others have been members of Congress”… Billy Tauzin

Karen Ignagni

Health Care Industry Spending 1.4 million/day on lobbying --The Washington Post 7/06/09, others

Magnetic Resonance Imaging (MRI) Machines per Million Population, 2008

Source: OECD Health Data 2010 (Oct. 2010).

* 2007.

MRI Scan and Imaging Fees, 2009

Source: International Federation of Health Plans, 2009 Comparative Price Report.

Dollars

1,500

US average

US high-end

Why does the market fail?

• Inelastic demand

• Almost no one pays directly for care

• Pricing is a mystery

Everything costs more

Los Alamos Medical Center

• Population 12,000

• 20 bed hospital

• 140 doctors

Depot Lupron

• Lowers testosterone to control prostate cancer

• Hospital bills $12,000

• Medicare pays $651.00

• Everybody else?

Los Alamos Medical Center

• Population 12,000

• 20 bed hospital

• 140 doctors

Little relationship between EFFECTIVENESS and PRICECancer Wholesale Price per 28 or 30 day cycle >$10,000 $5,000 to $10,000 $3,000 to 5,000 $1,000 to 3,000Breast Cancer Bevacizumab Ixabepilone Lapatinib Docetaxel

(Patent 2010)Capecitabine monotherapy

Paclitaxel (Generic)

Nab-paclitaxel Trastuzumab Chronic Leukemias

Nilotinib.Dasatinib Bendamustine

Lung Bevacizumab Pemetrexed Crizotinib (Xalkori) $9600

Erlotnib

Melanoma Ipilimumab Yervoy $30,000

Vemurafenif (Zelvorah) $9400

Renal Sorafenib.Sunitinib Temsirolimus Other Cancers

Lenalidomide Brentuximab (Adcetris)$25,000

Nelarabine

Colon Bevacizumab Panitumumab Various Sipuleucel-T

Provenge $93,000x1

Bevacizumab

Cost per life year

• Dialysis $87,561 per year

• Bevacizumab ~ $600,000 per year

J Natl Cancer Inst. 2011 Jan 19;103(2):117-28.

US Healthcare

• Most expensive

• Outcomes mediocre

• Many uninsured

Why So Expensive?

• Expensive care is more profitable

• Administrative costs very high

• Lacks benefits of a single payer system or a free market system to control costs

Thought Leader

• Lee Newcomber, MD, MHA

• Head of Oncology for UnitedHealthcare

Providers Effecting Change

• Memorial Sloan Kettering

• Zaltrap (aflibercept)

• Twice as expensive as Avastin (bevacizumab)

• MSK doctors refused to use the drug and wrote an Op-Ed in the New York Times

• Price subsequently cut by 50%

Affordable Care Act

• Will increase the number of Americans that have health coverage

• Economic impacts are yet to be determined

• Most significant reform in health care since Medicare in 1965

Obvious downsides

• Does not fix some of the fundamental barriers to controlling costs

• Some gaps in coverage will remain

• Had to listen to my talk

Opportunities

• Public is aware and fed up with failure to do a better job

• Fundamental reform is still needed, but perhaps more likely after the weeks events

• Conversation is continuing

What is Needed

• Campaign finance reform

• Address the role of special interests in government and healthcare

• Service minded individuals need to take back the reigns on a state and federal level

• Life is short

• Do good work

• Be kind

• Life is short

• Do good work

• Be kind

• Have fun

Structural Inefficiencies in American Health Care

Cancer as an example of why the worst cancer may be the system.