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10 Drivers of Healthcare Cost

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In this presentation, we highlight 10 drivers of healthcare costs in the US. The US spends over $2.6 trillion on healthcare or about 18% of GDP. Other nations are able to provide healthcare services …

In this presentation, we highlight 10 drivers of healthcare costs in the US. The US spends over $2.6 trillion on healthcare or about 18% of GDP. Other nations are able to provide healthcare services for considerably less: U.K. – 9.6% GDP, Germany – 11.6% GDP and Japan – 9.5% GDP. Despite our high level of spending on healthcare, the US lags in healthcare quality. This level healthcare spending is an unsustainable burden on the United States economy, more specifically businesses, employees and consumers. Businesses who provide health insurance are less competitive internationally, employees experience stagnation of wages and consumers spend more on healthcare and less on other necessities.

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  • 1. 10 Drivers of Healthcare Costs
  • 2. Fee-for-Service 1 ReimbursementThe Fee-for-Service (FFS) modelof paying for medical servicescreates an incentive to performa high volume of tests andservices, regardless of theirnecessity.
  • 3. Fragmentation of 2 Care DeliveryProviders lack an incentive andthe means to coordinate withother providers when treatingpatients. This fragmentation ofcare leads to inefficiencies, over-treatment and greater potentialfor medical errors.
  • 4. 3 Administrative BurdenThe complexity of the UShealthcare system produces aheavy administrative workloadand demand for resources thatleads to higher overall costs.
  • 5. 4 Population AgingThe aging of the baby boomerpopulation combined withlonger life spans means thatthere will be more elderly tocare for. The elderly requirecostly resources and careincluding inpatient hospitalstays, hospice care, outpatientcare, home health and nursingfacility care.
  • 6. Chronic Disease & 5 Lifestyle ChoicesChronic diseases (many ofwhich are preventable) utilizehigh volumes of a complexmix of services, resulting inabout 84% of US healthcareexpenditures.
  • 7. Utilization of Medical 6 TechnologyUtilizing new technology whenthere are alternatives that areless costly and equally effectivedrives up healthcare spending.Advanced technology’s truevalue is realized in its ability toimprove patient outcomes andefficiency.
  • 8. Lack of Transparency in 7 Cost & QualityInformation on cost and qualityof medical services is lacking ornot easily available to health-care consumers. This hasadverse effects on competition,cost and quality of services.
  • 9. Market Competition & 8 ConsolidationConsolidation of healthcareproviders and organizations cansometimes lead to competitionbeing drastically reduces andhigher prices being chargedfor medical services.
  • 10. Medical Malpractice 9 Fraud & AbuseThe litigious society in whichwe live combined with thepractice of defensive medicineends up costing consumersbillions in healthcare costs.Fraud is also rampant in ourhealthcare system at a cost of$80 billion per year.
  • 11. 10 Primary Care ShortageThe shortage of primary carephysicians drives patients tospecialists or worse, to emer-gency departments for their pri-mary care needs. Those who donot utilize primary care maymiss out on detecting andtreating a condition before itbecomes a serious problem.
  • 12. For More Information Visitpayerfusion.com/ceos-blog