WELCOMEWELCOME
To TheTo The
First Annual ASQ CincinnatiFirst Annual ASQ Cincinnati
Healthcare Quality AwardsHealthcare Qua...
CHALLENGES FACINGCHALLENGES FACING
HEALTHCARE PROVIDERS INHEALTHCARE PROVIDERS IN
TODAY’S TURBULENT FINANCIALTODAY’S TURBU...
Challenges Confronting ourChallenges Confronting our
Healthcare SystemHealthcare System
 Perceptions of our healthcare sy...
Challenges Confronting ourChallenges Confronting our
Healthcare SystemHealthcare System
 Pharmaceutical Co MarketingPharm...
PERCEPTIONS OF OURPERCEPTIONS OF OUR
HEALTHCARE SYSTEMHEALTHCARE SYSTEM
Perceptions of our Healthcare SystemPerceptions of our Healthcare System
   In a 1998 Harris and Associates poll, 79 perce...
Perceptions of our Healthcare SystemPerceptions of our Healthcare System
Survey Question Public
% Agree
Phys.
% Agree
Poli...
Government Reports & Other StudiesGovernment Reports & Other Studies
   In their report on Crossing the Quality Chasm: AIn...
Government Reports & Other StudiesGovernment Reports & Other Studies
   First National Report Card on Quality of Healthca...
Government Reports & Other StudiesGovernment Reports & Other Studies
   The IOM National Roundtable on Healthcare Quality ...
Comparison with Other CountiesComparison with Other Counties
   The United States spends more money on health careThe Uni...
Shortage of Healthcare WorkersShortage of Healthcare Workers
Shortage of Healthcare WorkersShortage of Healthcare Workers
 The Council on Graduate Medical Education predicts that the...
CHANGING DEMOGRAPHICSCHANGING DEMOGRAPHICS
The Baby Boomers are RetiringThe Baby Boomers are Retiring
Changing DemographicsChanging Demographics
 Every day in America, 10,068 people turn 50Every day in America, 10,068 peopl...
Healthcare Requirements of SeniorsHealthcare Requirements of Seniors
 86 percent of Medicare beneficiaries have one86 per...
A COMPLEXA COMPLEX
HEALTHCARE SYSTEMHEALTHCARE SYSTEM
System of HealthcareSystem of Healthcare
 Our reimbursement system does not encourage preventionOur reimbursement system ...
System of HealthcareSystem of Healthcare
 86% of Medicare beneficiaries have at least 1 chronic86% of Medicare beneficiar...
System of HealthcareSystem of Healthcare
 86% of Medicare beneficiaries have at least 1 chronic86% of Medicare beneficiar...
COMPLEXITY & FAST PACE OFCOMPLEXITY & FAST PACE OF
SCIENTIFIC DISCOVERYSCIENTIFIC DISCOVERY
Complexity & the Fast Pace ofComplexity & the Fast Pace of
Scientific DiscoveryScientific Discovery
 Every year 500,000 n...
PATIENT DISEASEPATIENT DISEASE
MANAGEMENT ANDMANAGEMENT AND
COMPLIANCECOMPLIANCE
Patient Disease ManagementPatient Disease Management
and Complianceand Compliance
 Patient Attitudes and Behavior:Patient...
Operational Challenges in theOperational Challenges in the
Physician OfficePhysician Office
Operational Challenges in theOperational Challenges in the
Physician OfficePhysician Office
Michigan Primary Care Consorti...
Operational Challenges in theOperational Challenges in the
Physician OfficePhysician Office
  
In an article by Morrison a...
MEDICAL ERRORSMEDICAL ERRORS
IOM Report : To Err is HumanIOM Report : To Err is Human
At least 44,000 people, and perhaps as many as 98,000At least 44,...
Medical ErrorsMedical Errors
 The average ICU patient experiences 1.7 medicalThe average ICU patient experiences 1.7 medi...
IOM Report : To Err is HumanIOM Report : To Err is Human
Beyond their cost in human lives, preventable medicalBeyond their...
Medical ErrorsMedical Errors
By way of comparison:By way of comparison:
If the 98,000 deaths per year due toIf the 98,000 ...
MEDICATION ERRORSMEDICATION ERRORS
Medication ErrorsMedication Errors
 IOM estimates thatIOM estimates that 1.5 million Americans a year are1.5 million Amer...
Medication ErrorsMedication Errors
The extra medical costs of treating drug-related injuriesThe extra medical costs of tre...
Medication ErrorsMedication Errors
 The American Hospital Association lists these as someThe American Hospital Associatio...
Medication ErrorsMedication Errors
– Lack of appropriate labelingLack of appropriate labeling as a drug is prepared andas ...
Pharmaceutical Co MarketingPharmaceutical Co Marketing
Pharmaceutical Co MarketingPharmaceutical Co Marketing
 The “Research-based” pharmaceutical industry spends moreThe “Rese...
Pharmaceutical Co MarketingPharmaceutical Co Marketing
 According to industry estimates, drug companies spentAccording to...
Pharmaceutical Co MarketingPharmaceutical Co Marketing
 In a study by Avorn, et al., forty-six% of physicians reportedIn ...
HEALTHCARE COSTSHEALTHCARE COSTS
Healthcare CostsHealthcare Costs
 Each year the United StatesEach year the United States
spends 2.5 trillion dollars onsp...
Healthcare CostsHealthcare Costs
How much is 1 billion dollars?How much is 1 billion dollars?
 1 billion seconds ago it w...
Healthcare CostsHealthcare Costs
How much is 1 trillion dollars?How much is 1 trillion dollars?
 One trillion seconds = 3...
Healthcare CostsHealthcare Costs
 Healthcare costs including hospitals and nursing homesHealthcare costs including hospit...
Cost of MedicationsCost of Medications
In 2006, U.S. adult consumers spent $130.8 billion on fiveIn 2006, U.S. adult consu...
Healthcare Costs for MedicationsHealthcare Costs for Medications
18.7%
11%
5%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
1992
...
Healthcare InsuranceHealthcare Insurance
Medicare CostsMedicare Costs
Healthcare InsuranceHealthcare Insurance
 PricewaterhouseCoopers reported that health benefitPricewaterhouseCoopers repor...
IMPACT OF RISINGIMPACT OF RISING
HEALTHCARE COSTS ONHEALTHCARE COSTS ON
BUSINESSBUSINESS
Impact of Escalating HealthcareImpact of Escalating Healthcare
Costs on EmployersCosts on Employers
   Many companies wit...
Impact on the Automotive IndustryImpact on the Automotive Industry
   The cost of healthcare for General Motors isThe cos...
Can Quality Management Make aCan Quality Management Make a
Difference?Difference?
 In contrast to U.S. auto manufacturers...
Is Nationalized Healthcare the Answer?Is Nationalized Healthcare the Answer?
The question is, can we afford it?The questio...
Current Economic Climate isCurrent Economic Climate is
QuestionableQuestionable
 Federal debt has increased exponentially...
More “Good News”More “Good News”
 Baby boomers are retiringBaby boomers are retiring and will begin to draw on Socialand ...
Social Security AdministrationSocial Security Administration
predicts deficitpredicts deficit
The annual report from Socia...
OASI ASSETS AS A PERCENT OFOASI ASSETS AS A PERCENT OF
ANNUAL EXPENDITURESANNUAL EXPENDITURES
Associated Press, Mon., Jan. 30, 2006Associated Press, Mon., Jan. 30, 2006
WASHINGTON – “Americans’ personal savings rate ...
Questions andQuestions and
CommentsComments
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WELCOME To The First Annual ASQ Cincinnati

  1. 1. WELCOMEWELCOME To TheTo The First Annual ASQ CincinnatiFirst Annual ASQ Cincinnati Healthcare Quality AwardsHealthcare Quality Awards Dinner and CeremonyDinner and Ceremony
  2. 2. CHALLENGES FACINGCHALLENGES FACING HEALTHCARE PROVIDERS INHEALTHCARE PROVIDERS IN TODAY’S TURBULENT FINANCIALTODAY’S TURBULENT FINANCIAL TIMESTIMES Presented by:Presented by: BRUCE W. JOHNSONBRUCE W. JOHNSON Chairman, ASQ Cincinnati SectionChairman, ASQ Cincinnati Section President, Johnson Consulting ServicesPresident, Johnson Consulting Services
  3. 3. Challenges Confronting ourChallenges Confronting our Healthcare SystemHealthcare System  Perceptions of our healthcare systemPerceptions of our healthcare system  Government reports & other studiesGovernment reports & other studies  Shortage of healthcare workersShortage of healthcare workers  Changing demographicsChanging demographics  Healthcare requirements of seniorsHealthcare requirements of seniors  Complexity and fast pace of scientific discoveryComplexity and fast pace of scientific discovery  Complex Inadequate Healthcare SystemComplex Inadequate Healthcare System  Medical errorsMedical errors  Medication errorsMedication errors
  4. 4. Challenges Confronting ourChallenges Confronting our Healthcare SystemHealthcare System  Pharmaceutical Co MarketingPharmaceutical Co Marketing  Escalating healthcare costsEscalating healthcare costs  Impact on US businessesImpact on US businesses  Impact on US EconomyImpact on US Economy  Foreign CompetitionForeign Competition  Is nationalized healthcare the answerIs nationalized healthcare the answer  Can we afford it?Can we afford it?
  5. 5. PERCEPTIONS OF OURPERCEPTIONS OF OUR HEALTHCARE SYSTEMHEALTHCARE SYSTEM
  6. 6. Perceptions of our Healthcare SystemPerceptions of our Healthcare System    In a 1998 Harris and Associates poll, 79 percent of theIn a 1998 Harris and Associates poll, 79 percent of the sample said the healthcare system needs eithersample said the healthcare system needs either ““fundamental changefundamental change” or to be “” or to be “completely rebuiltcompletely rebuilt”.”.
  7. 7. Perceptions of our Healthcare SystemPerceptions of our Healthcare System Survey Question Public % Agree Phys. % Agree Policy Makers % Agree People with chronic conditions usually receive adequate medical care 48% 45% 22% Government programs are adqequate to meet the needs of people with chronic illnesses 38% 20% 16% Health Insurance pays for most of the services chronically ill people need. 37% 28% 23% Source: Anderson GF. “Physician, Public and Policy-Maker Perspectives on Chronic Disease Conditions.” Archives of Internal Medicine 2003: 163(4); 437-42.
  8. 8. Government Reports & Other StudiesGovernment Reports & Other Studies    In their report on Crossing the Quality Chasm: AIn their report on Crossing the Quality Chasm: A New Health System for the 21New Health System for the 21stst Century” (2001),Century” (2001), the IOM states that “the IOM states that “The U.S. healthcare deliveryThe U.S. healthcare delivery system does not provide consistent, high-qualitysystem does not provide consistent, high-quality medical care to all peoplemedical care to all people.”.”
  9. 9. Government Reports & Other StudiesGovernment Reports & Other Studies    First National Report Card on Quality of Healthcare inFirst National Report Card on Quality of Healthcare in America published by the Rand Corp. in 2006, reportedAmerica published by the Rand Corp. in 2006, reported that “that “Quality varied substantially across conditionsQuality varied substantially across conditions, for, for example people with high blood pressure received aboutexample people with high blood pressure received about 65% of the recommend care, people with alcohol65% of the recommend care, people with alcohol dependence received about 11%”.dependence received about 11%”.  Healthcare also varies significantly by community andHealthcare also varies significantly by community and ethnic groups.ethnic groups.
  10. 10. Government Reports & Other StudiesGovernment Reports & Other Studies    The IOM National Roundtable on Healthcare Quality inThe IOM National Roundtable on Healthcare Quality in 1998 concluded that “1998 concluded that “ Serious and widespread problemsSerious and widespread problems exist throughout American medicineexist throughout American medicine. These problems,. These problems, which may be classified as underuse, overuse, orwhich may be classified as underuse, overuse, or misuse, occur in small and large communities alike, inmisuse, occur in small and large communities alike, in all parts of the country, and with approximately equalall parts of the country, and with approximately equal frequency in managed care and fee-for-service systemsfrequency in managed care and fee-for-service systems of care. Very large numbers of Americans are harmedof care. Very large numbers of Americans are harmed as a direct result.as a direct result. Quality of care is the problem, notQuality of care is the problem, not managed caremanaged care. Current efforts to improve will not. Current efforts to improve will not succeed unless we undertake a major, systematic effortsucceed unless we undertake a major, systematic effort to overhaul how we deliver health care services,to overhaul how we deliver health care services, educate and train clinicians, and assess and improveeducate and train clinicians, and assess and improve quality.”quality.”
  11. 11. Comparison with Other CountiesComparison with Other Counties    The United States spends more money on health careThe United States spends more money on health care than any other country in the Organization for Economicthan any other country in the Organization for Economic Cooperation and Development (OECD). The OECDCooperation and Development (OECD). The OECD consists of 30 democracies, most of which are consideredconsists of 30 democracies, most of which are considered the most economically advanced countries in the world.the most economically advanced countries in the world. According to OECD data,According to OECD data, the United States spent $6,102the United States spent $6,102 per capita on health care in 2004 — more than double theper capita on health care in 2004 — more than double the OECD averageOECD average. –. – CRS Report for Congress (2007).CRS Report for Congress (2007).  In two additional studies conducted by the CommonwealthIn two additional studies conducted by the Commonwealth Fund, a healthcare think tank, the US health care systemFund, a healthcare think tank, the US health care system ranks last among other major rich countries for quality,ranks last among other major rich countries for quality, access and efficiencyaccess and efficiency..
  12. 12. Shortage of Healthcare WorkersShortage of Healthcare Workers
  13. 13. Shortage of Healthcare WorkersShortage of Healthcare Workers  The Council on Graduate Medical Education predicts that theThe Council on Graduate Medical Education predicts that the nation is likely to experience a shortage ofnation is likely to experience a shortage of 96,000 physicians96,000 physicians by 2020 (2005).by 2020 (2005).  The Health Resources and Services Administration predictsThe Health Resources and Services Administration predicts that the nationalthat the national nursing shortagenursing shortage will top 800,000 by 2020will top 800,000 by 2020 (2002).(2002).  Other staff shortagesOther staff shortages are also expected, including Nuclearare also expected, including Nuclear Medicine Technologists, MRI Technologists, UltrasoundMedicine Technologists, MRI Technologists, Ultrasound Technologists, and Physician Assistants.Technologists, and Physician Assistants.  Only 2.5% of the graduating physicians are going into primaryOnly 2.5% of the graduating physicians are going into primary care practice.care practice.
  14. 14. CHANGING DEMOGRAPHICSCHANGING DEMOGRAPHICS
  15. 15. The Baby Boomers are RetiringThe Baby Boomers are Retiring
  16. 16. Changing DemographicsChanging Demographics  Every day in America, 10,068 people turn 50Every day in America, 10,068 people turn 50  There are now more people over 65 in ourThere are now more people over 65 in our population than there are teenagerspopulation than there are teenagers  The number of Americans over 65 is expected toThe number of Americans over 65 is expected to double by 2030 to 65 million; 9 million will be overdouble by 2030 to 65 million; 9 million will be over 85, compared with 4 million today.85, compared with 4 million today.  The population aged 65 - 85 years is the fastest-growingThe population aged 65 - 85 years is the fastest-growing age group in the United States.age group in the United States.  What is the impact on healthcare?What is the impact on healthcare?
  17. 17. Healthcare Requirements of SeniorsHealthcare Requirements of Seniors  86 percent of Medicare beneficiaries have one86 percent of Medicare beneficiaries have one or more chronic conditionsor more chronic conditions  Add to this the fact that 16% of all people overAdd to this the fact that 16% of all people over the age of 71 have a dementia and thethe age of 71 have a dementia and the challenges become even more dramatic.challenges become even more dramatic.
  18. 18. A COMPLEXA COMPLEX HEALTHCARE SYSTEMHEALTHCARE SYSTEM
  19. 19. System of HealthcareSystem of Healthcare  Our reimbursement system does not encourage preventionOur reimbursement system does not encourage prevention  Our reimbursement system does not encourage theOur reimbursement system does not encourage the coordination of carecoordination of care  The US healthcare system is designed primarily to addressThe US healthcare system is designed primarily to address emergency and acute care, yet:emergency and acute care, yet:  75% of all healthcare costs arise directly from chronic75% of all healthcare costs arise directly from chronic diseases (high blood pressure, diabetes, obesity, asthma,diseases (high blood pressure, diabetes, obesity, asthma, etc.)etc.)
  20. 20. System of HealthcareSystem of Healthcare  86% of Medicare beneficiaries have at least 1 chronic86% of Medicare beneficiaries have at least 1 chronic disease.disease.  Americans with chronic diseases receive only about 56% ofAmericans with chronic diseases receive only about 56% of recommended treatment.recommended treatment.  The direct medical and indirect cost of diabetes, for exampleThe direct medical and indirect cost of diabetes, for example accounts for $132 billion annually (10% of healthcare dollarsaccounts for $132 billion annually (10% of healthcare dollars & 45 million office visits).& 45 million office visits). McGlynn, et al, The Quality of Healthcare Delivered to Adults in the United States. NEJMMcGlynn, et al, The Quality of Healthcare Delivered to Adults in the United States. NEJM 2003:348(26);2635-2645.2003:348(26);2635-2645.
  21. 21. System of HealthcareSystem of Healthcare  86% of Medicare beneficiaries have at least 1 chronic86% of Medicare beneficiaries have at least 1 chronic disease.disease.  Americans with chronic diseases receive only about 56% ofAmericans with chronic diseases receive only about 56% of recommended treatment.recommended treatment.  The direct medical and indirect cost of diabetes, for exampleThe direct medical and indirect cost of diabetes, for example accounts for $132 billion annually (10% of healthcare dollarsaccounts for $132 billion annually (10% of healthcare dollars & 45 million office visits).& 45 million office visits). McGlynn, et al, The Quality of Healthcare Delivered to Adults in the United States. NEJMMcGlynn, et al, The Quality of Healthcare Delivered to Adults in the United States. NEJM 2003:348(26);2635-2645.2003:348(26);2635-2645.
  22. 22. COMPLEXITY & FAST PACE OFCOMPLEXITY & FAST PACE OF SCIENTIFIC DISCOVERYSCIENTIFIC DISCOVERY
  23. 23. Complexity & the Fast Pace ofComplexity & the Fast Pace of Scientific DiscoveryScientific Discovery  Every year 500,000 new healthcare articles areEvery year 500,000 new healthcare articles are publishedpublished  The amount of (all) technical information isThe amount of (all) technical information is doubling every 2 years.doubling every 2 years.  Four exabytes of unique information (4 x 10Four exabytes of unique information (4 x 101919 ) will) will be generated this year. That is more than the lastbe generated this year. That is more than the last 5,000 years5,000 years  Half of what students with a 4 year technicalHalf of what students with a 4 year technical degree learn will be out of date before theydegree learn will be out of date before they graduategraduate
  24. 24. PATIENT DISEASEPATIENT DISEASE MANAGEMENT ANDMANAGEMENT AND COMPLIANCECOMPLIANCE
  25. 25. Patient Disease ManagementPatient Disease Management and Complianceand Compliance  Patient Attitudes and Behavior:Patient Attitudes and Behavior: Too many patients wait until they have developed an illnessToo many patients wait until they have developed an illness to worry about healthcare and then there is the attitude thatto worry about healthcare and then there is the attitude that they can simply take a pill and then continue their unhealthythey can simply take a pill and then continue their unhealthy lifestyle, including:lifestyle, including: – Non compliance with treatment interventionsNon compliance with treatment interventions – Poor diets & over eatingPoor diets & over eating – Lack of exerciseLack of exercise – SmokingSmoking – DrinkingDrinking – Risky activitiesRisky activities   
  26. 26. Operational Challenges in theOperational Challenges in the Physician OfficePhysician Office
  27. 27. Operational Challenges in theOperational Challenges in the Physician OfficePhysician Office Michigan Primary Care Consortium conducted a needs assessment of the top obstacles to office efficiency: •Problems with support staff •Poor reimbursement for services •Excessive paperwork •Prior authorization requirements •Lack of electronic medical records or difficulties transitioning to the EMR •Patients skipping appointments
  28. 28. Operational Challenges in theOperational Challenges in the Physician OfficePhysician Office    In an article by Morrison andIn an article by Morrison and Smith, BMJ 2000: 321:1541, theySmith, BMJ 2000: 321:1541, they said “Across the globe physicianssaid “Across the globe physicians are miserable because they feelare miserable because they feel like hamsters on a treadmill.like hamsters on a treadmill. They must run faster to just standThey must run faster to just stand still… The result of the wheelstill… The result of the wheel going faster is not only agoing faster is not only a reduction in the quality of care butreduction in the quality of care but also a reduction in professionalalso a reduction in professional satisfaction and an increase insatisfaction and an increase in burnout among doctors.”burnout among doctors.”
  29. 29. MEDICAL ERRORSMEDICAL ERRORS
  30. 30. IOM Report : To Err is HumanIOM Report : To Err is Human At least 44,000 people, and perhaps as many as 98,000At least 44,000 people, and perhaps as many as 98,000 people, die in hospitals each year as a result of medicalpeople, die in hospitals each year as a result of medical errors that could have been prevented, according toerrors that could have been prevented, according to estimates from two major studies.estimates from two major studies. The problem isThe problem is notnot bad people in health carebad people in health care –– it is that good people are working in bad systems thatit is that good people are working in bad systems that need to be made saferneed to be made safer.. ““According to Dr. Deming, 85% of problems with qualityAccording to Dr. Deming, 85% of problems with quality are due to the process and 15% the people.”are due to the process and 15% the people.”   
  31. 31. Medical ErrorsMedical Errors  The average ICU patient experiences 1.7 medicalThe average ICU patient experiences 1.7 medical errors per day, nearly 1/3 of those are life-errors per day, nearly 1/3 of those are life- threatening. Most involve communicationthreatening. Most involve communication problems. -problems. - Robert Wachter, “The End of the Beginning:Robert Wachter, “The End of the Beginning: Patient Safety Five Years After “To Err is Human”.Patient Safety Five Years After “To Err is Human”.  According to IHI, there are some 37 million hospitalAccording to IHI, there are some 37 million hospital admissions each year in the United States and 40 –admissions each year in the United States and 40 – 50 patient injuries for every 100 admissions. If50 patient injuries for every 100 admissions. If those statistics are correct that translates into 15those statistics are correct that translates into 15 million patient injuries every year.million patient injuries every year.
  32. 32. IOM Report : To Err is HumanIOM Report : To Err is Human Beyond their cost in human lives, preventable medicalBeyond their cost in human lives, preventable medical errors exact other significant tolls. They have beenerrors exact other significant tolls. They have been estimated to result in total costs (including the expenseestimated to result in total costs (including the expense of additional care necessitated by the errors, lostof additional care necessitated by the errors, lost income and household productivity, and disability) ofincome and household productivity, and disability) of betweenbetween $17 billion and $29 billion per year$17 billion and $29 billion per year in hospitalsin hospitals nationwide. (IOM To Err is Human: Building a Safernationwide. (IOM To Err is Human: Building a Safer Health System, 1999)Health System, 1999)   
  33. 33. Medical ErrorsMedical Errors By way of comparison:By way of comparison: If the 98,000 deaths per year due toIf the 98,000 deaths per year due to iatrogenic causes is accurate - that isiatrogenic causes is accurate - that is equivalent to a jumbo-jet crash every day!equivalent to a jumbo-jet crash every day!
  34. 34. MEDICATION ERRORSMEDICATION ERRORS
  35. 35. Medication ErrorsMedication Errors  IOM estimates thatIOM estimates that 1.5 million Americans a year are1.5 million Americans a year are injuredinjured after receiving the wrong medication or theafter receiving the wrong medication or the incorrect dose and that number is twice what it was aincorrect dose and that number is twice what it was a decade ago.decade ago.  Serious injuries associated with medication errorsSerious injuries associated with medication errors reported to the Food and Drug Administration increasedreported to the Food and Drug Administration increased from about 35,000 in 1998 to nearlyfrom about 35,000 in 1998 to nearly 90,000 in 200590,000 in 2005..  Of those cases, more than 5,000 deaths were reported inOf those cases, more than 5,000 deaths were reported in 1998 and1998 and 15,000 deaths in 200515,000 deaths in 2005. Rong-Gong Lin II and. Rong-Gong Lin II and Teresa Watanabe, “Hospital Drug Errors Far FromTeresa Watanabe, “Hospital Drug Errors Far From Uncommon, “Los Angeles Times, Feb. 15, 2008.Uncommon, “Los Angeles Times, Feb. 15, 2008.
  36. 36. Medication ErrorsMedication Errors The extra medical costs of treating drug-related injuriesThe extra medical costs of treating drug-related injuries occurring in hospitals alone conservatively amount tooccurring in hospitals alone conservatively amount to $3.5 billion a year$3.5 billion a year, and this estimate does not take into, and this estimate does not take into account lost wages and  productivity or additional healthaccount lost wages and  productivity or additional health care costs, the report says. The National Academies,care costs, the report says. The National Academies, IOM, 2006.IOM, 2006.
  37. 37. Medication ErrorsMedication Errors  The American Hospital Association lists these as someThe American Hospital Association lists these as some common types of medication errors:common types of medication errors: – Incomplete patient informationIncomplete patient information (not knowing about patients'(not knowing about patients' allergies, other medicines they are taking, previous diagnoses,allergies, other medicines they are taking, previous diagnoses, and lab results, for example)and lab results, for example) – Unavailable drug informationUnavailable drug information (such as lack of up-to-date(such as lack of up-to-date warnings)warnings) – Miscommunication of drug ordersMiscommunication of drug orders, which can involve poor, which can involve poor handwriting, confusion between drugs with similar names, misusehandwriting, confusion between drugs with similar names, misuse of zeroes and decimal points, confusion of metric and otherof zeroes and decimal points, confusion of metric and other dosing units, and inappropriate abbreviationsdosing units, and inappropriate abbreviations
  38. 38. Medication ErrorsMedication Errors – Lack of appropriate labelingLack of appropriate labeling as a drug is prepared andas a drug is prepared and repackaged into smaller unitsrepackaged into smaller units – Environmental factorsEnvironmental factors, such as lighting, heat, noise, and, such as lighting, heat, noise, and interruptions, that can distract health professionals frominterruptions, that can distract health professionals from their medical tasks.their medical tasks. – Name confusionName confusion is among the most common causes ofis among the most common causes of drug-related errors, says Peter Honig, M.D., an FDA expertdrug-related errors, says Peter Honig, M.D., an FDA expert on drug risk-assessment. A recent example: the sound-on drug risk-assessment. A recent example: the sound- alike names for the antiepileptic drug Lamictal and thealike names for the antiepileptic drug Lamictal and the antifungal drug Lamisil.antifungal drug Lamisil. – Incorrect dosageIncorrect dosage, e.g. 100 mg instead of 100 ug, e.g. 100 mg instead of 100 ug
  39. 39. Pharmaceutical Co MarketingPharmaceutical Co Marketing
  40. 40. Pharmaceutical Co MarketingPharmaceutical Co Marketing  The “Research-based” pharmaceutical industry spends moreThe “Research-based” pharmaceutical industry spends more on marketing and administration than it does on research andon marketing and administration than it does on research and development. (development. (Families USAFamilies USA))  Since 1995, R&D staff of U.S. brand name drug companiesSince 1995, R&D staff of U.S. brand name drug companies have decreased by 2%, while marketing staff have increasedhave decreased by 2%, while marketing staff have increased by 59%. Currently, 22% of staff are employed in research andby 59%. Currently, 22% of staff are employed in research and development, while 39% are in marketing (development, while 39% are in marketing (PhRMA IndustryPhRMA Industry Profile 2000; percentages calculated by Sager and Socolar.Profile 2000; percentages calculated by Sager and Socolar.
  41. 41. Pharmaceutical Co MarketingPharmaceutical Co Marketing  According to industry estimates, drug companies spentAccording to industry estimates, drug companies spent $15.7$15.7 billion dollars on promotionbillion dollars on promotion in 2000. $7.2 billion dollars worthin 2000. $7.2 billion dollars worth of free samples were distributed that year (of free samples were distributed that year (IMS HealthIMS Health).).  U.S. Drug spendingU.S. Drug spending increased 17.1%increased 17.1% to $154.5 billion dollarsto $154.5 billion dollars in 2001. One-quarter of this increase was due to a shift to thein 2001. One-quarter of this increase was due to a shift to the use of more expensive drugs.  (use of more expensive drugs.  ( National Institute for Health Care ManagementNational Institute for Health Care Management))
  42. 42. Pharmaceutical Co MarketingPharmaceutical Co Marketing  In a study by Avorn, et al., forty-six% of physicians reportedIn a study by Avorn, et al., forty-six% of physicians reported that reps are moderately to very important in influencing theirthat reps are moderately to very important in influencing their prescribing habits (prescribing habits (Am Journal of Med. 1982).Am Journal of Med. 1982).  In a study by Lurie, et al., one-third of medical residentsIn a study by Lurie, et al., one-third of medical residents reported that they change their practice based on informationreported that they change their practice based on information provided by drug reps (provided by drug reps (Journal of Gen Int Med., 1990).Journal of Gen Int Med., 1990).  A study by Chew, et al., found that in the treatment ofA study by Chew, et al., found that in the treatment of hypertension, over 90% of physicians would dispense ahypertension, over 90% of physicians would dispense a sample that differed from their preferred drug choice. (sample that differed from their preferred drug choice. (JGIM,JGIM, 20002000).).
  43. 43. HEALTHCARE COSTSHEALTHCARE COSTS
  44. 44. Healthcare CostsHealthcare Costs  Each year the United StatesEach year the United States spends 2.5 trillion dollars onspends 2.5 trillion dollars on healthcarehealthcare  How much is that?How much is that?
  45. 45. Healthcare CostsHealthcare Costs How much is 1 billion dollars?How much is 1 billion dollars?  1 billion seconds ago it was 19591 billion seconds ago it was 1959  1 billion minutes ago Jesus was alive1 billion minutes ago Jesus was alive  1 billion hours ago our ancestors were1 billion hours ago our ancestors were living in the stone age.living in the stone age.
  46. 46. Healthcare CostsHealthcare Costs How much is 1 trillion dollars?How much is 1 trillion dollars?  One trillion seconds = 30,000 yearsOne trillion seconds = 30,000 years  1 trillion dollars would purchase 5.7 million homes1 trillion dollars would purchase 5.7 million homes  1 trillion $1,000 dollar bills stacked on top on each1 trillion $1,000 dollar bills stacked on top on each other would be 67 miles highother would be 67 miles high   
  47. 47. Healthcare CostsHealthcare Costs  Healthcare costs including hospitals and nursing homesHealthcare costs including hospitals and nursing homes increased by almost 300%increased by almost 300% from 1990 to 2005.from 1990 to 2005.  Healthcare costs are presently rising at aboutHealthcare costs are presently rising at about five timesfive times the rate of overall inflationthe rate of overall inflation..  A Harvard study in 2005 concluded that half of all U.S.A Harvard study in 2005 concluded that half of all U.S. bankruptcy filers stated that medical expenses led tobankruptcy filers stated that medical expenses led to their financial downfall and most of them had healththeir financial downfall and most of them had health insurance. This was a 30-fold increase from a similarinsurance. This was a 30-fold increase from a similar study conducted in 1981.study conducted in 1981.
  48. 48. Cost of MedicationsCost of Medications In 2006, U.S. adult consumers spent $130.8 billion on fiveIn 2006, U.S. adult consumers spent $130.8 billion on five therapeutic classes of prescription drugs. Expenditures ontherapeutic classes of prescription drugs. Expenditures on metabolic agents (drugs to lower blood sugar, reducemetabolic agents (drugs to lower blood sugar, reduce cholesterol, or help with other metabolic problems) rankedcholesterol, or help with other metabolic problems) ranked first at $38.1 billion, followed closely by cardiovascular agentsfirst at $38.1 billion, followed closely by cardiovascular agents (drugs for reducing high blood pressure and treating heart(drugs for reducing high blood pressure and treating heart conditions) at $33.1 billion. The remaining three therapeuticconditions) at $33.1 billion. The remaining three therapeutic classes that topped expenditures were central nervousclasses that topped expenditures were central nervous system agents ($28.2 billion), psychotherapeutic agentssystem agents ($28.2 billion), psychotherapeutic agents ($17.5 billion), and hormones ($14.0 billion). These purchases($17.5 billion), and hormones ($14.0 billion). These purchases accounted for 62.8 percent of the totalaccounted for 62.8 percent of the total $208.1 billion$208.1 billion spent onspent on all prescribed drug medicines. —Fromall prescribed drug medicines. —From Statistical Brief 232: Statistical Brief 232: The Top Five TherapeuticStatistical Brief 232: Statistical Brief 232: The Top Five Therapeutic
  49. 49. Healthcare Costs for MedicationsHealthcare Costs for Medications 18.7% 11% 5% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% 1992 1993 1994 1995 1996 1997 1998 1999 2000 Profitas%revenue drug industry median profit as % revenue other industry median profit as % revenue
  50. 50. Healthcare InsuranceHealthcare Insurance
  51. 51. Medicare CostsMedicare Costs
  52. 52. Healthcare InsuranceHealthcare Insurance  PricewaterhouseCoopers reported that health benefitPricewaterhouseCoopers reported that health benefit costs were expected to jump between 10.7 and 11.9costs were expected to jump between 10.7 and 11.9 percent in 2007.percent in 2007.  Health insurance premiums increased an average of 11Health insurance premiums increased an average of 11 percent per year from 2002 to 2007.percent per year from 2002 to 2007.  The average annual family healthThe average annual family health insurance premiuminsurance premium grew to $11,480 in 2006.grew to $11,480 in 2006.  In 2005, the number ofIn 2005, the number of Americans without healthAmericans without health insuranceinsurance rose by 1.3 million to 46.6 million or 15.9rose by 1.3 million to 46.6 million or 15.9 percent of the population.percent of the population.
  53. 53. IMPACT OF RISINGIMPACT OF RISING HEALTHCARE COSTS ONHEALTHCARE COSTS ON BUSINESSBUSINESS
  54. 54. Impact of Escalating HealthcareImpact of Escalating Healthcare Costs on EmployersCosts on Employers    Many companies with less than 25 employees haveMany companies with less than 25 employees have absorbed yearly premium increases of as much as 25absorbed yearly premium increases of as much as 25 percent or more.percent or more.  In response to increasing healthcare premiums,In response to increasing healthcare premiums, employers are shifting more of the burden for insuranceemployers are shifting more of the burden for insurance coverage to the employee.coverage to the employee.  The cost of healthcare in the U.S. is making AmericanThe cost of healthcare in the U.S. is making American businesses extremely uncompetitive versus our globalbusinesses extremely uncompetitive versus our global competitors.competitors.  Dr. Deming criticized “excessive medical costs” in hisDr. Deming criticized “excessive medical costs” in his book, “Four Days with Dr. Deming” as one of his 7book, “Four Days with Dr. Deming” as one of his 7 Deadly Sins for business.Deadly Sins for business.
  55. 55. Impact on the Automotive IndustryImpact on the Automotive Industry    The cost of healthcare for General Motors isThe cost of healthcare for General Motors is approximately $6 billion annually.approximately $6 billion annually.  Healthcare costs add about $1,500 to the price of eachHealthcare costs add about $1,500 to the price of each car, twice as much as the cost of steel and double thecar, twice as much as the cost of steel and double the cost of labor.cost of labor.  In the latest sign of the deepening troubles, G.M.In the latest sign of the deepening troubles, G.M. reported a stunning second- quarter loss of $15.5 billionreported a stunning second- quarter loss of $15.5 billion because of a continuing fall in United States sales andbecause of a continuing fall in United States sales and charges for job cuts, plant closings and the falling valuecharges for job cuts, plant closings and the falling value of trucks and sport utility vehicles (New York Times,of trucks and sport utility vehicles (New York Times, August 2, 2008).August 2, 2008).  That followed a loss of $8.7 billion reported by Ford.That followed a loss of $8.7 billion reported by Ford. Overall sales fell by 13 percent in July (New York Times,Overall sales fell by 13 percent in July (New York Times, August 2, 2008).August 2, 2008).
  56. 56. Can Quality Management Make aCan Quality Management Make a Difference?Difference?  In contrast to U.S. auto manufacturers, Toyota wasIn contrast to U.S. auto manufacturers, Toyota was nearly bankrupt in 1949. By implementing what hasnearly bankrupt in 1949. By implementing what has become know as the Toyota Production System (TPS)become know as the Toyota Production System (TPS) they have become the benchmark by which Americanthey have become the benchmark by which American Automotive companies are measured.Automotive companies are measured.  Today, Toyotas’ solid growth could put it ahead ofToday, Toyotas’ solid growth could put it ahead of General Motors as the world's No. 1 automaker.General Motors as the world's No. 1 automaker.  They reported a 34% rise in profit for the quarter endedThey reported a 34% rise in profit for the quarter ended Dec. 31,2008 as sales jumped in North America andDec. 31,2008 as sales jumped in North America and Asia. (USA Today, January 2, 2008).Asia. (USA Today, January 2, 2008).
  57. 57. Is Nationalized Healthcare the Answer?Is Nationalized Healthcare the Answer? The question is, can we afford it?The question is, can we afford it? Can government manage healthcare asCan government manage healthcare as well as they did the banking industry?well as they did the banking industry?
  58. 58. Current Economic Climate isCurrent Economic Climate is QuestionableQuestionable  Federal debt has increased exponentially in lastFederal debt has increased exponentially in last decade. In 2007 it was around $9,000,000,000,000decade. In 2007 it was around $9,000,000,000,000 or $30,000 per person.or $30,000 per person.  That number has grown substantially in 2008 andThat number has grown substantially in 2008 and continues 2009continues 2009  Federal spending shows no signs of slowing.Federal spending shows no signs of slowing.
  59. 59. More “Good News”More “Good News”  Baby boomers are retiringBaby boomers are retiring and will begin to draw on Socialand will begin to draw on Social Security, Medicare and Medicaid all of which are headed for aSecurity, Medicare and Medicaid all of which are headed for a deficit positiondeficit position  TheThe ratio of 20 to 64 year olds is decreasingratio of 20 to 64 year olds is decreasing so there will beso there will be fewer workers to support the retired baby boomersfewer workers to support the retired baby boomers  Additionally, theAdditionally, the savings rate of Americans is the lowest it hassavings rate of Americans is the lowest it has been in historybeen in history and these numbers were recorded before theand these numbers were recorded before the stock market crash, real estate bubble burst and thestock market crash, real estate bubble burst and the meltdown of the financial markets.meltdown of the financial markets.
  60. 60. Social Security AdministrationSocial Security Administration predicts deficitpredicts deficit The annual report from Social Security's Board of TrusteesThe annual report from Social Security's Board of Trustees outlining the financial status of the Social Security programoutlining the financial status of the Social Security program was released March 17, 2007. Michael Tanner, director of thewas released March 17, 2007. Michael Tanner, director of the Cato Institute's Project on Social Security Choice, says:Cato Institute's Project on Social Security Choice, says: "This year's report reinforces what we already know: that Social"This year's report reinforces what we already know: that Social Security facesSecurity faces massive long-term deficitsmassive long-term deficits and needs to beand needs to be reformed, and the sooner the better. With each passing yearreformed, and the sooner the better. With each passing year Social Security's multi-trillion dollars deficits increase and theSocial Security's multi-trillion dollars deficits increase and the cost of fixing the system rises."cost of fixing the system rises."
  61. 61. OASI ASSETS AS A PERCENT OFOASI ASSETS AS A PERCENT OF ANNUAL EXPENDITURESANNUAL EXPENDITURES
  62. 62. Associated Press, Mon., Jan. 30, 2006Associated Press, Mon., Jan. 30, 2006 WASHINGTON – “Americans’ personal savings rate dipped intoWASHINGTON – “Americans’ personal savings rate dipped into negative territory in 2005, something that hasn’t happened since thenegative territory in 2005, something that hasn’t happened since the Great Depression. Consumers depleted their savings to finance theGreat Depression. Consumers depleted their savings to finance the purchases of cars and other big-ticket items.”purchases of cars and other big-ticket items.”
  63. 63. Questions andQuestions and CommentsComments

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