Here are three insightful and thought-provoking facts that most
people aren’t aware of and the potential implications of these
statistics / trends on healthcare stakeholders.
Fact 1: The third leading cause of death in the U.S. is due to medical error
According to a study by Johns Hopkins, more than 250,000 people in the United States
die every year because of medical mistakes, making it the third leading cause of death
after heart disease and cancer. Some studies show the death rate as high as 440,000
deaths per year. To put that in perspective, approximately 350,000 people died from
COVID-19 in 2020, which, similar to medical error, was no fault of their own. A medical
error death “is caused by inadequately skilled staff, error in judgment or care, a system
defect, or a preventable adverse effect. This includes computer breakdowns, mix-ups
with the doses or types of medications administered to patients and surgical
complications that go undiagnosed.”
Fact 2: Medicare’s trustees report that the Part A trust fund will be insolvent by
2024
Medicare – Part A, which pays for hospital bills, is funded mainly through the payroll
taxes. According to the report, without changes to expected spending or trust fund
revenue, the fund will run dry in 2024 and have sufficient funds only to meet 90% of its
obligations. This is the second time insolvency has been predicted within five years.
Without any changes the shortfall would have to be covered by one or more of the
following potential options: (i) add new revenue, which equates to increasing the payroll
tax rate, (ii) raise the share of costs shouldered by enrollees, (iii) cut benefits, or (iv)
reduce payments to healthcare providers.
Fact 3: The last decade was the lowest population growth rate ever recorded
U.S. Population Growth for Decades
The U.S. population growth of 6.6% between 2010 and 2020 is lower than in any previous decade, including the Great
Depression years of the 1930s. It is also roughly half the growth rate of the 1990s, a time of rising immigration and
millennial-generation births.
The 2010s decade was one of fewer births, more deaths, and uneven immigration, but the primary cause of this dramatic decline is highly related to falling U.S. fertility rates.
The U.S. fertility rate has been falling steadily and as of recently stood at 1.7 births per woman (ratio of number of births in a year to total population of women between the ages of 15 and 50), the lowest level on record. Some experts hope that the decline is “temporary” and that Millennials are postponing family formation as they are burdened with debt and struggle with launching careers and establishing households. However, there is no clear sign of an any uptick, and, to make matters worse, net immigration has also declined since 2008.
The data is clear that the aging of America is inevitable, and the prospects for higher fertility rates look dim. Even if the
fertility rate were to surge today, it would not have an appreciable effect on the ratio of workers to retirees or the growth rate in employment for another twenty to twenty-five years (the time it takes to turn an infant into a fully productive adult).
Conclusion
What does the third leading cause of death in the U.S., Medicare Part A near-term insolvency projections, and declining population growth have in common? All of these alarming realities can be solved through value-based care. Value-based care is an alternative system for how providers are rewarded for care and incentivizes the quality of care they give to people, rather than the volume of services. Another way to put it, providers and health systems will not be paid for medical error deaths and instead be rewarded for quality of patient care and outcomes. Because of this alternative payment system, healthcare stakeholders will be forced to invest in technology, tools, and resources so that healthcare providers and workers can make better quality decisions. Technology will help alleviate staff shortages, improve medical treatment accuracies, increase productivity, and enable organizations to do more with less.
The alarming medical error rate is proof that our traditional healthcare system and payment models are flawed, and that the need to move into a value-based care world is a must. Imagine if the third leading cause of death in the U.S. were caused by commercial airline pilot errors. The industry would crumble overnight. The healthcare sector and our standards for care should be no different.
To add fuel to the fire, we have an impending insolvency issue with Medicare Part A funding combined with population growth trends that will result in a much wider gap between the working and an aging population in need of care. The working population decline will also have a downstream impact of less working providers / medical staff to take care of patients, as well as fewer contributing taxpayers. These trends, if left as is, will guarantee a very imbalanced, underfunded and extremely lopsided healthcare ecosystem.
Healthcare stakeholders need to think about reorienting provider compensation to encourage value over volume, invest in much needed tools, such as strong data analytics and reporting, so that the right decisions and diagnoses are made at the right time. Lastly, we need to shift care away from costly and error-prone hospitals and create innovative care models that deliver better care in a cost-effective manner. In essence, we need to do more with less. The aging and demographic shift of America is inevitable; however, the fiscal, economic, and potential healthcare catastrophe is not if we prepare, adapt, and transition to a value-based care world today
HENRY KOTULA 