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Want to cut health-care costs? Start with the obscene amount of waste.
A year of investigating revealed a staggering amount of supplies and drugs are simply thrown away.
In Maine, there’s a warehouse the size of a middle school gymnasium, stuffed with brand-new medical supplies and gently used medical equipment. Several pallets are piled with boxes of surgical sutures, still in their shrink wrap, each box worth hundreds of dollars. Tubs overflow with diabetes supplies and surgical instruments that may run hundreds of dollars apiece. There are bins of bandages and gauze and saline and ostomy bags and every other medical supply you can imagine. These materials, unexpired, could easily stock any hospital or clinic. But each item has actually been thrown away by a local medical facility.
The cost of health care has been rising for decades, and Americans are paying the price. In a recent Gallup poll, people cited the high cost of care as their No. 1 financial concern. It’s an enormous problem, and trying to solve it all at once brings on panic and paralysis. But after reporting for a year on the ways the medical industry blows through our money, I have one idea: Let’s end the egregious waste that’s draining our health-care system.
The National Academy of Medicine has estimated the health-care system wastes around $765 billion a year — about a quarter of what we spend. Eliminating all the waste could allow us to insure 150 million Americans, the Academy of Medicine said, and saving half of it could provide groceries for every household in the country for a year. Eliminating the waste would also stop our rising health-care costs from eating up our wage increases. My premiums go up 9 percent next year. Same thing happened last year. Odds are your costs are rising, too.
It’s hard to downplay what I found when I began investigating the issue. Hospitals throw out so many valuable supplies that a cottage industry of charities has sprung up to collect this stuff and ship it to the developing world — otherwise, all those goods in that Maine warehouse would be headed for a landfill.
Nobody tracks how much hospitals waste rather than donate, and I couldn’t track down where each item came from. But experts told me when hospitals change vendors for a type of supply, they often toss the old stuff. Or, if they take over a clinic or facility, they get rid of the items that come with it, even if they are unused and unexpired.
The operating room is a major source of wasted spending. One hospital tracked the value of unused items that went to waste during neurosurgery procedures in a single year. The total: $2.9 million — for one type of surgery at just one hospital. In that case, the surgeons hadn’t updated their system of telling the staff which supplies to prep for each operation. They were opening many items they didn’t need, which then had to be thrown away even though they were unused. The hospital updated its approach to make sure they aren’t setting up for operations with excess supplies.
I learned that nursing homes throw away hundreds of millions of dollars’ worth of valuable medication every year. They typically dispense drugs a month at a time for patients, and often have them discontinued if the patient dies or transfers. The excess drugs get trashed, incinerated or even flushed down the toilets, contaminating our water supply. The chief executive of a pharmacy that serves nursing homes in Florida told me that his company alone throws away about $2.5 million a year in valuable medication.
In Iowa, the state government funded a program to recover these castoff nursing home meds and donate them to needy patients, for free. This year, they’re on pace to recover and redistribute $6 million in medication. My story led policymakers in Florida and New Hampshire to introduce legislation to try to replicate the Iowa program.
Drugs are a huge source of waste, partly because drug expiration dates don’t mean what we think they mean. The Food and Drug Administration makes pharmaceutical companies show their medication is safe and effective until its expiration date. It doesn’t make them find out how long they actually last.
Studies show it’s common for a drug to be safe after its expiration date. The FDA runs a program that tests and then extends expiration dates on drugs in the federal government’s stockpiles. Those same drugs get thrown away in pharmacies when they “expire,” even though many of them are in short supply. How much of our money does it waste? One midsize hospital in Boston throws away about $200,000 worth of drugs a year that hit their expiration date. If that’s true for other hospitals, the total would be about $800 million a year for hospital pharmacies alone.
Meanwhile, drug companies are making eyedrops two or three times larger than what the eye can even contain. We are paying for the wasted medicine running down our cheeks. I spoke to the former head of research for Alcon Laboratories, a global leader in the eye care industry now owned by Novartis. He told me that in the early 1990s his team created a “microdrop” that eliminated the waste. The microdrops were effective and reduced the burning caused by larger drops. But Alcon’s leaders killed the project because they were worried it could reduce sales.
Vials of cancer drugs are also made too large, which one study said wastes about $1.8 billion a year in the valuable medication. Earlier this year, one drug company switched from a multiuse vial, which could be shared by patients, to a single-use vial that could not be shared, thereby increasing the amount of wasted cancer medication. The change would make the supply chain more reliable worldwide, the company said. But one cancer center calculated that the change would cost each patient an average of $1,000 in waste per infusion. Imagine: You’re fighting cancer and then get billed an extra thousand dollars for medication they toss in the trash. Two U.S. senators responded to my story by introducing legislation to solve the problem of oversized eyedrops and cancer drug vials.
These are not isolated examples or small sums being squandered. Let’s say my reporting identified about $10 billion in wasted spending. That’s a rough estimate because no one is actually tracking how much we’re wasting. What else could we be doing with that money? The Kaiser Family Foundation says it costs an average of $6,690 to pay one person’s insurance premium in 2017. At that rate, the $10 billion saved could insure about 1.5 million people for a year. Tell those people it isn’t important to reduce our wasted health-care spending.
The Academy of Medicine did something smart when it reframed our health-care overspending as waste. We may be a wasteful country, but we still teach our kids to eat everything on their plates. “Waste not, want not,” is baked into our cultural DNA. It’s a powerful concept because it’s a moral one. It’s wrong to squander the hard-earned dollars Americans are paying into the health-care system and then demand they pay more.
We can’t be naive and think it will be easy to fix this problem. Our wasted spending represents revenue and profit for the medical industry. But our health-care spending should not be an entitlement program for the medical industrial complex. I put together a prescription for reducing the wasted spending I identified. Our policymakers should stand up to the medical industry and stamp out the waste.
Top 10 health care surprises of 2017
https://www.politico.com/story/2017/12/30/trump-health-care-surprises-248996
President Donald Trump stormed into office last January confident that he could knock off Obamacare in a nanosecond. It didn’t turn out that way — and from drug prices to the Tom Price travel scandal, a lot of health policy didn’t go according to plan. Here’s a look at 10 health care surprises from 2017.
1. Obamacare survives its seventh year
In control of the White House and both chambers of Congress, Republicans had their best shot ever at Obamacare repeal — and even thought they could have it on Trump’s desk on Inauguration Day. The grand ambitions quickly met roadblocks. Members rebelled over policy details, GOP leaders struggled to find consensus, moderates mutinied, and virtually the entire health care industry — along with Democrats and Obamacare advocates — lined up against every plan that Republicans put forward.
Even so, the GOP eventually squeaked a bill through the House and after several false starts put a proposal on the Senate floor. That’s when Sen. John McCain (R-Ariz.) delivered perhaps the biggest stunner of the year: a late-night thumbs-down that sunk the Senate bill and effectively ended the GOP’s repeal effort … until 2018.
Still, Senate Republicans concede that with an even narrower vote margin, dismantling Obamacare may become, as Sen. Ron Johnson (R-Wis.) delicately put it, “a little more difficult.”
2. Price jets away from HHS
After years of railing against Obamacare as a member of Congress, Tom Price finally got a chance to do something about it as Health and Human Services secretary. The former orthopedic surgeon would aid Republicans’ effort to repeal the law while simultaneously unraveling Obamacare’s web of regulations. He fell short on both counts. Price all but disappeared during the Senate’s bid to craft a repeal bill, frustrating Republicans and, more importantly, the president. Soon after, POLITICO revealed that he had routinely traveled by chartered private or military aircraft, costing taxpayers $1 million.
The scrutiny over his travel habits, combined with Trump’s irritation on Affordable Care Act repeal, sped Price’s resignation seven months into the job. He left few tangible accomplishments — other than the distinction of being the first Cabinet member to make his exit.
3. Tough talk and no action on drug prices
Trump lobbed insults at a host of health care targets, but perhaps none landed with more rhetorical force than his denunciations of the “disastrous” drug industry.
“The drug companies, frankly, are getting away with murder,” he seethed early on, suggesting he might empower Medicare to negotiate with pharmaceutical companies.
It didn’t happen. For all of Trump’s tough talk, he’s made no concrete moves toward cracking down on pharmaceutical prices. A promised executive order never materialized — and a leaked draft of the directive appeared largely pharma-friendly anyway.
In November, Trump nominated Alex Azar, a former pharmaceutical executive, to serve as his next HHS secretary. Azar has already rejected sweeping changes to rein in drug prices, like allowing drug reimportation or giving Medicare greater negotiating power. The administration’s agenda on drug prices now looks smaller, more traditional, and far less of a threat to the pharmaceutical industry.
4. GOP kills the individual mandate — in a tax bill
For all their failures on repealing and replacing Obamacare, Republicans did land a major blow — it just took a tax bill to get the job done. The GOP’s sweeping tax overhaul zeroes out the penalty levied on most people for not purchasing insurance starting in 2019, effectively gutting Obamacare’s individual mandate.
Republicans had long made the mandate a top target for repeal. But it’s also a pillar of the health law — the mechanism that Obamacare supporters contend is crucial to keeping enough healthy people in the market to stabilize premiums.
Yet, in a twist, Senate Republicans who months earlier proved too skittish to dismantle Obamacare jumped at the chance to eliminate the mandate, despite Congressional Budget Office projections that it would drive up premiums 10 percent and leave 13 million more people uninsured over the next decade.
With just 12 days left in a year they’d vowed was Obamacare’s last, Republicans passed their tax bill — and in the process, made their only major legislative change to the health law.
5. Planned Parenthood’s funding goes untouched
The GOP’s sweep into power also placed Republicans on the verge of accomplishing a second top health care goal: defunding Planned Parenthood. Once again, Republicans found themselves foiled by their own members. Moderate Sens. Lisa Murkowski (R-Alaska) and Susan Collins (R-Maine) used their leverage as Senate swing votes to protect the funding of an organization they ardently support.
When McCain joined them in voting down repeal in July, it also put the defunding efforts on hold indefinitely. And now facing only a two-vote advantage in the Senate in 2018, it’s unclear whether the GOP can find the political will to take federal action against Planned Parenthood.
6. The vaccine controversy that never was
When high-profile vaccine skeptic Robert Kennedy Jr. traveled to New York in January to meet with Trump, it looked like the start of a controversial plan to boost the scientifically disproved theory that vaccines can cause autism. Trump had previously suggested vaccines could be dangerous, and Kennedy emerged from Trump Tower touting plans to chair “a commission on vaccine safety and scientific integrity” at the president-elect’s behest.
“President-elect Trump has some doubts about the current vaccine policies and has questions about it,” Kennedy said.
But Trump’s team never confirmed Kennedy’s assertions, and after Inauguration Day any momentum for a vaccine commission appeared to fizzle out. The chiefs of the administration’s Food and Drug Administration, Centers for Disease Control and Prevention and National Institutes of Health all advocate for vaccines, and there hasn’t been a peep from the White House so far about taking any close look at vaccine safety beyond the normal regulatory oversight.
7. Single payer gets serious
At this time last year, single-payer health care was a progressive pipe dream. Now it’s a rallying point for liberal Democrats, a possible litmus test for 2020 hopefuls and a serious policy proposal that’s won the backing of nearly a third of the Senate Democratic Caucus.
Sen. Bernie Sanders’ universal health care plan vaulted into the mainstream in September, after high-profile Democrats trying to strike a contrast to the GOP’s Obamacare repeal efforts latched onto the goal of universal coverage.
“Quality health care shouldn’t be the providence of people’s wealth. It should be a virtue of us being United States citizens,” Sen. Cory Booker (D-N.J.), one of several likely 2020 candidates backing the plan, said at the time.
The single-payer push exposed divisions over how exactly to achieve universal coverage, and several Democrats have put forth their own ideas on how to move more gradually. But the shift in the Democratic platform is clear: Three years after Sanders (I-Vt.) failed to win a single co-sponsor for his plan, universal health care is becoming a defining issue for Democrats in the run-up to 2020.
8. Medicaid as a wedge issue
In a year that was supposed to be all about Obamacare, Congress spent much of its time on Medicaid. The GOP’s Obamacare repeal bills all targeted the low-income health insurance program as well. Their proposals would have profoundly changed the nature of Medicaid — not just the expansion that was part of Obamacare but the traditional parts that predated the ACA by decades.
That’s where the GOP’s health care effort hit perhaps its most intense resistance, as Medicaid — traditionally overshadowed by Medicare — suddenly became a third rail. Democrats seized on projections that capping federal funding would drive deep coverage losses and leave the nation’s most vulnerable worse off. State governors on both sides of the aisle warned that the changes would cripple their ability to deliver crucial services. Swing vote Republicans balked at deep cuts at a time when Medicaid offered the first line of defense against the growing opioid epidemic.
That hasn’t stopped the GOP from taking on Medicaid in other ways. The Trump administration is encouraging states to impose work requirements and has made entitlement and welfare reform — both of which could involve Medicaid — a priority for 2018.
9. Shkreli goes to jail over Hillary’s hair
That Martin Shkreli will finish off this year from prison isn’t a surprise — but it’s what put him there that was unexpected.
The former Turing Pharmaceutical CEO, who gained notoriety for hiking the price of an AIDS drug, was convicted of securities fraud in August. But he was living freely while awaiting sentencing until he offered $5,000 on Facebook for a strand of then-presidential candidate Hillary Clinton’s hair. The post qualified as a “solicitation of assault,” a judge ruled, before revoking Shkreli’s bond and sending him to prison.
It’s just one of many strange twists in Shkreli’s saga, which included calling congressmen “imbeciles” on Twitter hours after refusing to answer questions at a House committee hearing; livestreaming on YouTube for hours on end, including right after his conviction; and purchasing the sole copy of a 2015 Wu-Tang Clan album for more than $1 million. He’ll now serve jail time over his request for Clinton’s hair until a mid-January sentencing hearing.
10. Collins, Murkowski play power brokers in the Senate
The most moderate members in a Republican Conference that narrowly controls the Senate, Collins and Murkowski were always going to be crucial players. But GOP leaders may not have anticipated just how much they’d flex that power.
Collins and Murkowski held out throughout the repeal effort over Medicaid cuts and skimpier subsidies they worried would hurt their states — and tanked a top GOP priority. At the end of the day, both voted for the big tax bill, with its individual mandate repeal. Collins got a promise from Senate leaders that two ACA stabilization bills would be included in Congress’ year-end spending agreement — though the bill have been pushed into 2018 and are in trouble, given the House opposition.
With Republicans’ margin in the Senate set to narrow to just 51-49 next year, Collins and Murkowski appear set to exercise even more influence over the party’s direction come 2018.
3 political issues for hospitals to watch in 2018
Hospitals and health providers suffered minimal damage in this year’s political collision over Obamacare. But 2018 will bring a series of equally high-stakes debates that will affect the financial viability of hospitals and the future of how care is measured and delivered.
And by the way, the war over Obamacare is hardly over — it’ll start up again next year with proposals to stabilize insurance markets and renewed GOP repeal efforts.
Here are some additional issues to watch:
Redefining value
The Trump administration is promising to set a new course for medicine’s value movement. Seema Verma, the chief of Medicare and Medicaid, is evaluating proposals for ways to link government reimbursement to patient outcomes. She is moving away from the mandatory payment programs created under President Obama — in which hospitals received lump sum payments for repairing fractured hips and other services — in favor of voluntary models with more flexible arrangements created by doctors and hospitals.
Greater leeway from the federal government might make it easier for hospitals to experiment with novel ideas, like pushing for new payment arrangements in specialty areas such as gastroenterology, behavioral health, and cancer care. But the additional flexibility could also take the teeth out of reforms and fatten providers’ margins without delivering corresponding cost and quality benefits.
It is unclear when the Trump administration will unveil its plans for new payment programs, but keep an eye out for news in the first half of 2018.
Medicaid, Medicaid, Medicaid
The federal program that provides care for the poor and disabled will remain a Republican target next year. The prospects of sweeping federal legislation appear dim, with strong Democratic opposition against a razor-thin GOP majority in the Senate. But the Trump administration may cut the program anyway, by giving states more flexibility to reshape their programs. That could mean swift approvals of popular GOP reforms, such as work requirements and premium-like payments by beneficiaries.
The implications couldn’t be bigger for providers, or their low-income patients. The underlying goal of these efforts is to reduce enrollments in the $500 billion program, an outcome that would increase uncompensated care and financial instability for struggling hospitals and households. But Republicans argue that cuts are necessary to keep federal spending in check and free states from mandates that are crowding out other budget priorities. That clash of interests will generate skirmishes across the country in 2018.
FDA regulation of medical technology
The Food and Drug Administration is redefining what it means to be a medical device in the digital age — a process that will have implications for the health care facilities that are the primary purchasers of such devices.
The FDA recently proposed streamlining the regulation of many health software products. The move will broaden providers’ arsenal of digital tools, such as decision support programs that helps doctors detect and respond to infections or diagnose rare diseases.
However the agency did not take a firm position on machines that rely on artificial intelligence, an area poised to generate plenty of debate in coming months. Products like Watson, IBM’s supercomputer, still fall in a regulatory gray area, as do others that rely on algorithms whose inner workings are shielded from users.
The key question is this: Should the FDA require companies to prove their products deliver safe and effective advice, or can they unleash these machines in health care with minimal oversight?
The uninsured are overusing emergency rooms — and other health-care myths
In the search for ways to bring down American health-care spending, there are certain ideas that are close to dogma. Chief among them: If you provide health insurance to people, they will stop overusing the emergency room.
“A lot of people just didn’t bother getting health insurance at all. And when they got sick, they’d have to go to the emergency room,” President Obama said in a 2016 speech. “But the emergency room is the most expensive place to get care. And because you weren’t insured, the hospital would have to give you the care free, and they would have to then make up for those costs by charging everybody else more money.”
The idea that uninsured people are clogging emergency rooms looks more and more like a myth, according to a recent study published in Health Affairs. Uninsured adults used the emergency room at very similar rates to people with insurance — and much less than people on Medicaid. Providing insurance to people can have many benefits, but driving down emergency room utilization doesn’t appear to be one of them.
Medicaid is GOP target in 2018
http://thehill.com/policy/healthcare/366728-gop-could-push-medicaid-cuts-in-2018
Medicaid could face crucial tests in 2018 at both the federal and state levels.
Republicans in Congress failed in their attempts earlier this year to impose drastic cuts to the program as part of ObamaCare repeal, but GOP lawmakers could try again next year.
The tax bill that President Trump recently signed into law is projected to add $1 trillion to the federal deficit, making cuts to Medicaid an even more tempting target for some conservatives.
“Medicaid is front and center in any budget exercises, and now that deficits have increased, it puts Medicaid squarely in the bull’s-eye,” said Joan Alker, the executive director of the Georgetown University Center for Children and Families.
Speaker Paul Ryan (R-Wis.) has said he wants to bring down entitlement spending, saying in December that “health-care entitlements such as Medicare and Medicaid are the big drivers of debt.”
Any entitlement cuts from Ryan will likely face pushback from members of his own party, including Senate Majority Leader Mitch McConnell (R-Ky.). McConnell has said he doesn’t expect to see entitlement reform on the agenda next year ahead of the midterms.
“The sensitivity of entitlements is such that you almost have to have a bipartisan agreement in order to achieve a result,” McConnell told reporters in late December.
Medicaid covers nearly 75 million people, and the program has proven resilient in the face of conservative opposition.
Cindy Mann, a consultant at Manatt Health who ran Medicaid under former President Obama, said attacks on Medicaid have made it more popular.
“Medicaid has always been supported by the people closest to it,” Mann said.
Some Republican senators have recognized the political risks of Medicaid cuts, too. The GOP’s ObamaCare repeal push failed in part because of senators opposed to the Medicaid cuts.
“The Medicaid program is starting to get a politically powerful status,” said Eliot Fishman, the senior director of health policy at Families USA, an advocacy group.
Fishman noted that Maine, Arizona and Alaska are all Medicaid expansion states represented by Republican senators who have shown a willingness to protect the expansion funding.
Over 16 million people have enrolled in Medicaid since states began expanding coverage under ObamaCare. The program could continue to grow in the near future, as more states could seek to take advantage of the additional federal money offered by the health law.
Future Medicaid expansions could be especially likely if a Democratic wave in November’s midterms gives Democrats control in more statehouses.
In Virginia, Gov.-elect Ralph Northam (D) has promised to expand Medicaid, something Democrats in the state have been unable to accomplish in the last four years in the face of a GOP-controlled legislature. But with a 50-50 split in the House or even a 51-49 Democratic minority, depending on the results of a recount, Northam has much better odds than current Gov. Terry McAuliffe (D).
In Maine, voters approved a ballot initiative allowing the state to expand Medicaid. Gov. Paul LePage (R) has refused to implement it, but a new governor replacing LePage after he leaves office in the face of term limits could be more willing to accept the results.
If even a few more states choose to expand Medicaid, “it starts to get to be enough critical mass nationwide that I would hope it just makes it a permanent part of the Medicaid program,” Fishman said.
But advocates worry that unprecedented flexibilities offered by the Trump administration will allow states to completely change the nature of Medicaid.
Administration officials have said they will allow governors to add work requirements, time limits and lockout periods for people who can’t pay their premiums on time.
Advocates say adding such provisions would further the Republican case that Medicaid is a welfare program, instead of health insurance.
“Whether you support them or not, those activities are not the function of a Medicaid program,” Mann said. “People can differ as to the efficacy of those efforts, but few people can accurately say that’s what health insurance ought to be doing.”
In the coming months, the Trump administration could approve waivers allowing states like Arkansas, Arizona, Indiana and Kentucky to impose work requirements on Medicaid beneficiaries.
Arizona also wants to impose a five-year limit on Medicaid eligibility for the “able-bodied.”
States that want work requirements have acknowledged that tens or even hundreds of thousands of people would lose Medicaid coverage under the proposals.
Prior to ObamaCare, Medicaid mainly covered children, the disabled and pregnant women. The law’s optional expansion allowed many more low-income people to become eligible, leading to criticisms from conservatives that “able-bodied” beneficiaries were essentially freeloading off the government.
Alker said that’s the wrong way to look at it.
“[Medicaid is] predominantly run by managed care insurance companies, so that kind of rhetoric is a gross oversimplification,” Alker said. “But people who want to cut it, they tend to focus on one population.”
New Year’s Resolution: In 2018
Philosophy of Management
Here’s to a Wonderful New Year
Happy New Year
HENRY KOTULA 