Opportunities for Cost Reduction of Medical Care: Part 3

Monte Malach; William J. Baumol


J Community Health. 2012;37(4):888-896. 

In This Article

Abstract and Introduction


The level of health care spending in the United States and other developed nations is rising at a disturbingly rapid rate. However, in the United States, these increases are not justified by superior performance. Rather, most other wealthy countries' inhabitants live longer and suffer from fewer medical problems than the average American. This paper demonstrates the continued abundance of opportunities for substantially reducing health care costs without decreasing the quality of care. In particular, it emphasizes the need to reduce the practice of defensive medicine and to enlarge the cadre of non-specialist physicians who educate future doctors. Such cost-saving opportunities are not rare phenomena but are widely available and offer the United States opportunities to move toward the markedly lower cost levels that have been achieved in other countries.


As we know, the cost of health care in the United States is rising at a disturbingly rapid rate. What is not widely recognized, however, is that this is true throughout the world, in all developed nations.[1] This trend is present in other countries, including those where health care is provided by private enterprise, by government, by single payer, or by some other arrangement. The rate of increase in health care spending seen in the United States is replicated elsewhere, despite differing health care systems in these countries.

However, the level of health care costs is a different matter from the rapidity of its rate of increase. In this, the United States is unfortunately an international leader, with cost levels exceeding that of all other wealthy economies and with no superiority in performance as justification. Indeed our record, in terms of mortality and morbidity, is far down on the list, with most other wealthy countries' inhabitants living longer and suffering from fewer medical problems. In this third of three articles[2,3] 1 we have written on the subject, we demonstrate the continued abundance of opportunities for substantial reduction in the level of health care costs—opportunities that readily can be put to use.

Why three articles on this subject? The answer is the remarkable speed with which cost-saving innovations are appearing in the medical field. Indeed, there are almost daily reports of significant opportunities to decrease the overall costs for the prevention, diagnosis, and treatment of diseases. The bulk of the examples provided in this paper have appeared and achieved public attention in the relatively brief interval between our prior publications and the writing of this one. The central contention of this article is that such cost-saving opportunities are not rare phenomena but are widely available and offer the United States opportunities to move toward the markedly lower cost levels that have been achieved in other countries.

Much of the innovation taking place in health care has been almost magically beneficial. Still, it must be acknowledged that there are some new procedures and drugs that turn out to be needlessly expensive, ineffective, and even dangerous or seriously detrimental to both patients and cost saving efforts. We highlight many examples of such medical innovations, in the hope that they can be eliminated swiftly.

Finally, and perhaps most important, in the political battles over the rising cost of health care, little or no attention seems to be paid to the distinction between savings that can be achieved without threat to the quality of health care and those that can only be attained at patients' expense. The bulk of this paper is devoted to recently emerging examples of opportunities for cost saving without reduction of quality of care. The examples we discuss here are only some of the many recent medical developments, but these examples tell us that economizing opportunities abound and offer remedies that beg for implementation.

The causes of exponentially rising health care costs are many and varied, but perhaps the most insidious and unspoken contributors to these costs are the unstated numbers of tests, procedures, and treatments performed in the interest of preventing malpractice suits. The cost of defensive medicine is commonly thought to account for no less than 25% of all medical care costs in the United States. However, it is impossible to quantify these costs. In addition, US government estimates indicate that litigation costs account for 2–4% of increases in medical care costs, which can only be remedied by tort reform.[4] However, such low numbers strain credibility.

Although patients' failure to comply with medication or treatments ordered by doctors is largely undocumented, this surely is responsible for delaying treatment and exacerbating diseases and, thereby, is a source of increased medical care costs.

Disease co-morbidity is another significant factor in medical care costs, especially in a health care system like ours, where broad-based internists and family physicians have largely been replaced by multiple specialists and subspecialists for each patient. This leads to frequently unnecessary, occasionally duplicative, and very expensive tests and treatments.[5] As previously reported, Braunwald has compared specialist and subspecialists to the virtuosi in an orchestra, whereas broad-based internists and family physicians, like the orchestra's conductor, are best equipped to direct treatment for the whole patient.[6]

Cost consciousness in patient care is a necessity for the control of medical costs. A defined protocol for educating medical students, medical residents, and specialty fellows in cost saving methods may also help to control costs.[7]

Making treatment decisions based on the findings of randomized clinical trials also has been problematic and very costly in certain instances—especially when longer term studies frequently disprove the original results of the clinical trial.[8]

Improved life expectancy resulting from improved medical care has been documented by the United States Department of Public Health (see Table 1 ). From 1999 to 2009, the age adjusted death rate in the United States declined from 881.9 people per 100,000 to 741.0 people per 100,000—a record low. This remarkable public health achievement resulted in decreases in seven of the 15 major causes of deaths in the United States, as well as reductions in the cost of medical care (see Table 1 ).[9]

1 In the interest of thoroughness, some of the examples cited in our previous papers[2,3] are repeated here.


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