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Sunday, March 12, 2017

9 Drivers of High Healthcare Costs in the U.S

The Commission's report outlined many findings, including the main drivers of high healthcare costs in the U.S. Here are the nine primary drivers, according to the report.
1. Physician, facility and drug costs. Data from the Organization for Economic Cooperation and Development have consistently showed the average unit costs for U.S. physicians, hospitals, facilities and drugs are the highest in the world.
2. Expensive technologies and procedures. When Americans do receive treatment, they often choose the most expensive technologies and procedures. For example, MRIs in the United States occur twice as often compared with the average country in OECD data.
3. Fragmented and uncoordinated care. Because care providers often treat the same patient with little consultation, unnecessary care, errors and dissatisfaction proliferates.
4. Lack of cost consideration from patients. There is an assumption among patients that the most expensive care leads to the best quality, but expensive care has no correlation with quality. Patients have limited capabilities to participate in the cost decision making process of their care.
5. Fee-for-service. Hospitals and physicians are reimbursed for every service they provide, which often leads to a focus on volumes instead of a focus on care.
6. High administrative expenses. The morass of health insurers and billing processes cost the U.S. healthcare system billions in wasted costs every year.
7. Unhealthy behaviors. Chronic illnesses — like heart disease, cancer and diabetes — cause about 70 percent of all deaths in the United States, and they are the most expensive to treat. A majority of chronic illnesses stem from unhealthy behaviors.
8. Expensive end-of-life care. The last year of an American's life is the most expensive for medical treatment, and the unnecessary procedures and repeated hospitalizations provide little value to the patient and the system at large.
9. Provider consolidation. Hospitals and health systems are merging and acquiring each other at a feverish pace, and the same goes for physician groups. Studies have shown that although provider consolidation leads to some economies of scale, the increased market power leads to higher prices and oligopolistic behaviors.

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