Overutilization In Healthcare

The everyday American is faced with the cost of health care which covers, treats, and prevents illness. Health care costs include and extend into vast areas such as; insurance, medication, procedures, co-pays, medical testing, and more. Currently, the United States is facing sky rocketing health costs, a decline in quality of services, and minimal access to quality and cost-efficient care. In the year 2015, the National Health Expenditure was roughly $3.2 trillion dollars, which equates to approximately $9,990 per person. (NHE, 2017) Of that $3.2 trillion dollars, about $324.6 billion of it went to prescription drugs, $634.9 billion went to physician and clinical services, and $1,036.1 billion went to hospital expenditures. (NHE, 2017)

The U.S. spends more resources on healthcare than any other nation. Yet, the The Commonwealth Fund (2014, para. 1) claim the U.S. health system consistently ranks last or near last relative to other industrialized nations regarding health outcomes. Consequently, insurance companies are adopting a value-based reimbursement system aimed at containing costs and improving clinical outcomes (U.S. Department of Health and Human Services, n.d., para. 35).

Healthcare spending growth rate trends show astounding estimates. Since 1960, spending has risen from $27 billion ($143 per capita, 5.1% pf GDP) to amazing $1,678.9 billion ($5,670 per capita, 15.3% of GDP, 2003 data) (HHS, 2005). Recent research estimated that by 2013, healthcare spending will be as high as 18.4% of the Growth Domestic Product. It is important to note that the gradual move from hospital to ambulatory setting has resulted in much higher spending on outpatient hospital services and prescription drugs. The spending growth for these two trends is much higher than the overall healthcare cost growth, which, in fact, increases faster than such important economic indicators as GDP growth, inflation growth, and population growth rates.

The structure of the private health insurance market is one reason as to why inefficiency is occurring within the U.S. system. More specifically, inefficiency results from the relationship between the insurance companies and patients. When consumers purchase health insurance policies, they become shielded from the full cost of medical care. Upon receiving medical care, consumers only need to pay a fraction of the full cost, which is called the copay. This creates a moral hazard problem within the system. That is, the behavior of consumers changes upon

It seems as though the gaps between patient-care and doctor relationships are being pulled apart and further disintegrated by eliminating “patient-care” and substituting it with “reimbursement”. Most physicians working in private practice today are burdened by diminished reimbursement rates and a growing list of administrative tasks required by insurance companies. In response, many primary care physicians are exploring alternative practice options other than the traditional fee for service. A fee for service is a delivery system where health care providers are paid for each service like an office visit, test, or procedure. A new health care trend which seems to be the growing

Space prevents a full breakdown of the differences between fee-for-service and managed care. There are important characteristics of each that affect how trade-offs between quality and cost are made. For fee-for-service: There is no “defined population” for which the insurance company is responsible. Connections with the system are initiated by the patients. The main focus is on treating sick patients. Neither physicians nor insurance companies are responsible for providing care beyond what is specified when patients seek care (Eddy, 1997). The responsibility of the insurance company is to pay the bills. Importantly, the insurance company is not responsible for the overall health of its subscribers or for the quality of care delivered by individual physicians. Physicians are left to decide what care their patients should receive.

Rising health care cost is a nationwide problem in the United States (U.S.). In the U.S., more money is spent on the health care than any other country in the world. In 2012, the overall national spending on healthcare in the U.S. was $2.8 trillion, which is about 17 percent of total economic output (Peter G. Peterson Foundation [PGPF], 2014). Several government organizations predict that the healthcare disbursements are expected to rise to 22 percent of gross domestic product (GDP) by the year 2039 (PGPF, 2014). Even though the U.S. has the priciest health care system in the world, it ranks lowest among the other wealthiest nations. There are many underlying causes for the high healthcare costs. Some of the main reasons for upsurges in healthcare

Americans often believe that more health care is better, and if experts suggest that having a certain test is unnecessary, they may feel this is the equivalent of rationing (Kerr & Ayanian, 2014). However, there are strong indications that some tests and treatments are overused, and the American Board of Internal Medicine has even set up a Choosing Wisely campaign (Lipitz-Snyderman & Bach, 2013) to convince citizens of the U.S. to stop overuse of health care. Certain examples of overuse in the health care realm including too much usage of antibiotics for the common cold, and too many imaging tests for common back pain among recipients of Medicare.

Healthcare in the United States has evolved over the years. The overall goal is to optimize how physicians, hospitals, and other care providers are remunerated focusing on high quality of care provided at lower costs. Currently there two various payment modes for healthcare providers, fee for service and capitated systems. Fee for Service (FFS) modes allow for payment to be made as the service is provided. Under the capitated system, a fixed payment is made in advance and when the patient seeks care, the healthcare provider provides all the services. These models have both advantages and disadvantages. FFS model will be the focus of this paper.

The United States spends more money on health care per person than any other country in the world (Brink, 2017) however this does not necessarily translate to better health. Among the 35 developed nations that make up the Organization for Economic Co-operation and Development (OECD), the United States continually ranks near the bottom on most standard measures of health. Life expectancy in the United States is currently 78.8 years, which is several years lower than the average of 82 years reported in comparable countries. Although the U.S. spends more on health care than any other country and has the highest proportion of specialist physicians, survey findings indicate that from the patients’ perspective, and based on outcome indicators, the

Medical staff in hospitals that are required to accept all patients are paid significantly less than the medical staff that work in hospitals that can turn away unprofitable patients. “Physicians and nurses and executives earned a fraction of the going rate in the private sector, as little as one-third to one-half what could be made elsewhere” (Young 195). Due to the current health care system present in America that doctors are paid via the FFS (fee for service) system, it is financially beneficial for physicians to have wealthy patients. With wealthy patients, the doctor can make more referrals and perform more tests, which in turn increase their own income (Landry, Jonas, Knickman, Kovner, and Erwin, 2015, 167). Because a doctor cannot suggest more tests and medications to increase the bill to a patient in the poorer tier, these patients are often turned away when possible. For the doctors in public hospitals to earn salaries similar to their colleagues in the private sector and patients in the “poor tier” to receive medical care similar to their wealthier counterparts, the health care payment system needs to be revised. A commonly mentioned alternative to the current health care system is the single payer system, as implemented by countries around the world (Weiner, Rising Costs,

There are two prime issues that arise from this discrepancy. Firstly, the performance of providers that treat patient populations with low socioeconomic status might be mis-measured. Secondly, even after addressing mis-measurement, disadvantaged patients are generally disproportionately served by low-performing performers that are under-resourced and require additional resources to improve quality for disadvantaged patients. Therefore the redistribution of resources way from the providers, who care for disadvantaged population, requires changes in the payment policy. Ideally, a pay-for performance

Fee-for-service is a method in which doctors and other health care providers are paid for each service that is performed, such as testes and office visit (Healthcare, n.d). Primary care fee-for-service only pays a doctor for a certain set of service that is performed, which limited to doctor sick visits and wellness care, which are tiered by means of an coding system counting, such as how many body parts a doctor examines, or what questions a doctor asks a patient about the quality of their symptoms. In Baicker’s article, “Healthcare spending in the United States now represents one-sixth of EDP and is projected to comprise more than one-quarter of it's within 25 years” (Baicker, 2012). This will help those providers who complain about “unsustainable reductions in compensation, unfair labor practice if they provide care that is too expensive in the view of the health plan, and unethical intrusion by health plan into the practice of medicine”. Therefore, salary based would allow doctors and hospitals get paid for services that are performed. Moreover, there is no limit on the physician treatment decisions, hence doctors are able to order as many tests as they deem necessary for their patients.

In our national health care plan, we believe that quality over quantity is essential. If someone is going to pay for something then they should be able to get their money’s worth and doctors should be paid on the basis of their performance in their work. Yes, going for quality may be more expensive than quantity, but we have a solution that will leave patient satisfied with not only the care they receive but also with the fairness of the price they pay: decreasing the amount paid for the premium and increasing

Under capitation, physicians are given incentive to consider the cost of treatment. Pure capitation pays a set fee per patient, regardless of their degree of infirmity, and gives physicians an incentive to avoid the most costly patients (Miller, 2009). Providers who work under such plans focus on preventive health care, as there is greater financial reward in prevention of illness than in treatment of the ill. Such plans avert providers from the use of expensive treatment options. The proponents of this method of payment especially insurance companies argue that when health care providers are not paid extra for additional office visits any associated medical expenses, they are likely to be more conservative with their treatment assessments