Cost Analysis in Healthcare, Research Paper Example

Introduction

Over the last 20 years the US Administration has been highly focused and concerned with the reduction of medical care costs.  This whilst at the same time looking at ways of improving healthcare for millions of Americans.  Despite this the costs have continued to escalate and the efforts have achieved very little by way of containment. This paper examines the concept of preventative cost reduction and the importance of reducing health care cost for Americans.  The question is whether the US administration has the right strategy to lower medical costs and provide a more effective healthcare system.  This in contrast to the more successful healthcare programs adopted by Canada, the UK and elsewhere in Europe. (Herron)

Preventative Approach in Cost Reduction

A large number of physicians within the medical community believe that the future resides more in preventative measures in order to reduce medical costs.  This is considered the important key to reduction of the current escalating expenditure burden.  The US needs to move away from the concept of a medical system to a more holistic concept of a healthcare system similar to that in Canada and the UK. Preventative medicine moves us more towards creating healthier eating habits and regular exercise regimes for people.  It is considered that this could reduce the morbidity rates by almost 1 million Americans per year who suffer from diseases as a result of smoking, lack of exercise, high blood pressure and cardiovascular disease. Essentially if we can get people to make lifestyle changes then the cost of medical expenditure would start to reduce instead of escalating.  (Schimpff).

Although a lot of focus is aimed at the US Medical system, this has become a global problem with medical expenditure on the increase in most countries.  Developing and third world countries have been particularly lax in adopting more preventative medicine approaches. There have been some successes in improving the rates of vaccinations, sterilization, hygiene and improved water conditions. Despite this we still have a long way to go in terms of making lifestyle changes.  Smoking is still very big in the Developing world and the US suffers from poor eating habits that lead towards serious illnesses like diabetes and heart conditions. In addition the pressure of modern living has resulted in alcohol and substance abuse that have resulted in premature deaths.

At the moment it is considered that 33% of all Americans are seriously overweight and the lack of preventative medicine is increasing both medical expenditures and morbidity rates.  Despite the increase of the Health and Wellness industry it is important for individuals to find a holistic approach that incorporates preventative medicine, regular exercise and diet ( including eating the right foods).

Preventative Cost Reduction Detail

Research has indicated that cost savings can result from genetic testing for different patients. This can help in identifying diseases that the patient may have a predisposition to and as such early corrective action can be taken thereby reducing medical costs. This has proved to be particularly useful in the treatment of coronary disease. A huge cost reduction would occur by elimination of expensive medical procedures and costs of medication that are not deemed to be necessary. Examples include the use of hormone replacement drugs being used in a preventative capacity for the risk of osteoporosis and heart disease.  Further the use of estrogens being prescribed to women after menopause; this turned out to be unwarranted and unjustified treatment therapy.  There is a whole range of medical costs that are unwarranted on the grounds of pure prevention.  This needs to be carefully examined particularly where healthier alternatives might be offered.  (Baumond).

Other cost savings may be achieved by less expensive interventions.  The preventative use of aspirin and beta blockers have helped to reduce the number of incidents of stroke and heart attacks and reduced hospitalization costs. Preventative medicines also assist in the onset of disease and as such prevent the cost expenditure for long term medical care.  An example of this is in the applied use of statins to reduce cholesterol and lower the risk of potential heart attacks. Research has indicated that regular use of aspirin has helped in the reduction of colon cancers. This being attributed to the drugs properties for a Cox-2 anti-inflammation inhibitor. (Baumond).

The control of blood pressure has been an important preventative measure in helping to reduce incidents of coronary disease and diabetes.  There is no doubt however that this needs to be a holistic approach that embraces more than just drug treatment. It needs to incorporate healthy eating and regular exercise.

Medical practitioners also have to be careful with malpractice insurance claims and the possibility of legal action being taken where informed consent was not properly carried out i.e. documented and witnessed in the event of a morbidity outcome and a lawsuit being raised.

Other cost saving opportunities has been identified in areas of improving medical training to both Doctors and Nurses.  It has been argued that more funding needs to be diverted into the development of general practitioners than that of speciality medical practices. This means changing some of the existing medical care practices.

Considered Approach to Cost Reduction

In 2000 the health care spending figure in the USA was around $1.3 Trillion or around an average figure of $4,637 per individual American. By 2011 this had reached $2.8 trillion and equivalent to 17% of GDP.  Most economists believe that a mistake was made by employers reducing the medical insurance costs for employees. There is a need to offer more medical plan alternatives and a fixed dollar contribution by employers.

There is a large population suffering from mental illness disorders and this creates a huge expense burden on the State.  One response has been in the proposed “carve out” option that manages the behavioural conditions of individuals in specific care areas.  This increases the amount of outpatient treatment options available and as such lowers the administrative burden of hospital costs. This was found to have a steep decrease in costs for the treatment of substance abuse people who were treated as outpatients outside of hospital prime time. (Stanton).

Conclusions

The importance of preventative cost reduction in healthcare will be one of the most important agenda topics in the forthcoming presidential election.  There is an urgent need to make continued process reform on the US health care system.  The Republicans have stated that they will repeal the ‘Obamacare’ system adopted by the current democrat administration.  This in favour of a voucher system that will offer individuals more freedom of choice. The current administration stated that they will continue to enhance and consolidate the ‘Obamacare’ system on the basis of bringing affordable medical care to a wider population.  There still remains scope however for consideration of a National Health System that is more modelled on Canadian and UK Health administration lines.

References

Baumond, M.Malach and W.J. “Further opportunities for cost reduction of medical care.” Community Health (2010): 1-11.

Herron, Robert. “The healthcare cost crisis and the role of prevention.” Modern Science Vol 6(1) (2012): 33-59.

Schimpff, Stephen C. Prevention improves health and lowers healthcare costs. 2 6 2010. http://www.kevinmd.com/blog/2010/06/prevention-improves-health-lowers-healthcare-costs.html. 4 10 2012.

Stanton, Mark.W. Reducing costs in the healthcare system. 2012. http//www.ahrq.gov/research/costsria/. 4 10 2012.