Containing healthcare cost: New focus, solutions needed

While healthcare spending is one of the top priorities of most governments around the world, budgets do not always rise in proportion to need. Even in advanced economies, the spiraling cost of public healthcare funding is a big fiscal burden that traditional approaches are now being evaluated to solve the conundrum.

To help governments with healthcare policymaking, the World Economic Forum (WEF) has released a report that identifies at least five major roadblocks in healthcare finance. The report, "The Five Bad Habits of Healthcare: How New Thinking about Behavior Could Reduce Health Spending", was prepared in collaboration with the Imperial College London and released in November 2011.

The study was anchored on the fact that as the world economy is facing huge challenges now and in the years ahead, it would be increasingly difficult to rely on public funds or public borrowing to finance public healthcare. At the same time, national incomes and the aging population are rising, and along with it the cost of care.

In the US alone, the report cited that current spending for health is 17 percent of GDP and this is projected to grow to 27 percent by 2050. The so-called Bismarck countries (e.g. Austria, Belgium, France, Germany, the Netherlands and Switzerland) that have social insurance funding systems will also see the proportion of GDP spent on health rise to 15 percent by 2050.

"Without new sources of public funding, a greater share of the burden may come to be met by individual contributions for instance through private insurance coverage, user charging or greater out-of-pocket payments. If so, inequalities of access, treatment and outcomes – already an issue in countries such as the US where private expenditure is significant – are likely to become an increasing problem," the report cited.

Current practices in question

It is no secret that the last century was characterized by great medical advances and have greatly transformed healthcare. New medicines, new diagnostic tools and treatment options, new researchers and the growing use of information and communication technologies (ICT) in the healthcare environments have turned healthcare into a very complex ecosystem, yet more efficient.

"Health professionals must work hard to stay up-to-date with best practice and new techniques," the report advised, adding that the most cost effective diagnostic or treatment options should always be pursued. It has been established that generic drugs, for example, are more cost-effective but not all doctors prescribe them.

Another suggestion offered by the report is giving conditional rewards or setting default options for making healthy choices, such as making flu vaccination a requirement for employment to ensure that more working people will be less vulnerable to epidemics during the flu season.

The report also calls for minimizing unnecessary diagnostic procedures that do not usually lead to better health outcomes. The report cited that in the US, the number of emergency visits to hospitals that include a computerized tomography (CT or CAT) examination increased from 2.7 million to 16.2 million in the US between 1995 and 2007.  "It has been shown that many CT scans – at least for head injuries – were unnecessary and potentially harmful.31 Why do doctors order these tests when they are not only expensive but also pose risks to patients?" the report asked.

The report traced this trend to the current incentive structure and reimbursement schemes for healthcare providers, which it found to focus more on "quantity of care" rather than "quality of value".