Health ministers call for outcomes-based approach to end wasteful spending

Adverse events occur in one in ten patients admitted to hospital, adding 13 – 17 per cent to healthcare costs. Up to 50 per cent of prescriptions for antibiotics are unnecessary. Between 12 and 56 per cent of visits to accident and emergency departments are inappropriate. The share that generic drugs have in the overall market ranges from 10 per cent to 80 per cent. Healthcare administration costs vary more than seven times.

As this - far from exhaustive - list illustrates, a significant proportion of health spending is wasteful or inappropriate. “I’d say one fifth overall is a defensible figure,” said Mark Pearson, deputy director of employment, labour and social affairs at the Organisation for Economic Cooperation and Development.

To rub salt in this rather large wound: “Much wasteful spending is actively bad for patients,” Pearson said.

At a time when budgets are under such pressure, it is alarming that 20 per cent of health expenditure makes no, or minimal, contribution to good health outcomes. In effect, governments could spend less on health care and still improve patients’ health.

Doing something about this requires a strategic approach that puts value at the core of the policy debate and patients at the centre of the restructuring of care. Change should be based on two basic principles: Stop doing things that are not effective, and adopt lower-cost treatments in place of ones that cost more, if they are likely to have equivalent effect.

Health ministers start to act

The fact that there is such a large variation in the uptake of generic drugs, antibiotic prescriptions, caesarean sections, knee replacements and other treatments in OECD member countries points to a huge potential to reduce waste, as was noted in the statement issued by OECD health ministers following their meeting in Paris January 17th to scope ‘Next generation health reforms’.

Ministers expressed concern that a significant fraction of health spending does not actually improve patient health, saying: “Large geographic variations in medical practice within our countries are not always due to differences in need or preferences, and policies should promote clinical best practice.”

Outlining the findings of the OECD report, ‘Tackling Wasteful Spending on Health’ in London earlier this month, Pearson said the large variation in the volume of services delivered cannot be medically justified.

“For example, a four-fold difference in the number of knee replacements across countries, and within countries a three-fold variation between regions, must be a sign of some wasteful clinical care,” he told health care professionals, hospital administrators and academics at the King’s Fund, a charity promoting improvements to healthcare

There are many more examples of inappropriate care. Better information is one way to deal with waste, Pearson said. As one case in point, there was a clear inflection point in the number of adverse events in New Zealand following the implementation of a national reporting system.

“This is a result of bringing the issue of poor care to the attention of clinicians,” said Pearson.

Setting down and enforcing clinical guidelines and protocols can play a role, as can behaviour-change campaigns. Antimicrobial stewardship campaigns in countries including Belgium and Finland have led to a fall in the number of prescriptions.

In addition, appropriate financial incentives and nudges, such as paying for a bundle of care, rather than individual elements, are starting to have an impact, reducing the number of readmissions to hospital.

Operational inefficiency

There are also examples of operational waste, such as unnecessary outpatient appointments, delays in discharging people from hospital and wide variations in admissions to hospital of people suffering exacerbations of a chronic disease – indicating inadequate primary care.

To target operational waste, Pearson suggested the promotion of day case surgery, bundling payments so hospitals are not paid for readmissions, and strengthening alternatives such as hospital at home services.

Although there is a seven-fold variation in the cost of administering health care systems in OECD countries, Pearson said this aspect is on the margins in terms of wasteful spending, with administration accounting for only three per cent of overall budgets. “Given the complexity, that doesn’t seem that high,” he said.

However, loss to fraud and error accounts for six per cent of healthcare expenditures, and this should be targeted. “Fraud is getting more attention, with moves to create specialised departments away from health ministries that are using data mining to identify anomalies,” said Pearson.

The public is one of the great unexploited resources in tackling wasteful spending in health, Pearson said. “Nearly all the data is based on clinicians, not on if patients feel they have better outcomes.”

The UK has gone further than most OECD countries in the adoption of patient-reported outcomes (PROs).

“I hope PROs become an internationally comparable system, to get patients’ perspectives at the centre,” said Pearson.