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Don Berwick on healthcare spending: “We have to improve our way out of this”

7:05 pm by | 0 Comments

Cost figures from the healthcare reform debate are large enough to defy comprehension, but Dr. Donald Berwick boils things down to one crucial figure: $1 out of every $3 spent on healthcare is wasted.

He then argues that the way to get control over healthcare costs is not to take an axe to spending, but to make changes that make the delivery of healthcare better.

“We can get out of this; we can absolutely get out of this,” said Berwick, former Center for Medicare & Medicaid Services administrator. “But we have to improve our way out of this.”

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Berwick was a keynote speaker at the the SAS Health Care & Life Sciences Executive Conference hosted by Cary, North Carolina software company SAS. Berwick could have used his stage time to defend the federal health reform law known as the Affordable Care Act, and he did show his support for the law and its objectives. But he spent most of his time explaining ways to chip away at healthcare spending waste. Some of those improvements are already in practice now.

The University of Pennsylvania Health System changed hospital processes to tackle the problem of central line infections. Berwick said that he once thought central line infections were inevitable. But Dr. Richard Shannon’s work at Penn showed that changing hospital central line processes and procedures reduces infections. The hospital has the data to prove it.

Changing processes is a key part of improvement and it’s here that healthcare can learn from other industries, such as automobile manufacturing. Berwick cited Toyota as an example. In Japanese, the word for continuous improvement is “kaizen.” These efforts generate new efficiencies, which in turn reduces costs. At Denver Health, such “lean” practices resulted in savings of $135 million since 2006.

Berwick turned to Alaska to offer another example of how improving processes can lead to efficiencies and cost savings. “Nuka” is an Alaska Native word that means strong giant structures and living things. In Anchorage, the term refers to the Nuka system of healthcare practiced by the nonprofit Southcentral Foundation. The Nuka system was created by Alaska Natives to serve Alaska Natives. The system fosters a relationship with a patient, whose care is handled in a team-based manner that incorporates wellness and prevention. The system’s success can be measured by reductions in emergency room visits and hospital costs. More data.

But individuals also have a role in reducing healthcare costs. Here Berwick cited a Swedish man on hemodialysis. One day he told his nurse he could do it himself. He reasoned that his germs were his so he wasn’t going to infect himself. He did his own hemodialysis. Then another patient asked if he could show her how to do it. Now 60 percent of patients at this Swedish hospital do their own hemodialysis and infection rates have been reduced. The reduced infections come with an economic benefit — patients return to work sooner.

Where is the waste? It comes from  overtreatment, failure to coordinate care, fraud and abuse among others things. Berwick said his vision puts patients first and protects the poor and disadvantaged. He said changes need to be made at scale because pilot projects are not enough. Cost savings must be returned to those paying the costs. And he also urges people to take action locally.

Berwick started his talk by stating what he called the First Law of Improvement: Every system is perfectly designed to achieve the results it gets. So if you want the system to produce better results, you need to change its design. In other words, you need improvement. If not, that $1 in waste for every $3 spent is only going to grow.

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By Frank Vinluan

Frank Vinluan is the North Carolina Bureau Chief for MedCity News.
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