Consider payment processing, which is faster and cheaper than ever, or signing up for a new mortgage, for which you can get preliminary approval on your phone in minutes.

Despite generations of technological advancements, however, healthcare systems remains= stuck: productivity and quality have stagnated, and change has been slow.¹

Of the nearly $4 trillion spent on healthcare annually in the United States, administrative spending is about one-quarter of the total; delivery of care is about three-quarters.

But what portion of that administrative spending is unnecessary, and how can it be simplified?

The objective is to introduce Administrative Simplification. That is what is needed in healthcare systems.

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Source: NEJM Catalyst Innovations In Care Delivery Dec 9 2020

Most efforts to eliminate defects in health care value have been piecemeal rather than systematic. Here is a framework for savings that can be achieved by eliminating defects in value.

Health care harms too many patients, costs too much, and improves too slowly. Progress in improving value has been slow. Most efforts to eliminate defects in value have been piecemeal rather than systematic. In this article, the authors describe a framework for identifying defects in value and provide estimates for cost savings if these defects were to be eliminated. The authors then provide a framework for how health systems may work to systematically eliminate these defects in value. Finally, they provide an example of one academic health system that embarked on a journey to implement this framework and the initial results and lessons learned. In the current study, the authors found that: (1) the U.S. health system spends in excess of $1.3 trillion per year on suboptimal behavior; and (2) their organization was able to reduce the annual per-member-per-year cost by 9% over the course of 12 months by reducing specific defects in care. Although it is early in the journey and the framework is only 25% deployed, the authors believe that this model offers a hopeful path forward for improving value.

By

• Peter J. Pronovost, MD, PhD, 
• John W. Urwin, MD, 
• Eric Beck, DO, MPH, 
• Justin J. Coran, PhD, MPH, 
• Abirammy Sundaramoorthy, MD, MBA, 
• Mark E. Schario, MS, RN, FACHE, 
• James M. Muisyo, MSc, 
• Jonathan Sague, MSN, RN, 
• Susan Shea, FAA, MAA, 
• Patrick Runnels, MD, MBA, 
• et al.

December 9, 2020

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