Take a look at this map and see if you can guess what the highlighted territories have in common.
They all have a higher life expectancy than the U.S.
And all except Switzerland spend less—in most cases a lot less—than we do on healthcare. The Swiss live on average 4+ years longer than Americans.
Bloomberg Health Efficiency Index
Every year, Bloomberg creates a list ranking healthcare efficiency of economies with life expectancies of at least 70 years, GDP per capita of over $5,000, and a population of more than five million.
The ranking is weighted as follows:
- Average life expectancy (60%)
- Percentage of GDP spent on healthcare (30%)
- Average per capita healthcare expenditure (10%)
In the most recent index, the U.S. ranked second to last of 56, just ahead of Bulgaria, and tied with Azerbaijan.
Hong Kong topped the index. They have the longest life expectancy of 84.3 years, spending only $2,222 per person, while our expectancy of 78.7 years costs over four times as much, at $9,536.
So why are we spending so much yet getting so little bang for our buck?
It’s a Complex Question.
Our relatively poor life expectancy is impacted by factors in addition to healthcare:
- 70% of Americans over the age of 15 are obese, increasing the risk of a host of chronic conditions.
- The U.S. ranks 127th out of 183 in road deaths per 100,000 people overall, but among countries in the Bloomberg index we are in the bottom 50%.
- In 2016 firearms killed 37,200 people in the U.S., second only to Brazil with 43,200.
- We have a high poverty rate and the highest child poverty rate in the developed world.
Yet none of these issues explain our outsized spending. The reason for that is simple: we pay more for things here.
Compared to other countries on the list, we spend more on high-tech medical equipment such as MRI machines, and we overutilize them. Americans are 44% more likely than others to receive an MRI scan, at an average cost of $2,600—though some hospitals will charge over $13,300, and that wild range is another part of the problem. While we use medical imaging more, outcomes are not necessarily better. The U.S. performs more cervical cancer screenings per capita than any other country, yet survival rates are below average.
Another contributing factor is the high cost of drugs in the U.S. compared to the rest of the world. For example, the bestselling biologic Humira costs an average of $2,700 per dose in the U.S. (common dosage is twice a month), yet that exact same dose could be had for $822 in Switzerland, or $1,362 in the U.K. And the price of the drug has doubled here over the last ten years.
How is that possible? Most other countries have price controls and agencies charged with negotiating better rates based on bulk purchasing. Our fragmented system means every insurance plan is negotiating on its own.
American patients don’t visit a doctor as frequently as many others, four times a year on average versus six times worldwide. This can allow chronic conditions to develop or worsen.
Enough about what we’re doing wrong, let’s take a look at who’s doing things right. Here are the top three countries on the index:
#1 – Hong Kong (efficiency score: 87.3; life expectancy 84.3)
The Hong Kong health system includes both public and private options. Highly subsidized public care is available to all residents and anyone with a visa valid for longer than six months. Quality of care is considered excellent in both public and private facilities.
Their efficiency ranking is primarily due to extensive government subsidies and tight control and oversight of the system.
However, it’s not all rosy: a rapidly aging population, medical tourism, and institutional resistance to doctors with foreign accreditation means that the public system is severely overburdened. Wait times for stable patients are as long as 84 weeks for surgery, 94 weeks for an ENT appointment, and 183 weeks for a gynecological examination.
#2 – Singapore (efficiency score: 85.6; life expectancy 82.7)
Singapore also maintains a good balance between public and private options, and has a medical savings plan into which employees and employers must contribute equal amounts. They also mandate transparent pricing, and regulate the number of practitioners and medical devices (and their use) to avoid overutilization.
#3 – Spain (efficiency score: 69.3; life expectancy 82.8)
Third on the list, and best in Europe is Spain. Like Hong Kong and Singapore (and many others on the list), they have a mix of public and private facilities and are predominantly funded by taxes. State-sponsored coverage is mandated in the Spanish constitution and is available free to any resident. The system covers 99.7% of the population, with 0.3% having access only to private care.
Spanish doctors have no financial incentive to prescribe expensive drugs or procedures, and therefore seek and recommend the most cost-effective treatment plans.
How Can We Do Better?
There are several things that can be done to improve the situation in the U.S. (efficiency score: 29.6; life expectancy 78.7), and many are already in motion:
- People need to practice better preventative medicine, visit their primary care provider more, and follow through on treatment plans and medication. Population and member health management systems are helping in this area by identifying those at risk of developing or worsening health, and intervening early and appropriately.
- We need more transparent pricing for medical procedures and drugs. The current system makes it too easy for companies to quietly increase prices over time.
- Social determinants of health such as income levels, access to medical facilities and quality nutrition need to be taken into account and addressed, not just by some health programs, but by all.
- In order to disincentivize provider and medication overutilization, we need to make some form of value-based payments work. The move to from fee-for-service to payment for outcomes is underway but is still experiencing growing pains. However, it’s working in other countries, and could have a profound effect on the efficiency of our system as a whole.
- Integration promotes coordination and savings. The health system in Israel (ranked #6; efficiency score: 67.0; life expectancy 82.0) consists of four HMOs managing providers, primary care clinics, hospitals, and pharmacies. Having all these services under one umbrella encourages collaboration and innovation, and helps keep people healthier and out of hospital.
- Technologies such as AI, machine learning, robotic automation and predictive analytics can be used to streamline operations throughout the system and root out fraud, waste, and abuse.
HMS is working hard in several of these areas today. What is your plan doing to boost efficiency?