Californians can save more than $1 billion each year by eliminating unnecessary medical treatments, using less-expensive but equally effective drugs and reducing other kinds of waste from the health care system, said a report released yesterday by the California Public Interest Research Group.
The Sacramento-based consumer advocacy group, commonly called CALPIRG, reviewed treatments given to Medicare patients in California and found that $700 million could be saved if doctors and hospitals followed “best practice” standards recommended by leading medical organizations.
Extending those standards to all patients in the state would greatly increase the savings, CALPIRG spokesman Pedro Morillas said.
Government agencies, patient advocacy groups and health institutes have increased their efforts to eliminate imprudent medical spending as health care costs continue to soar and the slumping economy makes it more difficult for consumers to balance medical expenses with other basic needs, such as paying for groceries, gasoline and mortgages.
Medicare officials are giving bonuses to hospitals that excel in using best-practice guidelines, and it is moving to phase out payments for the treatment of infections that were caused by improper hospital care.
The National Institutes of Health, the RAND Corp., the Kaiser Family Foundation and the California Endowment are among other major players adding their voices to the push for cost-conscious medicine.
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Reducing wasteful health spending
The California Public Interest Research Group's recommendations include:
 Standardizing health insurers' billing systems.
Adopting electronic medical-record systems for health care providers.
Limiting the amount of money from policyholders' premiums that can be spent on administrative tasks.
Publicizing the benefits and prices of drugs as an alternative to marketing efforts by pharmaceutical companies.
Restricting drug companies' gifts to physicians.
Making low-cost, high-benefit treatments widely available to people with chronic diseases.
Giving consumers more information about doctors and hospitals so they can better evaluate their health care options.
Rewarding doctors and hospitals for providing care that's both medically beneficial and cost-effective.
Online: For CALPIRG's study on health care spending, go to uniontrib.com/more/
calpirgreport
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“Everyone thinks health care is too expensive until they get sick. You have people saying, 'We're spending too much on health care,' but you have patients saying, 'Spend as much as you need on me,' ” said Nathan Kaufman, a health care industry consultant in San Diego.
“The problem is that the fee-for-service system rewards (health providers) for using excess capacity,” he added. “Now, we're at a point where the nation and individuals can't afford to keep doing that.”
The new report said U.S. health spending on a per-capita basis topped $7,000 in 2006, nearly twice as much as in Canada, Australia, Sweden and the United Kingdom.
Medical bills in California totaled $167 billion in 2004, the last year for which data were available.
CALPIRG officials released their study first in the San Diego and Sacramento metropolitan areas, where the organization says hospitals are more cost-efficient than those in other urban regions of California.
Hospitals in Sacramento, which was ranked No. 1 in terms of efficiency, spent an average of $26,000 on each Medicare patient during the final two years of life, the report said. Researchers chose the two-year period partly because it allowed them to eliminate many variations among communities and regions.
San Diego's average was $30,200. Los Angeles ranked at the bottom of the list, with average spending of $43,500.
Morillas said hospitals and doctors in San Diego and Sacramento do a better job of limiting administrative overhead; avoiding unnecessary tests, surgeries and other treatments; and releasing patients from the hospital as soon as possible. Those three areas were the focus of the researchers' attention.
Efforts to provide health insurance coverage to the state's 5.1 million uninsured people – such as Gov. Arnold Schwarzenegger's plan that failed to win legislative approval this year – will be affordable only if they are coupled with strategies to eliminate needless spending, the report said.
“It is critical that we reform the elements of our health care system that promote spending that does not deliver results,” the report said.
The study netted praise from several quarters.
“What this report and other research shows is that there are very viable cost-control efforts that are about improving value in the health care system rather than curtailing care,” said Anthony Wright, executive director of the Oakland-based nonprofit group Health Access California, which supports universal insurance coverage.
Other groups in the medical system said they are well aware of the need for changes.
“Frankly, this is nothing new,” said Jan Emerson, spokeswoman for the California Hospital Association. “This is why health care reform is so important.”
In recent years, the federal government has taken a crack at eliminating excessive health spending by forcing some Medicare suppliers to submit competitive bids rather than being paid standardized fees for products and services.
This month, Medicare introduced competitive bidding among suppliers of durable medical equipment, such as walkers, hospital beds and diabetic supplies, in 10 test markets. The program could save Medicare $1 billion annually and will be expanded to the rest of the country next year, said Jack Cheevers, spokesman for the regional office of the Center for Medicare and Medicaid Services in San Francisco.
But an effort is under way by some of the companies on the losing end of the bidding process to halt the program, he said. “They're saying they are going to lose jobs, and a lot of congressmen are listening to that.”
Dr. Robert Brook, a researcher with the RAND Corp., said his fellow physicians deserve the bulk of the blame for wasteful medical spending because it is their decisions – such as prescribing a particular drug or ordering a surgery – that ultimately determine the level and cost of care for patients.
“Medical schools, the curriculum, the whole way we think about practicing medicine, is totally out of whack with reality,” said Brook, who also is a professor of public health at the University of California Los Angeles.
Others medical experts said patients bear responsibility for the problem as well.
“It's really more of a cultural issue that extends far beyond the reaches of the hospital and into our individual homes,” said Dr. James LaBelle, medical director of clinical quality and emergency services at Scripps Memorial Hospital-Encinitas.
Although the economic value of medical choices can be obvious at times, LaBelle said, the atmosphere surrounding them can be clouded.
“Every day we have new drugs that come onto the market, many of which are extraordinarily expensive and are nothing short of miraculous when used appropriately and in the right place. But what is the right place?” he said.
Complicating matters further is the fact that not all treatments are clearly defined.
While the medical community has established widely followed standards for dealing with many conditions, such as a broken hip, protocols for treating other ailments and chronic diseases, such as congestive heart failure, are more nebulous, leaving doctors with much discretion.
“What is our capability of doing a cost-benefit analysis in that situation?” LaBelle asked. “It's easy to do it on paper, but when you're dealing with a patient who wants to stay alive, the decision becomes much less actuarial and much more emotional.”
Keith Darce: (619) 293-1020; keith.darce@uniontrib.com
