Looking for value in reform documents? Weigh the new IOM report
One document gives healthcare better bang for the buck
Last Wednesday, I asked Maureen McKinney, one of our reporters, for a copy of the Institute of Medicine’s new report, Best Care at Lower Cost. McKinney got an advance copy of the report, which was formally released Sept. 6, to begin work on this issue’s cover story. After I asked, she looked up from her cubicle and said, “Are you sure? It’s a real door stopper.” At first, I thought she said “showstopper” because the report promised a detailed blueprint on how the healthcare system in the U.S. could transform itself into one that provides the best possible care for the lowest possible price. “No,” she said. “I meant door stopper.”
At 382 pages, the report was indeed capable of propping open one of the big outside doors at HHS headquarters in Washington. After reading it, though, the report was truly a showstopper. In short, the healthcare system can spend at least $750 billion less each year and eliminate 75,000 avoidable patient deaths just by better using what the system has already.
But isn’t that what the Patient Protection and Affordable Care Act is supposed to do? Control costs, expand access and improve care? With value top of mind for all healthcare executives and the journalists who cover them, I started to do some figuring. I compared the relative value of three of the most important healthcare documents of the past two years. In chronological order, they are the ACA (March 2010); the U.S. Supreme Court’s decision on the ACA (June 2012); and the IOM’s new report (September 2012).
I loaded two, 500-sheet reams of 8.5 x 11-inch paper into our Konica Minolta 4525 Series PS copier and printed out the ACA. It spit out 975 pages of healthcare reform. I took the stack to our mailroom to weigh it: 9 pounds, 10.7 ounces. At a total cost of $940 billion over the first 10 years of the law, that comes out to a little more than $6 billion per ounce and about $964 million per page.
After putting in more paper, I printed out the Supreme Court decision, which upheld most of the key provisions of the reform law but struck down several others. It was 193 pages long and weighed 1 pound, 14.6 ounces. I don’t know if the nine justices of the Supreme Court got a raise this year, but in 2011, the chief justice was paid $233,500, and the other eight justices were paid $213,900 each. That’s a total of $1,944,700. That comes out to be $63,552 per ounce and a little more than $10,000 per page.
And finally, I printed out the IOM report. The tome weighed in at 3 pounds, 13.1 ounces. The report didn’t have a price on the cover, nor did it say inside how much it cost to produce. Three foundations provided the support for the project: the Blue Shield of California Foundation, Charina Endowment Fund and Robert Wood Johnson Foundation. All are supported by charitable donations, so the grants they give out are effectively free to taxpayers. So that’s $0.00 per ounce and $0.00 per page.
So which of the three provided the best value? No doubt it was the IOM report. If its recommendations are followed, the nation could spend almost 30% less on healthcare each year and produce better results. For nearly a trillion dollars, what do you get with the ACA? According to the latest estimates from the CMS’ Office of the Actuary, the rate of increase in annual national expenditures on healthcare services would average only slightly less through 2021. In other words, you’re spending a lot to bend the cost curve a little. Under the IOM’s plan, you’re spending little to bend the cost curve a lot.
The real value of the IOM report is this: It shows that the healthcare industry already has the tools it needs to fix its problems. The real question is whether it needs the strong arm of government to make it happen.