Here are some numbers for you. The United States currently spends about 17% of its gross domestic product (GDP) on health care. About 95% of that money comprises what we call “pooled money,” which means that by and large, any mismanagement of funds in the system is being shared by all those who pay taxes and insurance policy premiums. More accurately, money waste in health care is being passed on to our children.
First let’s looks this 17% of GDP figure. Perhaps you’re thinking that this seems like an appropriate amount for a prosperous nation to spend on its health care. Wrong. No matter how good it is, health care will always be a supportive service, not an economic engine, which means we must always keep this massive expenditure in check. You can’t spend all of your money on health care because then nothing is actually generating anything. You need to have a product that you either build or sell or invent.

Some people counter that those health care dollars are mostly spend domestically. But the point is, it’s spent, and then I as an individual don’t get to spend it and its productive capacity has been lost. The Singaporese spend about 5% of their GDP on health care and have greater longevity and better infant mortality. If we had that expenditure we would actually have a budget surplus. We could pay against the debt.

The next issue is the pooled money. If health care is going to operate largely out of pooled resources, we must get a handle on how our money is being spent, and where it’s falling through the cracks. Below I’m going to talk about nine ways that we could save millions in health care, in areas that no one wants to touch.

#1 The EMS Mess
As a so-called necessary health care expenditure, I think EMS is the largest hoax ever foisted on the American people. There is no data, not one study, which shows that anything beyond the intermediate level – basic EMT with defibrillator capabilities – does anything in the long run to change the health care of the United States. The problem is this: it’s a hidden cost. Do you realize what it costs for a fire department to simply keep everyone current with their ACLS cards? This is what Casey Stengel would call a long run for a short slide. This has become a local government power base and the numbers aren’t even figured in to the overall health care costs in the United States.

#2 Take Services Off the Table!
Let’s look at the Germans. They’ve made decisions. They have a board which asks the question: Does this new therapy really work? They are not run by drug company advertising first with the larger interest of society second. And if the national board of medicine in Germany doesn’t say that a procedure is available, you can’t get it in Germany. The best example is a bone marrow transplant in stage two breast cancer. It doesn’t work, and it’s not available in Germany. They say it’s no different than flipping a coin. In California there was an insurance company sued for $17 million for not offering that therapy. You cannot litigate your way to success. No country ever sued its way to greatness.

#3 Let Them Die in Peace
There comes a time to die. Why would you have people without intellectual function on long-term ventilators? It’s crazy. Several people have placed a dollar value on restrictions to end-of-life care. I will claim that it is ten times the cost of all emergency care in the United States. Furthermore, I think this expense could be reduced by 50% with more responsible end-of-life decision making.

#4 Stop the Unnecessary Testing
Doctors used to be people who had sort of a mechanical bent. They figured things out. Now they’re a bunch of intellectuals who send off a bunch of numbers and hope that an answer falls out. You don’t need a test in every situation. And, a lot of our tests don’t answer the question on the table. And all it does is feed the plaintiff’s attorneys who say, “Well you didn’t get this!” See I don’t think that the majority of kids hit on the head need a CT scan. I have the lowest rate of the use of CT in our department for head injury and headache. By far. Why? Because I know how to examine. We need to return to a cost-benefit analysis and ask the question: What is the reasonable miss rate. We’ve decided in this country that the number is zero, so you don’t get sued. I believe that through more intelligent testing we could save at least 10% on the health care dollar.
You hear all of these nit-wits complain about their Press-Gainey scores; I have good Press-Gainey scores. I can convince a patient of anything. I say, “If it was me…”, or, “If it was my child, this is what I would do.” If you do it that way, if you truly empathize and communicate clearly, your Press-Gainey scores will be just fine.

The average emergency physician spends between 12 and 15 times their annual salary on testing. That number has been looked at several times. As soon as you order that CT on a basic headache, what have you done to that visit? The EP got something like $68 for seeing the patient. Now there’s $1000 that just went down the drain on a patient whose odds of having it be a benefit are small. Not to mention the fact that the federal government this year will spend more money on EKG overreads than it does on emergency department visits. 

#5 Quit Jumping on the Bandwagon!
Change happens all the time, but progress doesn’t happen very often. For example, Nesiritide came out for congestive heart failure. It was a disaster. They spent $7 million the first week it came out in journal advertising. Now, look what’s happening with Vytorin. You talk about a drug that has now decided to head south on the last train to hell. We need to sit back a little bit and not jump on the bandwagon of every two-bit piece of crap coming out.

I review for five journals. Our journals tend to only print positive results. We never print negative results. Here’s something that needs to be done in this country. We need to have a registry of studies so that everything that is eventually going to be published has been registered. That way, if there’s a negative trial and it’s withdrawn, you have to account for that one too. The problem is that we don’t even know what we don’t know. You can always cherry pick a study to give you what you want. That’s not science.

#6 Take an Honest Look at Cost vs. Benefit
Marginal benefit isn’t the exception these days in health care, it’s the norm. When I started in medicine in the late 60s, about 3.5 percent of the health care dollar was spent on medications. That number is now 20%. And what we’re buying for the dollar is extremely poor. And that’s at all ends of the spectrum. If you go to Holland today your children with otitis media will not get an antibiotic during the first three days. Those kids are going to be able to cure themselves. In this country, no parent thinks they have been treated unless they leave with a bottle of pink stuff that smells like bubble gum. What we should do is just give them a bottle of bubble gum and let them leave!

#7 Show SOMEONE the Money!
Europeans basically run their health care system as a federal HMO. I was a visiting professor at Cambridge and experienced the British system first hand. Britain has a global budget for health care which it has to function within, making rank order decisions. Every financial system has a governor that controls its flow and output. In the free market, people control it by having to pay the price of what they want. You have to take the money out of your pocket. When people don’t see the money they do not understand what the hell’s going on. There was a time in this country when doctors knew people were paying the bill and they’d say things like, “I think there’s a cheaper way we can do this.” Sorry, the good old days are gone. In essentially no medical schools or training programs is cost effectiveness even discussed any more.

#8 ICU Misuse
Another place where we could save millions is our use of the ICU. I’ve never understood no codes or DNRs in ICUs. What are we doing? This should be where we apply high level technology to people who have a reasonable chance of making it. You’re looking at 8-10 percent of hospital costs are going into their ICUs. In fact, at certain kinds of hospitals, it could be up to 15%.

#9 One Word: Workforce
The big money savings are in workforce: who is doing what tasks, and for how much. In case someone hasn’t looked recently, there’s a nursing crisis in the United States. Nurses should be doing nursing functions. That is, the monitoring of critically ill patients. Emergency department techs can do the majority of the other work. 90% of what has to be done in the ED is hand work, not head work. I don’t think an RN should ever be bringing a patient back to the room, getting them undressed or pushing them to X-ray.
Furthermore, I think there needs to be a progression of jobs. It would be great if we could take EMTs, not overtrain them, and then after five years or so, transition them into in-hospital techs. When you think about it, EMTs is a young person’s job. You don’t want to be cutting people out of cars at age 60. I can barely get in my car at age 60!
Finally, Most routine care situations don’t need a doctor. The best example is pediatrics. We’re one vaccination away from wondering why we even train pediatricians at all. Most of that care is book-keeping. Did you show up? How are you progressing? And then, knowing when to do intervention on real problems. And, there’s certainly all kinds of care being given out at nursing home type facilities which we need a different kind of provider for.

What do we think the society owes the individual, and what does the individual owe the society? I think that the individual owes the society something which no one wants to talk about, and that is a time to die. At a certain point in time, you can’t afford to do everything for everybody. No western democracy has succeeded in its health plan without grappling with this most basic of questions.

The silver lining to all of this doom and gloom? Take pride in the fact that you, an emergency physician, occupy perhaps 1.8 to 2.2 of the health care dollar of the United States, and it’s the best 2.2% this country ever got. When you look at it, we’re useful!

Greg Henry, MD, is the founder and CEO of Medical Practice Risk Assessment, Inc. Dr. Henry is a past president of ACEP and directed an emergency department for 21 years. Dr. Henry has had an interest in economic issues for over 30 years.


# Mchael Nerenberg MD 2008-09-03 19:29
Very good work Dr Henry. You are entirely correct.
Other big costs you left out:
The cost of health insurance company profits - including the costs to individual providers of having to get the paperwork done to bill the insurance companies.
The costs of overregulation. I understood, when I was chairman of my department 15 years ago, that the cost of JCAHO prep was an average of $100,000/year per hospital in the country. I suspect it is more now. Is there ANY evidence at all that being JACHO ready improves outcomes? Other quasi and actual government regs seem to push us into a costlier use of resources. I know, if I were an office doc, I wouldn't accept medicare and medicaid due to the regs. This pushes patients toward the expensive ED, increasing costs.
Speaking of end of life care; what about dialysis on debilitated, demented, very elderly patients. I see a lot of them in my ED, frequently, and wonder at that cost.
Speaking of workforce issues; why can't we use the out of the military corpsmen as anything but low level techs. Seems to be a GROSS waste of a trained and experienced resource.
# #10 End First-Dollar CoverageJohn Maxfield, M.D. 2008-09-03 21:13
A woman came to my ED by ambulance for 2 weeks of chapped lips. Although I work in a Level 1 Trauma Center, I would guess fully a quarter of the patients I see do not need to see any provider in any setting. A nurse over the phone would do just fine. Although not dialysis for the vegetative, the aggregate cost of this overuse has to be a more than an insignificant slice of the health care pie. But without liability reform to protect the advisor and pain at the pump (i.e. everybody paying SOMETHING), I see no end to it.
# AMEN BROTHER!Walt Dixon, MD 2008-09-04 05:18
Dr. Henry, I'm very heartened by your comments which I agree with 100% However, I feel we are in an ever decreasing minority. I think I'm the only person in my department that considers cost when working up a patient. In fact, I've felt pressure to do more test to be on par with the majority. How do we counter this prevasive wave of wastefulness? Does anyone remember when they put the cost of lab test on Part 3 of the medical license exam, and you were penalized if you spend too much money? How do we get that mentality back!
# DODavid Ross 2008-09-05 14:39
I,too, fully agree with Dr. Henry's comments.

I would emphasize the point about nursing roles and add that there is a very real potential for a nursing shortage crisis by 2020. Part of the problem is that nursing education seems to be unwilling to recognize this and many qualified applicants are delayed, if not refused, entry to nursing school. The average nursing faculty age is 55 (so they are close to retirement) and nurses must have at least a master's degree in nursing to teach. Nursing education needs a reexamination.

In the meantime, we should be busy developing alternatives to nursing in hospital settings.

Another contributor to large costs is the hospital industry building new, hotel-like facilities and wanting to be everything to everyone. We have beautiful new hospital monuments that want to be Trauma Centers, Stroke Centers, Chest Pain Centers, Cancer Centers, Pediatric Centers, etc.etc. - just down the street from another place that wants the same as well.

But the problem with this is, in addition to being wasteful of money and resources, that we simply are not graduating the medical specialists to support all these tertiary centers. This is part of the reason we currently see specialty shortages on our call panels now.

In order to actually accomplish anything meaningful in curbing healthcare spending, every stakeholder has to accept something less than they are currently receiving. That is what has occurred in other countries.

And this concept is a very tough sell in America, since we have live in a society that wants more, more, more. It will take real sacrifice and real political leadership to make some of these changes.

So, I am not very optimistic.
# attending physicianDr Sourbutt 2008-09-05 19:04
I nominate Dr Henry to be our first Medicine Czar My Friends or is that too much Hope and Change to expect?
# Some additional thoughtsPACPhD 2008-09-15 05:18
Dr Henry, you bring up many of the same ideas that make me frustrated every day I come to work. I spent 20 years in manufacturing prior to my medicine career and if any hospital I have ever worked in were trying to compete in business in the real business world, it would shut it's doors within a month. Nurses answering phones, cleaning floors, making beds???? While we have a 8-10 hour wait because we have such a staff shortage! In our state EMTs and paramedics are not allowed to work in any medical capacity in any hospital because the nursing powers that be have made sure through legislation that no one will take their jobs away from them. It is a broken system.

One important issue you overlooked in your cost saving discussions was the utilization of physician assistants. You mentioned that physician's are not always needed in pediatrics. Well they are not always needed to see every patient in the emergency department, in the pediatric office, in the FP office, etc. They are well utilized in many areas and are a great benefit to the whole system.
# Agree and disagreeH.W PA MPH 2008-09-16 22:07
I agree with much of what you say doc.

I also echo the important role PA's can play in this economic crisis. I have been practicing Emergency Medicine as a PA for several years. I studied health economics and work in management of the ED. Plenty of data to show the effectiveness of having PAs on staff.

My support for EMS is anecdotal. I have been a paramedic for sometime. I have had numerous saves for cases of cardiac arrest, anaphylaxis, drug overdose, etc.. I am confident these patients would not of survived anything above a 5 minutes basic life support transport to an ED. I could write books on all the stories to support using ALS. I have to admit though, like you said, I do not have any data to show the economics of ALS EMS. I think this is more an issue of ethics than it is economics. Shouldnt we try to provide the best care possible? I think end of life and EMS are two very different subjects. They cost money in different ways.

I suspect the cost benefit analysis of EMS would probably reveal a loss.
# A. Lewis MD 2008-09-17 12:13
What about limiting peg tube and feeding tube placement in nonverbal, nursing home patients. Think about how much that would save. If nothing else, it would save on ED visits for "PEG tube out".
# MDAlan Kenwood 2008-09-17 15:24
The whole health care argument boils down to one thing: where is the money going? We have limited resources, we are spending more on health care than any other country, and our combined results are far worse than they should be. The only way to reform the system is not evolutionary, as both political candidates would have it, but revolutionary.

The biggest source of waste is the administrative overhead. The only way to real savings in the health care system is to reduce this overhead to a much smaller amount. If that means cutting out the middle man - the health insurance companies - then that is what we must do. Or at the very least, put them on a very short leash and remove the incentive they have to get rid of the sick insured and market aggressively for the healthy population. Of course, this would create a bureaucracy of its own, but a much smaller one than what we now have.

No political candidate wants to talk about this, because there are very powerful interests that basically control health policy in this country. This view is not paranoia - just count the contributions to both parties and count the number of health care lobbyists for the health insurers and big Pharma in Washington.

The ultimate answer will have to come from the bottom up. The only thing the political parties fear more than powerful business interests are the voters!
# from the fieldCDR Mark L Plaster MC, USN 2008-09-18 07:28
As most of you know, I'm currently running a Shock Trauma Platoon in Iraq. This unit has one nurse (male) and 15 corpsmen and we do just fine. I'd like a chance to run an ED stateside with corpsmen. I'd bet that it could be done for a fraction of the current ED budget without a drop in quality of care, IF a) we had protection from nuisance law suits b) we could allow people to do anything that their supervising physicians had trained them to do and c) we could render the care that was medically necessary and not what was expected to get a high customer satisfaction score.
Am I asking too much? I don't think so. But it won't get done unless we all speak up, locally and nationally. As we reform medicine these features must be included or we will have accomplished nothing.
# Med-Mal Defense Attorney.Gerald P. Duff, Esq. 2008-09-25 15:48
I have known Dr. Henry for many years. He is an incredibly intelligent man.(He should be teaching at Notre Dame, not Michigan)
I totally agree with his comments.He speaks from learned experience.I hope to pass my comments on to him in person. Gerry Duff
# Wrong assumptions. Third party control will continue to fail patients and doctors.David McKalip 2008-10-24 20:31
Interesting and useful discussion. You are correct that individuals need to control their own spending. I hope you don't think that some health care "Governor" can do it better.

Also many of your assumptions are wrong. Spending money on health care does indeed contribute positively to productivity. If people aren’t healthy, they can’t work. You write as if all health care spending is a money loser.

You also err in claiming that spending 16.9% of the GDP is all waste and we should get down to 5% like Singapore and we will magically have longer life expectancy and infant mortality. The numbers for infant mortality etc are reported wrong as are life expectancy. Further, why 5%? Why not 10%?

The answer is that there IS no way for any third party to determine the “proper” amount of medical spending in an economy. The only way is for the number to reveal itself in a free market system. When third parties control spending (as they do now) they will insist on things that lowers cost like letting people die too early (whether they like it or not) or telling docs how to practice medicine “efficiently”.

Dr. Henry works from two flawed assumptions:

1. That your numbers are correct (e.g. we spend too much and get worse results)
2. That some third party can fix this without hurting patients and the profession of medicine.

Keep working on the concept that individuals know best how to spend their money best Dr. Henry...you are getting close to the right answer!

David McKalip, M.D.
Chair, FMA Council on Medical Economics.
# You're an idiotnot an idiot 2008-12-17 04:13
You really think EMS is a hoax? I really don't see doctors like you out on the street, doing our job, putting your life in danger. I guess you can observe anything from a nice and cozy ER, or in your case, a classroom. Smarten up and show me proof that ALS doesn't help. You say there's no study saying it helps, so show me that it doesn't help.

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