Dennis Dahlen: It’s time to look at what’s working — and what isn’t — in reducing care costs 

There’s a surprising phenomenon taking place in Medicare spending — and it points to the need to look deeper when it comes to healthcare cost containment. 

For years, Medicare was viewed as the nation’s “budget buster,” with spending spiraling so quickly that some budget experts predicted no amount of tax money could sustain it. And then, the continual rise in spending per beneficiary stopped. 

Suddenly, the trajectory of Medicare spending decreased after 2011 and has held fairly steady since then. Just as startling: “No one is quite sure why,” The New York Times reports.  

There are guesses from experts that sound plausible. One professor says the push for greater value in care has made clinicians and leaders more cost-conscious. It’s also possible that amid healthcare cost control efforts, Medicare patients haven’t received their treatments of choice. COVID-19 also could have played a role: Seniors who survived the pandemic have lower average morbidity and are so far less expensive to treat.  

The New York Times article also highlights the $3.9 trillion in lower spending from the flattened cost curve over the past 12 years. However, the truth is Medicare spending and the increasing cost — as well as healthcare spending in general — remain top concerns for the nation. Unless we know what works and what doesn’t in achieving cost effectiveness of health, we will struggle to achieve a sustainable system of care. 

Clearly, our collective efforts to improve quality of care or reduce healthcare costs are neither optimal nor sustainable. Nearly 25% of healthcare spending is considered waste, and there are indications it is getting worse. Medicare Advantage, perhaps the most significant payment innovation and a vehicle for advancing value-based care, is beginning to experience attrition among provider organizations willing to contract with these plans. The weight of prior authorizations, denials and other frictional costs appears to be overwhelming the potential value of aligning payment and care models. 

As many as 61% of healthcare professionals today believe the move toward value could be slowed by current financial conditions. At such a time, we must consider: How could healthcare finance take the lead in reducing administrative waste, especially if part of what’s wasteful stems from billing? 

The future of our healthcare system depends on our ability to answer this question.