david morgan

Tackling wasteful spending on health:

A pathway to improving health system performance of

OECD countries

David MorganHealth EconomistThe Organisation for Economic Co-operation and Development (OECD)

Tackling wasteful spending on health

Why do we need to talk about waste?

• Adverse events occur in 1 out of 10 hospitalisations and add 13-

17% to hospital costs when up to 70% of these events can

actually be avoided

• Geographic variations in rates of cardiac procedures (threefold)

and knee replacements (fivefold) are largely unwarranted

• Up to 50% of antimicrobial prescriptions are unnecessary

• 12-56% of ER visits are unnecessary

• Administrative expenditure varies more than six-fold

geographically, with no obvious correlation with performance

• Loss to fraud and error may average 6% of payments

for health care services

What exactly is wasteful spending?

• A pragmatic definition

– Services and processes which are either harmful or do not

deliver benefits;

– Excess costs which could be avoided by replacing them with

cheaper alternatives with identical or better benefits.

• Up to a fifth of health spending in OECD countries is at

best ineffective and at worst, wasteful


Understanding wasteful spending

Waste

occurs

when …

Patients do not receive the right

care

Duplication of tests and services

Avoidable adverse events

Low-value care: Ineffective, inappropriate, not cost-effective

Benefits could be obtained with

fewer resources

Discarded inputs e.g. purchased drugs

Overpriced input(e.g. generic vs brand)

High cost inputs used unnecessarily (HR, hospital care)

Resources are unnecessarily

taken away from patient care

Administrative waste

Fraud, abuse and corruption


What are the causes?


Waste occurs at all levels of the health system

Patient

Manager

Regulator

Ac

tor

Clinician

Poor

incentives

Drivers

Unintentional Deliberate

Errors and sub-

optimal decisions

Poor

organisation

Intentional

deception

Preventable adverse eventsDuplication of services

Ineffective and inappropriate (low value) careWasteful clinical care

Overusing high-cost inputs

Paying an excessive priceDiscarding unused inputs

Ineffective administrative expenditure

Wa

stin

g w

ith in

ten

tion

:

Fra

ud

an

d c

orru

ptio

n

Operational waste

Governance-related waste


Wasteful clinical care Mounting evidence of overuse

C-section rates, 2015

53

.1

46

.8

46

.0

38

.0

37

.2

36

.2

35

.3

34

.0

32

.9

32

.3

32

.2

30

.2

30

.2

30

.1

28

.7

27

.9

27

.8

26

.3

26

.2

26

.0

25

.4

24

.5

21

.1

21

.0

20

.8

20

.8

20

.8

18

.7

17

.3

16

.2

16

.1

16

.0

15

.9

15

.5

0

10

20

30

40

50

60

Per 100 live births

Chronic benzodiazepine use, 2015

Number of patients per 1000, aged 65 years and over who have prescriptions for benzodiazepine for more than 365 days in 2015 (or nearest year)

67

54 5244

3427 25

18 18 18 18 1711 10

5 3 00

10

20

30

40

50

60

70

80

Per 1000 persons aged 65 years and over


Wasteful clinical care Whether reported or not, adverse events are costly

0

20

40

60

80

100

120

140F

ran

ce

Austr

ia

Isra

el

Gre

ece

Germ

any

Belg

ium

United

Sta

tes

Port

ug

al

Luxe

mb

ou

rg

Chile

Spa

in

United

Kin

gd

om

Slo

ven

ia

Italy

Cana

da

Austr

alia

Denm

ark

OE

CD

-35

Sw

ede

n

Ja

pa

n

Ire

land

Neth

erla

nds

Icela

nd

Sw

itze

rla

nd

Kore

a

Norw

ay

Fin

land

Latv

ia

Pola

nd

New

Ze

ala

nd

Czech R

ep

ub

lic

Esto

nia

Slo

vakia

Me

xic

o

Hung

ary

Tu

rkey

Source: IHME 2015

Disability Adjusted Life Years

attributable to patient harm in OECD countries (2015)


Wasteful clinical careInformation systems need strengthening

• Robust information systems to identify low-value care

– At least 10 OECD countries have atlases

– Limitations of many administrative data systems

• Reporting and learning systems of adverse events

– New Zealand: System covers most non-hospital providers

• Patient-reported measures

– Value and safety from the perspective of care recipient

– England: A leader among OECD countries

– PaRIS agenda


Wasteful clinical careCombination of policy levers to tackle wasteful care

• Adherence to clinical guidelines and protocols can be

encouraged by audits and feedback

• Behaviour change campaigns

– Choosing Wisely® campaign in a third of OECD countries

– Kaiser Permanente’s antimicrobial stewardship programme

resulted in a 45% drop in prescriptions

– Safety campaigns: “SAVE LIVES: Clean Your Hands” initiative

active in 174 countries

• Financial incentives and nudges

– Australia’s Queensland withholds payment to hospitals for

“never events”

– 19 countries use the Health Technology Assessment (HTA)

disinvestment: Australia’s on-going benefit schedule review


Operational wasteA hospital example


40 41

48 53 6

6 69 70 73 73 74 9

2 94 96

10

1

11

0

11

3 13

0

13

3

13

6

13

7

14

1

14

1

14

3

14

8

15

1

15

1

17

1

18

7

19

2

19

7

20

4 21

8

22

2

22

5

26

6 28

1

29

2

0

50

100

150

200

250

300

350

4002010 2015

Age-sex standardised rates per 100 000 population

191

Operational waste Hospital admissions for chronic conditions are often avoidable

Diabetes hospital admission in adults, 2010 and 2015 (or nearest year)


Operational waste Ambulatory surgery is developing at an uneven pace

86.3

73.6

73.5

70.8

67.9

63.3

55.6

53.0

49.8

47.8

42.8

37.9

34.1

30.6

30.4

24.2

21.0

18.3

10.7

8.8

6.6

5.9

3.7

3.7

0.1

0.0

0.0

0

20

40

60

80

100

2000 2015

%

Share of tonsillectomy carried out as ambulatory cases, 2000 and 2015 (or nearest year)


Operational waste The share of generic continues to be low

28

71

3631

39

45

28

17

40

19

29

48

25 23

16

2320

17 18 16 1712

15 16

2318

86

86 8481

79 7875

73 7270

61

5553 52 50 49 48 47

42 4239

3634

32 30

24 2219

11

0

30

60

90Value Volume

%

Share of generics in the total pharmaceutical market, 2015 (or nearest year)


Operational wastePolicy levers to better target hospital use

• Payments and financial incentives:

– To promote day-surgery

– Bundled or population-based payments to incentivise delivery in the

right setting (Best Practice Tariffs in England, Sweden)

• Behavioural change for providers and patients:

– Clinical guidelines, disease management

– Self-management by patients, education campaigns

• Strengthening of alternative services:

– Out-of-hours services can be provided by on-call physicians,

dedicated fleets (SOS médecins France), larger Primary Health Care

facilities (Norway) or community services (US rapid access clinics)

– Hospital at Home model (France)


Governance-related wasteA low-hanging fruit?

• Only represents 3% of health spending on average

• Differences in level of administrative costs are largely

driven by institutional features:

– Multiple-payer systems cost more than single-payer ones

(whether SHI or a government entity)

– Private insurance schemes have higher administrative costs

• Still, functional (Australia) and multi-stakeholder reviews of

processes (Germany, the Netherlands) help identify

administrative processes and structures that add little value


Governance-related wasteA third of OECD citizens believe the health sector is corrupt


Governance-related wasteTackling various forms of fraud and corruption

• Detection, prevention and response to fraud in the delivery

and financing of care:

– Dedicated and specialised departments

– Proactively seek to identify problem areas (data mining,

campaigns targeted at types of care susceptible to abuse)

– Organise and phase responses (from information campaigns

targeting outliers to investigations of abusive practices)

• Combat inappropriate business practices

– Mostly rely on self-regulation (code of conducts, conflict of

interest policies)

– Increasingly, some practices are being regulated (Sunshine-

type of regulations mandating disclosure of financial ties:

US, France)


Where to start: A chicken and egg situation

Saturation of existing

resources partly due to misuse

Tackling unnecessary

use

Releasing resources –

physically and financially

Investment

Design for the new

reality of care


Where to start?

• Reducing wasteful clinical care could release significant

amounts of resources

– Patients and health care providers must be on board

• Administrative waste or loss to fraud and corruption is

present in all systems and should not be tolerated

– Magnitude of potential savings is relatively modest

• Eliminating operational waste is most complex

– Little evidence on policies that work

– Can pave the way for efficiency-enhancing systemic changes,

including hospital restructuring


Levels and solutions: Acknowledge

• All OECD countries are explicitly (or not) already engaged

in activities which aim to tackle waste

• Netherlands (2013): Created a hotline and website where

stakeholders could report anonymously instances of waste,

which this led to a series of measures in the area of drugs

and medical devices, long term and curative care

• A difficult but worthwhile conversation


Levels and solutions: Inform

• Simple comparisons are a good starting point

– Atlas variations in the volume of services (10 countries) –

2014 OECD study

– Price variations: UK NHS Atlas (2014) wristbands for hospital

patients (twofold), needles (47% variation)

• Reporting and learning systems of adverse events

• More robust and rich information systems

– Limitations of many administrative data systems

– PROM-PREM: Value and safety from the perspective of care

recipient

• Making information public can effectively support

behavioural change (IGAS France on cases of fraud)


Levels and solutions: Pay

• Base coverage decisions on value

– 19 countries use Health Technology Assessment (HTA)

disinvestment (SiNats in charge of HTA since 2015)

– Australia’s on-going benefit schedule review

• Payment systems

– Fee-for-service encourage volume irrespective of

appropriateness and deter coordination

– Bundled or population-based payments are increasingly used

to incentivise delivery in the right setting

• Procurement (SPMS – Portugal)

• Investing in alternatives (Primary care and FHU,

Coordinating Units for Diabetes)


Levels and solutions: Persuade

• Importance of behavioural change

• Public campaigns

– Choosing Wisely® campaign in a third of OECD countries

• Combined with individual-level interventions: Clinical

guidelines, audit and feedback

• Importance of engaging stakeholders

– Encouraging self-management and self regulation in patients

• Supporting tools (e.g. e-prescription, decision aids)


Thank You

david morgan

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