Cutting healthcare waste: a win-win for providers, payers, patients

CONSUMERS are undoubtedly feeling the pinch with healthcare costs on the rise. MediShield Life premiums rose last year to ensure that the fund remains solvent and sustainable.

An ongoing debate between the Life Insurance Association Singapore (LIA) and the Singapore Medical Association (SMA) revolves ultimately around a lack of data, which obscures the reasons for rising healthcare costs. The SMA claimed that insurers had been unfair to medical professionals with their exclusive Integrated Shield Plan (IP) medical panels while LIA contended that having more doctors on IP panels may lead to even higher insurance premiums.

At the crux of the heated debate lies a single question - what is the true cost of healthcare?

WASTE NOT, WANT NOT

To unpack the issue, it is vital to first understand the concept of healthcare waste.

Global healthcare providers have a history of struggling with systematic and operational inefficiencies. Healthcare waste is incurred any time a patient, doctor, healthcare worker engages in unnecessary medical activity - ranging from preventable mistakes in medical care, to misdiagnoses, provision of unnecessary treatments, and procedural inconsistencies.

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Research has shown that 30 to 50 per cent of all healthcare resource expenditures are quality-associated waste - in the US this amounts to a staggering US$760 billion to US$935 billion annually, or 25 per cent of total medical spending. Given that more than half the world's population lives in the Asia-Pacific, numbers here would be similar, if not worse.

Medical professionals often work with limited information, leading to inconsistencies in clinical and surgical processes, procedures, and testing that result in overtreatment. Patients may overconsume medical services for greater peace of mind, or because there is little to no cost as expenses are covered by insurance. These factors ultimately drive up the cost of healthcare and insurance premiums.

ESTABLISHING COMMON GROUND

The lack of information and clarity about how much healthcare is necessary and what it actually costs has sowed distrust among stakeholders. Even the debate between the SMA and LIA points to a fundamental lack of trust - doctors do not trust insurers to fairly include them in their medical panels, while insurers do not trust doctors to keep costs within reasonable limits.

To create the necessary conditions for trust, there must be greater transparency and a common point of reference for all industry stakeholders.

First, healthcare systems need to move towards digital data aggregation and analytics. A robust, open and scalable data platform can act as a foundation that brings together clinical, operational and financial data from across the healthcare system to propel data-driven improvements. This makes it possible to define appropriate healthcare performance benchmarks to enhance delivery of medical services. For example, health systems will be able to identify the care processes that consume the most resources, analyse variations within those processes, and ascertain the biggest opportunities to reduce waste and improve care.

Second, activity-based costing is the best way to obtain information about an organisation's costs because it accurately measures and assesses 100 per cent of clinical costs. This involves assigning direct costs to each patient for items, such as drug and supply costs, and determining the actual consumption of indirect clinical costs, such as the number of minutes spent in an operating room or length of stay. By connecting healthcare actions and decisions to their actual costs, medical professionals are empowered with more information to exercise better stewardship of limited resources.

An aggregated platform for healthcare data helps to optimise healthcare processes and resource allocation, thereby eliminating healthcare waste while improving quality of care. It also helps us to understand the true cost of delivering care to patients while reducing costs for everyone - a win-win situation for all parties.

FORGING A DATA-DRIVEN FUTURE

There is a major opportunity for data-driven healthcare system improvements in Asia-Pacific. Singapore is already a healthcare hub and could soon become an exporter of health analytics and healthcare improvement expertise. For instance, the Ministry of Health's Transformation Office developed a Covid-19 predictive mortality model to prioritise patient care - an initiative that would also benefit neighbouring countries.

Allowing secure access to the right data for appropriate stakeholders at the right time to glean insights will benefit patient care and outcomes, and eliminate the unnecessary use of resources, especially as states grapple with ageing populations and the aftermath of Covid-19.

Ultimately, a clear data-driven approach is essential to understand the true costs of care and whether it is being appropriately administered. Healthcare ecosystem stakeholders can then effectively eliminate waste and move towards a value-based care system where high quality care is provided at the lowest cost with the best patient outcomes.

• The writer is senior vice-president, Asia-Pacific, at Health Catalyst