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Technology’s Answer To America’s Healthcare Overspending Epidemic

Technology’s Answer To America’s Healthcare Overspending Epidemic

This is no exaggeration. At least, if you ask the president:

“The greatest threat to America’s fiscal health is not Social Security,” President Barack Obama said recently during a speech at the White House. “It’s not the investments that we’ve made to rescue our economy during this crisis” he continued. “By a wide margin, the biggest threat to our nation’s balance sheet is the skyrocketing cost of health care. It’s not even close.”

Yes, our nation is in danger. It’s sick from the vast amount it spends on health care, an amount that has done little to actually make our population healthier, and for which there is much evidence has actually made us less healthy.

According to a recent study by PwC’s Health Research Institute, our country is wasting more than half of what we spend on health care, or $1.2 trillion out of a $2.2 trillion total.

This waste increases the cost of insurance, which means less people can purchase health insurance and less employers are willing to offer quality insurance, and millions more families are at risk of being bankrupted by a serious health issue. It means even people with good insurance can often not afford the care they deserve. And, of course, it means our country’s economy is deeply weighed down by this problem.

And worst of all, the money we’re spending, or wasting,  hasn’t resulted in better health for our country relative to countries who spend less per capita on healthcare.

Why are we overspending?

The main issue that has been pointed out again and again, and has been blamed by everyone from research institutions, the government, and insurance companies themselves, is a payment service called “Fee-for-service” (or FFS for short).

Fee-for-service is exactly what it sounds like: it means that doctors and health care providers are compensated for every single service they perform.

On the surface, this makes some sense. If a doctor does work, he should be compensated for it, right?

But, of course, it is not that simple.

One of the main issues with FFS is that it is not dependent on whether a test or treatment was actually worth doing. The only requirement for the “fee”? Simply that the “service” has been administered.

The problem here is quite obvious: what if the test or treatment was unnecessary? What if it makes things worse?

Essentially what this means is that health care providers are rewarded every single time they do a test. For every treatment. And, often, the more expensive and invasive, the more the compensation, which means a bigger reward for a more expensive test or treatment.

And the proof is in the pudding: we are being over-tested and over-treated, and there is no doubt that FFS is the culprit.

According to the PwC study cited above: “Defensive medicine [done to protect the doctor from litigation, and not in the best interest of the patient], such as redundant, inappropriate or unnecessary tests and procedures, was identified as the biggest area of excess.”

In a 2003 study done by Dartmouth, they found that the amount of wasteful, defensive health services conducted on patients could vary by as much as sixty percent. In other words, in many regions of America, people are receiving sixty percent more procedures, tests, and more than others.

According to the article written in the Dartmouth newspaper about the study:

“Despite receiving more care, patients in higher intensity regions did not have better chances of survival, nor did they express greater levels of satisfaction with their care than did people in more conservative regions. On some measures, such as quality of care and access to outpatient services and preventive care like flu shots and Pap tests, higher-intensity regions actually fared worse than conservative regions.”

As the New English Journal of Medicine put it, “The fee-for-service mechanism of paying physicians is the major driver of higher healthcare costs in the United States. It contains incentives for increasing the volume and cost of services (whether appropriate or not), encourages duplication, discourages care coordination, and promotes inefficiency in the delivery of medical services.”

Is it any surprise, then, that doctors and health care providers so often over-test and over-treat? It would seem, in fact, that the Dartmouth study is only the tip of the iceberg when it comes to the problems created by this fee-for-service system.

For example, according to an article in the New Yorker on this subject, “In 2006, doctors performed at least sixty million surgical procedures, one for every five Americans. No other country does anything like as many operations on its citizens. Are we better off for it? No one knows for sure, but it seems highly unlikely. After all, some hundred thousand people die each year from complications of surgery—far more than die in car crashes.”

According to an analysis by Ezekiel Emanuel, a professor of health policy at the University of Pennsylvania, in 2009 the US spent $7,960 per person on healthcare, more than any country in the world. By the way, that’s 35% more than the next-highest, Norway. It’s also double France, Sweden, and Britain, which all have healthier populations than ours.

Even worse, it’s costing you and me, us normal folks, an incredible amount of money to support this system:

From an infographic we recently made related to this topic you can see some shocking facts:

  1. 20% of Americans struggle to pay their medical bills. No other developed country is even in the double digits of this number.
  2. 57% of personal bankruptcies are due to medical bills.
  3. Over 15 million Americans deplete their savings every year to pay their medical bills and 10 million can’t pay for necessities because of the cost of their bills.
  4. Among developed countries, we have by far the most people who don’t visit the doctor, don’t get prescriptions filled, and/or skipped a treatment because we couldn’t afford it. In case you’re curious, one quarter of our country does all three of those things. Again, no other country is even close.

One hope is that some of the healthcare legislation that has passed may help these problems, but it’s clear that there’s a core problem bigger than anything else: FFS, a system that is weighing down both our economy and our people.

Hope in the air

But don’t give up hope just yet.

Since just about everyone has acknowledged the toxicity of FFS, there has been an enormous effort underway to shift the winds towards a system that rewards doctors not for tests, but for success. Not for treatments, but for efficiency.

Most significant, almost all major insurance companies have begun moving away from this system towards what they call “value based” care.

The companies who have done so up to this point include Blue Cross and Blue Shield Association, UnitedHealth Group, and Aetna, among others.

UnitedHealth Group has committed, for example, to go from spending $36 billion on “value-based arrangements” to $65 billion.  Every dollar of those billions will be removed from their FFS plans.

Even doctors have admitted that change needs to happen, with 86% admitting in a recent survey that “money trumps medical care” is either a very or somewhat important reason for American medicine’s decline.

For the very people who directly benefit from this system to admit something so clearly is a sign that there is a sea-change happening.

The very fact that the president himself spoke on this subject is a sign that things are changing.

There are many alternatives being offered, the most popular being what is called an, “Accountable Care Organization” (or ACO) which supposedly will result in oversight on the quality and results of tests and treatments.

There is no question that change is happening, and that it is happening quicker than some may expect, although it certainly won’t be overnight.

The latest hope: technology

As a tech company, we can’t help but mention something else that will vastly increase the efficiency of our healthcare system: us.

If only because technology is a system by which efficiency is rewarded, systems such as CrowdMed’s have been able to change the way we look at just how efficient the healthcare system can be.

At CrowdMed, we deal with the hardest medical cases in the world. We deal with people who have not found a diagnosis or effective treatment for years (more than 8 years on average). People who have spent beyond their means to get answers (roughly $60,000 on average).

Our system works by combining the input of multiple “medical detectives” and then algorithmically arriving at a list of the most likely diagnosis and/or treatment (by taking a variety of elements into account, much in the same way Google tries to give you a list of the best results for our search query).

Through our system, we have been able to vastly increase the efficiency of their cases, ultimately saving them untold amounts of money and time looking for the answers they desperately need.

  • Over the last few months, we’ve raised our success rate (the percentage of patients we bring closer to a correct diagnosis or cure) to over 70%
  • The average time those patients had been sick before they came to us: 8 years
  • The average time it takes to resolve their case on our site: 54 days
  • Their average medical costs before they come to us again: $60,000
  • Their average spend on our site: $251
  • That means our patients (and their payers) spent 287 times more on their medical case than the cost to resolve the case on our site. It also means that we were able to resolve their case 48 times faster than the time they had already spent bouncing through the medical system.

Of course, all of our patients end up going to their physicians afterwards to confirm and begin treatment, but the savings are still enormous, and the time saved beyond compare to anything else.

Our entire goal, in other words, is efficiency, specifically because we work with patients for whom the system has been so terribly inefficient.

The point here isn’t just how great CrowdMed is: it’s that there is a movement to make healthcare more efficient, and that, increasingly, you will see it coming from the tech world.

You’ll see it in places like 23andMe, a technology startup that empowers the public by making their genetic information easily accessible and affordable. As a sign of the potential for where this sort of technology can go, 23andMe just got approval from the FDA to allow people to test themselves for the potential that they may be a carrier for a rare, dangerous disease.

There are also the ever-increasing amount of wearables that will allow us to spot health problems before they even happen.

In conclusion

There is a huge inefficiency epidemic in our healthcare system today. But there is hope, and it’s coming from many different sectors. The ideal, of course, would be for the insurance companies, the government, and the tech sector, to work together to help defeat these inefficiencies together.

But there will be change, and we at CrowdMed are committed to being part of that change.

The present may not be perfect, but the future is looking beautiful.


If you want to read about how CrowdMed’s efficiency and effectiveness has helped change actual lives, feel free to take a look at our patient success stories.

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