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With advent of affordable care act and other socio political affairs healthcare service cost is under scrutiny for last few years. According to a report at Forbes  ,  U.S. is the most expensive healthcare system in the world.  Similar observations were made by OECD report in 2013 where USA is spending 17% of GDP on healthcare, highest for a developed country.

Data are being released that show significant variation across the country and within communities in what providers charge for common services. These data include information comparing the charges for the 100 most common inpatient services and 30 common outpatient services. Providers determine what they will charge for items and services provided to patients and these charges are the amount the providers bills for an item or service.

Same dataset suggest that there is significant variability in healthcare cost across the state.  A weighted healthcare index suggest that Alaska, California and Washington DC top the pack while Al, AR and WV are offering cheapest healthcare services.

Essentially this  index indicate that if we leverage best practices i.e service patients at most cost effective healthcare facility , we could save up to 30% cost.

Another interesting observation was that 20 patient codes are covering 50% of total expenditures. Any improvement on these service codes can have measurable impact on bottom line.

In order to improve health care cost to US, we need to look into three lenses

  • Manage need for health care:  Foster healthier life style in citizens. Teach how to make healthy choices
  • Reduce the cost of individual service components
  • Improve the cost for service delivery include operations and administration cost leveraging best practices and utilize more efficient providers when it is possible

This initiative will focus on identifying winners in terms of best cost effective services providers so industry could look into factors that are driving

Data sources:

http://www.forbes.com/sites/danmunro/2014/06/16/u-s-healthcare-ranked-dead-last-compared-to-10-other-countries/

http://www.oecd.org/els/health-systems/Health-at-a-Glance-2013.pdf

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