Amid the debate about how to slow rising healthcare costs, a group of 54 healthcare organizations—many of them health systems—are working together to develop a strategy to reduce waste 50% by 2025.
As part of the Institute for Healthcare Improvement’s Leadership Alliance, which includes C-suite executives from MemorialCare, Providence and HealthPartners, the leaders are calling on healthcare organizations nationwide to rethink how they do business and to remove services that don’t add value for the patient.
The alliance’s bold waste-reduction goal for the U.S. healthcare system would save about $500 billion. Recent estimates about the cost of waste ranges from $760 billion to $935 billion annually.
The alliance members are of the mindset that healthcare organizations have a responsibility to decrease waste rather than waiting for regulatory changes requiring them to do so.
“All of the talk and all of the rhetoric that is going on in Washington … we are just moving the bag of money around and no one is striking (the money) inside that bag,” said Helen Macfie, chief transformation officer at MemorialCare who is also leading the IHI’s focus on waste. “Who best to help with that than those out here in the real world doing the real work? We can wait for someone to try to legislate it or pay us less, in which case that results in unfortunate side effects … or we can take these savings and return the money to society, to people.”
Dr. James Leo, chief medical officer of MemorialCare and another leader of the IHI’s effort, said the alliance wanted to establish a bold goal to elicit attention and hopefully action from healthcare organizations.
“It requires we think differently. We are not going to get there by doing things the way we always have,” he said. “By the alliance choosing that as a goal, it would require transformative work.”
To monitor progress, the group is going to track overall U.S. healthcare spending. In 2018, $3.6 trillion was spent on healthcare, up 4.6% compared with the year earlier. Healthcare accounts for 17.7% of the gross domestic product.
“We actually know about a year later how much we spend as a nation on healthcare. If we are successful at this, we are going to see that (GDP) for healthcare come down by half a trillion,” Leo said.
“There is waste in the system and if we can take it out, the prices can drop,” Macfie said. “Helping to solve that problem is what we can do.”