Healthcare System Efficiency

 Looking at the figures behind the rising cost of healthcare often begs a simple question:  why?  In truth there is no simple answer, however, a large culprit of healthcare's rising cost is due to a series of inefficiencies built into the structure of the healthcare system.  The piecemeal development of America's healthcare system over the course of the past half century greatly mirrors the fragmented system that we have today.  A large portion of healthcare's cost is consumed by the massive administrative brigades and the paper trails needed to integrate insurance companies, providers, hospitals, pharmacies, the government, patients, and much more. Strangely, unlike other American enterprises, the healthcare industry has been slow to integrate technology and resistant to streamlining the inefficient bureaucracies and administrative processes inherent to the system.  
If the American healthcare industry really was like any other enterprise it would be struggling to compete.  Aside from its issues regarding IT and administrative costs, the American healthcare system’s ability to compete in any true open market setting would be negated by its total lack of consumer friendliness.  The transparency of healthcare costs between providers and consumers (in this case, patients) is virtually non-existent.  In healthcare’s peculiar industry, consumers are neither informed of nor encouraged to become informed about the cost of treatments and procedures, instead they pay their co-pay and allow their insurance to pay the rest.  However, unbeknownst to many, those costs are ultimately retransferred back to patients and the public as a whole through higher insurance premiums for individuals and employers or in the case of public programs, higher taxes.  In our healthcare system, market forces are unable to efficiently regulate cost and moreover if consumers are dissatisfied they are for the most part limited in their ability to take their business elsewhere.  

Additionally, our fragmented and decentralized system disallows the kind of formal oversight necessary to hold such a large and vital industry accountable for its performance.  As a result, if patients have issues with their insurance companies or providers, their sole means of significant action lies within the US legal system.  Leaving a knowingly expensive legal system to act as the main form of regulation and patient advocacy in healthcare, adds a tremendous amount of cost to the system.  Providers, insurance companies and patients alike pay billions of dollars in liability insurance and legal fees for malpractice suits, piling on even more to the cost of healthcare that eventually trickles down to us all – just what we and the system needed.  

• In 2005, less than a quarter of office based physicians used electronic medical records; in 2007, still less than a third. ³⁰
• The average premium for physician malpractice insurance increased by 73% between 1999 and 2002. ³¹
• 94% of Healthcare Organizations devoted 6% or less of their budget to information technology. ³²