A team of U.S. physicians joined forces to examine the rising cost of healthcare, concluding that rising prices play a major role in driving up national healthcare spending and that patients are ultimately getting the short end of the stick.
Although annual spending increases have slowed over the last couple of decades, the growth in healthcare remains greater than any other industry and outpaces U.S. gross domestic product, according to the authors of "The Anatomy of Health Care in the United States," published this month in the Journal of the American Medical Assn.
"The main element propelling increasings costs is not demand for services or intensity of those services, but rather the price of those services," study author Dr. Hamilton Moses said in a podcast interview accompanying the paper. "Price is the culprit."
Cost of care is an equation with 3 variables: price, population and demand, according to the study. Conventional wisdom has placed demand and population as lead drivers of cost, tied to our aging population and longer life-spans, but Moses and the other authors maintained that prices are rising faster than the other factors.
"Between 2000 and 2011, increase in price (particularly of drugs, medical devices, and hospital care) not intensity of service or demographic change, produced most of the increase in health’s share of GDP," the authors wrote.
Within the price hikes, drugs and devices accounted for the greatest increase, followed by professional services and hospital care. The rate of growth has slowed, however, especially since 2002.
The study did not separate medical devices from drugs in terms of their impact on spending, but recent studies published my medtech industry insiders have concluded that medical device prices have barely budged in the past 20 years. From 1989 to 2009 device and diagnostic prices increased at an average annual rate of 1.0% compared to national inflation at 2.8%, according to a report issued by industry lobby AdvaMed, who updated the report in 2012 with consistent results.
Another study published earlier this year by the Canadian Health Policy Institute found that the U.S. is 44th in terms of highest national medtech expenditure as a portion of overall healthcare spending. In 2006 U.S. patients spent an average of $275 on medical devices per capital, which amounted to about 3.9% of per-capita healthcare spending in total. By 2011 average per capita spending grew to $369 and medical devices made up 4.3% of total healthcare spending, that study found.
The JAMA study ceded that the overall cost of care has grown less in recent years than in the past, citing is as good news that cost increases have not been inexorable. Ultimately, however, the authors asked whether the rising price of care has been worth the money when patient outcomes have been far outpaced by the cost of treatment.
"The U.S. "system" has performed relatively poorly, by some measures, despite the extraordinary economic success of many of its participants," the authors wrote. "Outcomes have improved, but more slowly than in the past and more slowly than in comparable countries."
"The characterization of the current state of U.S. healthcare reported in this article leads to the conclusion that institutional structure reflects neither the underlying economics nor the operating requirements of providing maximum value at minimum cost," they added.