Hoosiers 'waste' $2.5B a year on health care, group says

December 3, 2009

Hoosiers spend $2.5 billion more each year than they would if they lived in the most efficient health care markets in the country, according to an analysis of data from the federal Medicare program.

And residents in Indiana’s highest cost metro area spend more than twice as much as the lowest cost city for treatment of the same conditions, concluded the analysis by Indianapolis-based Better Healthcare for Indiana, a not-for-profit group advocating for grass-roots health reform.

Better Healthcare will release its findings Thursday at an 8 a.m. press conference at Christian Theological Seminary in Indianapolis. Afterwards, it will conduct a day-long summit to help community leaders from around the state develop local strategies to reduce health care costs and improve their citizens' health.

A key part of the summit will be presentations by hospital officials from LaCrosse, Wisc., and Grand Junction, Colo.—two communities that provide the lowest-cost health care, according to Medicare data. President Obama visited Grand Junction earlier this year to kick off his push for health care reform, which is now being debated in the U.S. Senate.

"There are communities that have already managed to produce excellent medical outcomes at costs substantially below the norm, without federal health care/health insurance reform or without reform of the current payment system with its perverse incentives," said Dr. David Cook, a board member of Better Healthcare and the medical director of Indianapolis-based Key Benefits Administrators. "We can learn from those communities and apply the methods used to achieve those outcomes here in Indiana too."

Better Healthcare based its conclusions on data provided by the Dartmouth Atlas for Health Care. It compares the amount of money health care providers spend to provide care to Medicare patients in the last two years of their lives.

The Dartmouth Atlas has famously found that the way doctors practice varies widely from region to region, with some regions prescribing far more—and therefore more expensive—care while achieving quality that is no better, and sometimes slightly worse.

Many health reformers, including Obama’s budget director Peter Orszag, say that if all regions practiced like Grand Junction and LaCrosse, it would cut out 30 percent of all health care spending—or about $700 billion each year.

In Indiana, the most expensive metro area is around Hammond, in the northwest corner of the state. Also high on the cost ranking are Terre Haute, Elkhart, Kokomo, Crawfordsville and Evansville.

Those cities all pay at least 56 percent more for their care than Indiana’s cheapest city, Seymour.

The Indianapolis area is average for the state. But the Medicare program still pays 45 percent more here than it does in Seymour.

Other lower-cost cities include Logansport and Columbus, but Medicare spending there still runs more than 20 percent higher than in Seymour.

If all cities had the costs of Seymour, the federal Medicare program would spend $2.5 billion less each year than it currently does in Indiana. Private insurance companies and the employers they serve would, presumably, see substantial savings, too.

Dr. Alan Snell, another Better Healthcare board member, insists that these instances of local overspending can be addressed regardless of the reforms Congress passes to reform health care.

"The current federal proposals on health care reform won’t necessarily fix health care," said Snell, who is chief medical informatics officer at the St. Vincent Health hospital system. "Health care is local, and leadership within local communities can come together with proper planning and tools to assure their community efforts to improve its health status."


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