small ideas 1-3

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January 8, 2014

Small Ideas for Saving Big Health Care Dollars (No. 1-3)

Every Wednesday this month, the RAND Blog will highlight a few small ideas for saving big health care dollars.

Relentless growth in health care costs is perhaps America's most critical domestic policy challenge. A 2012 report from the Congressional Budget Office identified spending growth as the greatest threat to the federal government's solvency.

Cost growth has taken its toll on American families, too. Recent RAND research found that ten years of growth in health care spending wiped out the real income gains of average American families.

So why think small for a problem so big?

For decades, gridlock has undermined more sweeping measures to address health care cost growth, such as tort reform, pay-for-performance, and changes to Medicare or Medicaid eligibility. The reason for the impasse is obvious: all of these reforms may threaten the economic interests of key stakeholder groups. Passage of the Patient Protection and Affordable Care Act is an exception to the gridlock, but cost reduction proposals that require legislation will clearly be difficult to implement.

By shifting the conversation to smaller, more focused approaches, RAND experts hope to identify opportunities for modest cost savings—without generating controversy.

To that end, the research team, led by Jeffrey Wasserman, projected a rough sense of each small idea's operational and political feasibility, assigning a ranking of low, medium, or high to both of these dimensions. Rankings reflect the professional judgment of the researchers, as well as their review of the relevant literature.

Operational feasibility can be thought of as the ease with which a small idea could be implemented as a promising cost-savings strategy at the national level. Thus, an idea with high operational feasibility could be “scaled up” from a smaller population.

Experts determined political feasibility by reflecting on how each small idea would affect the economic incentives of relevant stakeholder groups, such as consumers and various provider types (e.g., physicians, hospitals, etc.).

With the United States spending $2.8 trillion per year on health care, we can't afford to leave money on the table.

Thinking small could save big.

— Pete Wilmoth

Small Idea #1

Reduce use of dedicated anesthesia providers for routine gastroenterology (GI) procedures

Rationale

The use of dedicated anesthesia providers is medically justifiable only for high-risk patients.

Estimated annual savings1

$1.2 billion

Feasibility

  • Political: Medium
  • Operational: High

Learn More

Small Idea #2

Change payment policy for emergency transport

Rationale

Changing Medicare's reimbursement policy would allow emergency medical service agencies to carefully manage patients in more efficient ways (e.g, transporting low-risk Medicare beneficiaries to a physician's office or providing treatment on the spot).

Estimated annual savings1

$290 - $580 million

Feasibility

  • Political: Low
  • Operational: High

Learn More

Small Idea #3

Increase use of lower-cost antibiotics to treat acute ear infection in children

Rationale

Most antibiotics to treat uncomplicated acute otitis media (middle ear infection) in children have similar rates of clinical success.

Estimated annual savings1

$36 million

Feasibility

  • Political: High
  • Operational: Medium

Learn More

1All estimates are in 2012 dollars.