The Healthcare Hub

GHX provides a wide range of perspectives on how greater collaboration and visibility across the supply chain can improve both clinical and financial performance in healthcare.

Wednesday, August 10, 2011

Orlikoff on Healthcare: It's Killing America

I had the chance to hear Jamie Orlikoff, one of the better consultant-type speakers, at the AHRMM Conference yesterday. It was actually the third time I have heard Mr. Orlikoff speak, but each time I gain some new insights. His message is not necessarily new (Healthcare expenditures are on an unsustainable upward trajectory), but he positions the problem in a manner that – while certainly dire – should provide some clues as to how we got into this mess and what we need to do about it.

The biggest takeaway: despite the best of intentions, our healthcare system is doing a disservice to its customers, the patients. Consider these statistics that Mr. Orlikoff shared with the audience:


  • 30% of what we spend on healthcare adds no clinical value (Orlikoff thinks it is closer to 50%)
  • 4.4 million hospital admissions – at a cost of nearly $31 billion – are preventable
  • 19.6% of Medicare patients are readmitted to the hospital within 30 days; 28.2% within 60 days, and only 10% of those readmissions are planned.
  • 1 out of 7 hospitalized Medicare patients is harmed.
To hear Orlikoff tell it, hospitals are the 4th leading cause of death and are bankrupting America. Perhaps an exaggeration, but certainly not a good PR story.
So, what’s to be done? Orlikoff says it’s up to the various parties in the healthcare industry to come together to stop the bleeding, literally and financially.
Orlikoff noted that healthcare expenditures are growing two to six times faster than rate of economic expansion, currently accounting for nearly 18% of the GDP, compared to less than 5% for defense spending. He added that the Pentagon’s fastest growing expense is, you guessed it, healthcare. Same is true for American companies struggling to compete in a global marketplace.
With the debt ceiling debate still stinging, Orlikoff said we need to carefully consider what a recent McKinsey study said about our options. With our debt at record levels, the report says we have just three choices:
  1. Default on the debt
  2. Hyperinflate our way out of the debt.
  3. Tighten our belts and slowly dig out.

Given that options 1 and 2 are probably not really options, Orlikoff says we will be forced to find ways to cut how much we spend on healthcare. After all, as he so eloquently stated: If something cannot last forever, sooner or later it will stop.

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Karen Conway

Vice President, Healthcare Value