6 Ways to Cut Health Care Costs

Health Care ManagementContributed by Jerry Lovrien, Health Care Management Instructor, Globe University

Health care costs continue to rise and continue to be cause for concern. It is estimated that health care costs for 2013 will hit $2.8 Trillion, 20% of our GDP. How do we control the cost of health care while still providing quality care?  In a recent TIME article, Steven Brill proposed some areas for improvement.  These changes would allow for better care at lower cost without moving to a government-provider system as found in other countries.

  1. Savings – $94 Billion – Control prescription drug prices.  Prescription drugs make up 10% of US healthcare costs.  Studies show US drug prices average 50% higher than in other developed countries.
  2. Savings – $84 Billion – Recapture profits from hospitals.  Hospital expenses are about 30% of health care costs.  Taxing hospitals and regulating their prices are one option.  Another option is ensuring real competition and transparency along with the end of the chargemaster.
  3. Savings – $74 Billion – Cut 5% from hospital and doctor costs by reducing the over-ordering of tests and other procedures.  Some of these are done only to prevent medical-malpractice lawsuits rather than for a health reason.
  4. Savings – $50 Billion – Regulating fees or taxing profits on outpatient clinics and labs owned by doctors.  This spending could be cut by 30% or more.
  5. Savings – $30 Billion – Reduce the overall gross profit margins of medical device makers down to 50% through transparency or price controls.
  6. Savings – $28 Billion – Allow and fund comparative effectiveness evaluations on prescription drugs, tests and medical devices.

Total potential savings – $360 Billion

The health care industry is constantly growing and evolving.  Health care employment is growing and expected to continue to grow as the baby boomer generation continues to reach retirement age.  Health Care Health Care ManagementManagement students at Globe University stay up to date with the changes in the health care system.  Consider a career in health care, learn more on our website.

Jerry Lovrien has held positions of Chief Executive Officer at health and behavioral health facilities in Minnesota and Washington State. He served successfully as State Director/Commissioner of Health and Behavioral Health in Georgia, West Virginia and Minnesota. Jerry has taught high school through graduate courses and is currently an Instructor with Globe University.