Is Innovation The Key To Reducing Wasted Spending In Healthcare?
A recent article in Harvard Business Review shares how the U.S. can reduce waste in healthcare spending by $1 trillion…and continued innovation is the key!
According to the authors, the U.S. can only achieve this ambitious goal if it continues to encourage and invest in broader innovation across the healthcare industry. The good news is that we have already made significant strides and recent successes in new value based payment models such as Accountable Care Organizations (ACOs) and consumer directed health plans are quickly gaining traction and demonstrating meaningful results, with ACOs saving $410 million in 2014 alone. However, to cut $1 trillion in wasted spending the U.S. must accelerate its efforts and combine payment reforms and incentive structures (which can eliminate nearly $600 billion in wasted spending) with more innovative and efficient ways to deliver better patient care.
Digital health is one such area of innovation and a new report by Accenture illustrates how digital health could save primary care $10 billion annually through enabling patients to shorten office visits, self-monitor conditions, and expand their access to virtual consults. As shown in the infographic to the left, applying digital health tools to annual patient visits alone could save each primary care physician in the United States an average of five minutes per encounter, equivalent to $7 billion in annual savings.
To catalyze the digital health revolution, U.S. venture firms poured $3.3 billion into digital health investments in the first three quarters of 2015, exceeding funding during the same period in 2014. According to a recent analysis of how top investors are channeling their funds into digital health, the “smart money” has been placing bets in the following areas: Healthcare cost transparency, Big data Healthcare analytics, Quantified self, Real-time healthcare, and Personal medicine and information.
Clearly, successful innovation requires trial and error and if the first attempt fails (which it often does) you need to iterate and try again. Thankfully, CMS recognizes this challenge, as does nearly every U.S venture firm, and the CMS Innovation Center recently awarded $685 million to more than three dozen physician groups, health systems and other organizations to spur innovation by increasing training, education, and investment in information technology, care coordination, and quality-improvement efforts.
With any luck, the pace of investment and innovation will continue to accelerate in the months to come and the reduction in wasted spending that results will lead to savings for all and most importantly improved care.