Global Perspective

We’ve all heard the stereotypes: Other countries have socialized medicine, rationed care, endless lines, and little incentive for innovation. OK, there might be a grain of truth to the wait times. But healthcare in other developed nations is surprisingly varied in its mix of public and private providers, and it yields high-quality outcomes for a far better price than in the U.S. And yes, international innovation is alive and well.

Head-to-head comparisons can only go so far, with many countries using vastly different metrics to measure quality and efficiency. Nevertheless, the examples of bundling, reference pricing, and patient-reported outcomes offer a glimpse of how large-scale initiatives can help improve outcomes and bottom lines in the hospital and beyond.

The numbers suggest that the tests ordered, the drugs prescribed, the devices implanted, and other medical services offered are driving up costs.

Just the Facts

Last November, the nonprofit Commonwealth Fund in New York funded an analysis of healthcare data from the Organisation for Economic Co-operation and Development (OECD), which explains just how expensive healthcare is here.

In 2008, the U.S. spent roughly $7,500 per person on healthcare, an astonishing 50% more than the next closest country: Norway, at about $5,000 per person. And yet we lag behind Norway and almost all of our other peers in mortality rates. Cathy Schoen, senior vice president for policy, research, and evaluation at the Commonwealth Fund, says the OECD statistics also say something about how we use hospitals. Compared with its peers, the U.S. actually spends a smaller fraction of money on hospital care. We’re also on the low end of the number of acute-care hospital beds and hospital discharges per 1,000 people, and below average on the typical length of stay for acute care, at about 5.5 days. “So we’re not using the hospital more, and we’re not staying in it longer,” Schoen says. “Nor do we have way more beds, so it’s not an occupancy issue that’s driving this.”

Instead, the numbers suggest that the tests ordered, the drugs prescribed, the devices implanted, and other medical services offered are driving up costs, at least in part. So what can other countries tell us? As policymakers here debate how to bundle more healthcare payments around episodes of care (see “A Bundle of Nerves,” November 2010, p. 1), European countries including Germany and the Netherlands already are using the payment initiative on a national level to create efficiencies around hospital-based care. And they’ve done it with an American innovation: diagnostic-related groups, or DRGs. Bundling around a hip replacement, for example, includes the cost of the implant, the surgeon, and all of the hospital care. “It gives the hospital overall and all of its physicians an incentive to say, ‘If we could buy supplies cheaper, let’s do it,’ ” Schoen says.

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