Data-Driven Healthcare

May 11th, 2009 by Ilya Marritz

The super-nerds in team Obama are turning their attention to the health care system. The leader in this drive, somewhat counterintuitively, is thought to be budget director Peter Orszag.

What makes Orszag’s vision so interesting is that it is utterly data-driven. In a time of negative growth and yawning deficits, Orszag believes it is possible to extend coverage to everyone and lower costs over all. The New Yorker’s Ryan Lizza has a great profile of the man & his ambitions:

Orszag is convinced that rising federal health-care costs are the most important cause of long-term deficits. As a fellow at the Brookings Institution, he became obsessed with the findings of a research team at Dartmouth showing that some regions of the country spend far more money on health care than others but that patients in those high-spending areas don’t have better outcomes than those in regions that spend less money. If spending more on health care has no correlation with making people healthier, then there must be enormous savings that a smart government, by determining precisely which medical procedures are worth financing and which are not, could wring out of the system. “I spent several months in very intense study,” Orszag told me. “The reason that I wanted to go to C.B.O. was I thought that was one of the key bodies that could really delve into what we could do about it.”

Interestingly, when the Times’ David Leonhardt sat down with President Obama recently, Obama struck a similar note:

“if it turns out that doctors in Florida are spending 25 percent more on treating their patients as doctors in Minnesota, and the doctors in Minnesota are getting outcomes that are just as good — then us going down to Florida and pointing out that this is how folks in Minnesota are doing it and they seem to be getting pretty good outcomes, and are there particular reasons why you’re doing what you’re doing? — I think that conversation will ultimately yield some significant savings and some significant benefits.”

But the President goes a step further, bringing up the example of his grandmother, who had hip replacement surgery last summer, and died a few months later. Expensive procedures like these, which frequently occur at the end of life, are some of the biggest drivers of healthcare costs.

NYT: So how do you — how do we deal with it?

THE PRESIDENT: Well, I think that there is going to have to be a conversation that is guided by doctors, scientists, ethicists. And then there is going to have to be a very difficult democratic conversation that takes place. It is very difficult to imagine the country making those decisions just through the normal political channels. And that’s part of why you have to have some independent group that can give you guidance. It’s not determinative, but I think has to be able to give you some guidance. And that’s part of what I suspect you’ll see emerging out of the various health care conversations that are taking place on the Hill right now.

Scary stuff, medical bills. The idea that better information can make health care cheaper is enticing but untested. We do know, however, that much of the cutting edge of medicine is super-expensive, precisely because it’s so advanced.

UPDATE: It seems like the healthcare industry is sufficiently frightened of having cost-cutting imposed on them to make some preemptive announcements that they’ll cut costs themselves.  Hmm…

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