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Are your patients putting off care?

July 2013

Health spending is not increasing as fast now as it did in the 1980s and 90s. Why?

Much of the answer is the troubled economy. People are delaying, suspending or simply not seeking as much care. They are putting off elective surgery. Some have lost their insurance. Some are even putting off having babies. The birth rate is down nationally, including in Oregon. Hospital admissions are down across our market, just as they are nationally.

The rate of increase in health care spending has been lower in the past three years. The Kaiser Family Foundation (not associated with Kaiser Permanente) recently analyzed health spending at the national level. It grew 3.9 percent in 2009, 2010, and 2011. In 2012, it grew at 4.3 percent. Compare this with annual increases in the ‘80s and ‘90s of 6-10 percent.

Fewer office visits, but signs of a rebound

A separate study by IMS Health reports that the number of physician office visits decreased by 0.9 percent from 2011 to 2012.

But the decline last year was not nearly as sharp as it was in 2011, when office visits were down 4.7 percent, and 2010, which saw a 4.2 percent decline. This suggests that office visits may be on the verge of a rebound.

Blame the economy, mostly

The economy plays a huge role in health spending, Kaiser concludes. It attributes 77 percent of the slowing of health spending to the larger economy. This means that as the economy recovers, health spending will increase again. That’s not good news for those who want to reduce health spending.

The good news lies in the other 23 percent. Kaiser says the main parts of the remaining savings come from changes in the way care is delivered and paid for. Medicare started penalizing hospitals in October 2012 for readmission rates higher than expected. This has made prevention of readmissions a high priority. This reduces what would otherwise be "excess" care.

Readmission rates drop; higher co-pays

The overall Medicare readmission rate dropped from 19 percent to 17.8 percent last year. Readmission rates for patients discharged from Legacy hospitals are down as well. Decreases in rates from the end of 2011 to the end of 2012 range from 1.44 points at Legacy Mount Hood to 5.14 points at Legacy Emanuel. 

Many people are also paying for more of their care through higher copayments and other changes. This reduces the amount of care they seek. They also are more likely to seek care in a less-expensive setting like a doctor’s office instead of going to the emergency room. 


Accountable care organizations, or ACOs, are also driving down expenditures by removing excess care. At Advocate Health Care in Illinois, hospital admissions are down 6 percent and length of stay is down 9 percent.

Legacy Health is a member of Health Share of Oregon, which is a coordinated care organization (CCO) for Medicaid patients. The concept is similar to an ACO, and the partners are counting on reducing excess care in order to provide better and less expensive care.

As the Affordable Care Act takes full effect in January 2014, it will affect the level of spending on health care. People who have health insurance for the first time will likely drive up spending at first. Over time, it is expected that changes in how care is delivered will help hold down spending. Care transformation is all about moving from volume to value. This means less unnecessary care and more efficient care. It also means better care.

This article is adapted from one sent to Legacy Health employees in June 2013 as part of ongoing strategic planning and business development information.


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