The Two Ways Better Databases Would Drive Down Health Care Costs

mexico_postal_code_database__premium_edition_-17514.jpgAs we’ve blogged about a great deal here, the costs of medical malpractice don’t amount to a hill of a beans when we’re talking about the costs of health care generally. According to the journal Health Affairs, the direct costs of medical malpractice (insurance company payouts, payments to medical malpractice defense lawyers) and the indirect costs (the costs of so-called “defensive medicine”) amount to 2.4% of our nation’s annual health care tab.
So while all the great new patient safety ideas that we blog about here – such as medical checklists and cockpit safety principles – hopefully catch on in medicine, they’re unlikely to change the curve of growing health care expenses.
What could succeed in driving down health care costs is getting better databases to track health care spending. We already have databases with lots of health care spending data in them. What we need are smarter databases, databases that we can use to more easily manipulate the numbers and search for trends within them.
Smarter databases could help reduce health care spending in two ways. Smarter databases could reduce health care costs on the demand side by identifying patients who are costing us the most and targeting them for more efficient care. And smarter databases could reduce health care costs on the supply side by helping us identify unnecessary tests and procedures.

  • The Demand Side –
  • Getting smarter databases will enable us to do the kind of “medical hot spotting” that promises to drive down health care costs. As we’ve previously blogged about, health care “hot spotting” is modeled after the Compstat crime-tracking system that many credit with contributing to the decline in crime rates that began in the 1990s. Just as Compstat uses crime data to micro-map police precincts and direct police resources to the areas where they are most needed, medical “hot spotting” uses health care data to identify the “high spending” patients. As one study in Camden, NJ demonstrated, thirty percent of the city’s health care spending was spent on one percent of the city’s residents. Identifying those high-cost patients helped the city get a handle on health care costs by targeting those high-cost patients for interventions – such as healthy cooking lessons and other social services – that, although pricey, resulted in a huge reduction in health care costs. Unfortunately, the nifty databases that allow researchers to ferret out high-cost patients for individual attention are not easy to come by. Companies like Verisk Analytics are spending millions developing proprietary algorithms to get the job done. Your run-of-the-mill databases can’t do hot spotting, but we could net a lot in savings if our databases could.

  • The Supply Side –
  • As the journal Health Affairs has noted, the costs of medical malpractice are dwarfed by the costs of fee-for-service medicine. Because of fee-for-service we get doctors performing a lot of unnecessary tests and procedures. Eliminating those unnecessary tests and procedures would take a big chunk out of our health care costs.
    How do we uncover which doctors are guilty of performing unnecessary tests and procedures? By combing through the data. That’s exactly what the Wall Street Journal is doing in its series “Secrets of the System” series – scrutinizing Medicare payment data and unveiling which doctors are performing unnecessary surgeries. Other databases, such as ProPublica’s “Dollars for Docs” database, enable us to connect up the kickbacks that some doctors receive from medical device manufacturers with the types of surgeries that they’re performing.
    Medicare, insurance companies, and other entities already have all this information: it’s merely a matter of having the right software to ferret out the excesses.

We don’t need tort reform. We need smarter databases.

This blog in maintained by the Boston medical malpractice lawyers at The Law Office of Alan H. Crede, P.C.