Elusive Waste

“Health care in the United States has its own version of the Fermi paradox. It involves the strong evidence of massive waste that is updated in the Special Communication by Shrank and colleagues in this issue of JAMA. The authors recalculate the proportion of US health care expenditures that is waste. Their estimates, which they suggest are conservative, are similar to other major reports of the past decade, which came up with median estimates of waste amounting to 30% to 35% of total health expenditures. Shrank and colleagues estimated that waste represents 20% to 25% of US health care expenditures, but they explicitly did not include some extrapolations from Medicare data to the population at large. The authors further reviewed the literature on efforts to reduce waste, which, they claim, suggests that about 25% of that amount—approximately 5% of total health care spending—could be reduced with implementation of well-documented, current programs.

-Donald M. Berwick, “Elusive Waste: The Fermi Paradox in US Health Care.” JAMA. Octover 7, 2019.

Amazon Health – Stratechery by Ben Thompson

“At the same time, the U.S. healthcare system is inextricably tied up with the post-World War 2 order; indeed, the entire reason employers are so important to the system is because of World War 2 regulations that instituted price controls on wages, incentivizing employers to use benefits as a means of attracting workers (this was further enshrined by making healthcare benefits tax-exempt)…

…My expectation, then, is not that the Internet methodically disrupts industry after industry in some sort of chronological order, but rather that the entire edifice lasts far longer than technologists think, only to one day collapse far quicker than anyone expected.

The ultimate winners of this shakeout, then, are not only companies that are building businesses predicated on the Internet, but just as importantly, are willing and able to build those businesses with the patience that will be necessary to wait for the old order to collapse, particularly if that collapse happens years or decades after the underlying business models are rotten.

There is no more patient company than Amazon.”

—Ben Thompson, “Amazon Health.” Stratechery.com. January 31, 2018.

An American National Weakness

“…As a nation, we are relatively intolerant of long waits, and we’re not sufficiently focused on the long-term solutions of exercise and good diet. We love the quick fix, we want it on our terms, and we hate being told no…

I do think these tendencies reflect a kind of American national weakness, and that we would be better off if we had a less consumerist, more philosophical, and indeed more spartan approach to our health and well-being. That would lead to less overtreatment, less strain on health-care resources, and in the longer run a healthier nation with a sounder fiscal position for the federal government.

—Cowen, Tyler. “Spending a Lot on Health Care Is the American Way.” Bloomberg. July 20, 2017.